Treasury Secy Tim Geithner Testimony Senate Banking Committee, May 20, 2009 – Full Text
(Source: U.S. Dept. of the Treasury)
Introduction
Good morning.
Chairman Dodd, Ranking Member Shelby, members of the Senate Banking Committee, thank you for the opportunity to testify before you today.
On October 3, 2008, during a time of tremendous financial upheaval and economic uncertainty, Congress passed the Emergency Economic Stabilization Act (EESA) with the specific goal of stabilizing the nation’s financial system and preventing catastrophic collapse. Soon after taking office, this Administration rebuilt the EESA programs from the ground up with a new foundation. We also unveiled a financial stability plan to restore the flow of credit to consumers and businesses, tackle the foreclosure crisis in order to help millions of Americans stay in their homes, and comprehensively reform the nation’s financial regulatory system so that a crisis like this one never happens again.
Today, just four months into President Obama’s term of office, there are important indications that our financial system is starting to heal. For example, spreads for investment grade corporate bonds have fallen about 210 basis points and spreads on high yield corporate bonds are down about 770 basis points since the end of November. Spreads on AAA municipal bonds have come down 150 basis points since October. Risk premiums in short-term, inter-bank markets have fallen 280 basis points over roughly the same period and the cost of credit protection for the largest U.S. banks has fallen by about 180 basis points just since early April. Treasury is continuing to look into additional metrics that gauge the markets more broadly, as well as additional economic metrics, to determine the effectiveness of the current strategy and whether additional or different steps are needed.
Could a Honda Product Really Be “Biblically Terrible?”
If The Insight is as Bad as Reviewer Says, It Might Say Something About Automakers Rushing ‘Affordable’ Hybrids to Market
A review for the 2010 Honda Insight by the Times of London caught my attention with passages like this:
So here goes. It’s terrible. Biblically terrible. Possibly the worst new car money can buy. It’s the first car I’ve ever considered crashing into a tree, on purpose, so I didn’t have to drive it any more.
And this:
And the sound is worse. The Honda’s petrol engine is a much-shaved, built-for-economy, low-friction 1.3 that, at full chat, makes a noise worse than someone else’s crying baby on an airliner. It’s worse than the sound of your parachute failing to open. Really, to get an idea of how awful it is, you’d have to sit a dog on a ham slicer.
So you’re sitting there with the engine screaming its head off, and your ears bleeding, and you’re doing only 23mph because that’s about the top speed, and you’re thinking things can’t get any worse, and then they do because you run over a small piece of grit.
Now, I’ve got to tell you – I’m a Honda fan from a Honda family. My own last three cars have been Honda CRVs, two of them were purchased new. My first car was a 1976 Honda Civic – a true rice burner. Hondas are just great cars for a lot of reasons including operating cost, fuel economy, design and resale value.
Not only have I never driven a Honda I didn’t like, I’ve never read anything especially bad about the cars or the company. Then I read this review.
Here’s what I think. In the rush to go green and get the costs of hybrids down, Honda must have cut some corners on the Insight. Are the majority of consumers of clamoring for hybrids? I don’t think so, but I could be persuaded if there’s good data on that. I do believe that Western governments are applying pressure to automakers to get their fleets more environmentally friendly. This is a good thing, but does it have to mean hybrids for everyone immediately?
Some data I have been privy to regards the state of Ohio fleet manager’s decision on choosing a default state vehicle. The state of Ohio found that on all measures including sticker price, the Ford Focus was the most economical choice for state employees who are permanently assigned vehicles. At 30 MPG or so, even their carbon footprint was smaller than Honda’s older model Insight.
This brings about some other public policy issues. Most objectively informed people understand that we must curtail carbon emissions and that oil will only grow increasingly scarce and expensive over time. Government policies affecting the auto industry or consumer choice in cars – such as tax breaks – should perhaps provide incentives to radically move the bar up on CAFE standards.
The world’s auto industry is too important to the overall economy to have great companies like Honda rushing products that aren’t ready. The unintended consequences could be detrimental to brands or worse, turn consumers off to hybrid vehicles.
I don’t doubt that someday there will be affordable hybrids or electric vehicles which provide utility and are a pleasure to drive. For now, maybe we should bridge the gap to that future by perfecting what we know so much about – the internal combustion engine.
