Secretary Geithner to Travel to China and Japan Next Week

Trip to Highlight Issues Including State of the Global Economy, Stronger Growth and Increased Pressure on Iran

 

WASHINGTON – The U.S. Department of the Treasury today announced that Secretary Tim Geithner will travel to Beijing, China and Tokyo, Japan January 10-12, 2012, for meetings with senior government officials in both countries to discuss the state of the global economy, policies to strengthen global growth and other economic issues of mutual importance. Secretary Geithner will also discuss our continued coordination with international partners in the region to increase pressure on the Government of Iran, including financial measures targeting the Central Bank of Iran.

 

On Tuesday, January 10, Secretary Geithner will arrive in Beijing for a meeting with Chinese Vice Premier Wang Qishan. The following day, he will meet with Premier Wen Jiabao, Vice President Xi Jinping and Executive Vice Premier Li Keqiang to discuss measures to promote continued economic growth and level the playing field for U.S. workers and firms. The Secretary’s visit to Beijing comes ahead of Vice President Xi’s visit to Washington later this year.

 

On Thursday, January 12, the Secretary will be in Tokyo, Japan for meetings with Prime Minister Yoshihiko Noda, Finance Minister Jun Azumi and other senior government officials to confer on the U.S. and Japanese economies and cooperation on efforts to support strong, sustainable and balanced global growth.

 

Additional details will be announced in the coming days.

Remarks by Treasury Secretary Tim Geithner on Targeting Iran’s Nuclear and Missile Programs

As Prepared for Delivery

 

Thank you, Secretary Clinton.

 

I want to thank you, and I want to commend my colleague at Treasury, David Cohen, and his counterparts here at the State Department for working so hard to put together today’s very significant financial actions.

 

Since President Obama came into office, this administration has put in place an aggressive strategy to stop Iran’s illicit activities.  A key part of this strategy has been to impose overwhelming financial pressure on Iran. 

 

Because of this strategy, Iran has been subjected to new and damaging levels of financial and commercial isolation. 

 

First, we have dramatically reduced Iran’s access to the international financial system.  Iranian banks are losing the ability to do business around the world, which in turn has reduced the ability of the Iranian government to finance activities opposed by the international community.

 

Second, Iran’s national shipping line – which has transported material in support of Iran’s missile program – is now shut off from many of the world’s major ports and routinely finds its ships seized or turned away.

 

And third, Iran’s primary source of revenue – its oil sector – is in decline, because it cannot attract the foreign investment that it desperately needs to maintain production.

 

Together, the intensification of sanctions by this Administration, alongside our partners around the world, has inflicted substantial damage to the Iranian economy.

 

To continue these efforts, the Treasury Department today is designating additional entities for their support of Iran’s nuclear and proliferation-related activities.

 

Today we are also taking the next significant step to escalate the pressure by acting under Section 311 of the USA PATRIOT Act. For the first time, we are identifying the entire Iranian banking sector – including the Central Bank of Iran – as a threat to governments or financial institutions that do business with Iranian banks.

 

If you are a financial institution and you engage in any transaction involving Iran’s Central Bank or any other Iranian bank operating inside or outside Iran, you are at risk of supporting Iran’s illicit activities:  its pursuit of nuclear weapons, its support for terrorism, and its efforts to deceive responsible financial institutions and evade sanctions.

 

Any and every financial transaction with Iran poses grave risk of supporting those activities.

 

Financial institutions around the world should think hard about the risks of doing business with Iran.

 

We are taking this latest action alongside our partners in the United Kingdom and Canada, who announced earlier today that they have implemented similar measures to insulate their banks from Iran. As a result of this coordinated effort, Iran is now cut off from three of the world’s largest financial sectors. 

 

We encourage other leaders around the world to take forceful steps – like the action we are announcing today – to prevent Iran from simply shifting financial activity to banks within their nations. 

 

As we put these new measures in place, and as we continue to work to expand their reach around the world, we will continue to explore other measures.  No option is off the table—including the possibility of imposing additional sanctions on the Central Bank of Iran.

 

The policies Iran is pursuing are unacceptable.  Until Iran’s leadership agrees to abandon this dangerous course, we will continue to use tough and innovative means to impose severe economic and financial consequences on Iran’s leadership.  

 

Thank you.

Measures to Increase Pressure on Iran

Hillary Rodham Clinton

Secretary of State

 

Secretary of Treasury Tim Geithner

November 21, 2011

 

SECRETARY CLINTON: Well, good afternoon, everyone. I am delighted to welcome Secretary Geithner here to the Treaty Room of the State Department, and I also welcome his team and thank my team for the work that they have been doing with respect to Iran.

 

Recent days have brought new evidence that Iran’s leaders continue to defy their international obligations and violate international norms, including the recent plot to assassinate the Saudi Ambassador here in the United States and as verified by the new report from the International Atomic Energy Agency that further documents Iran’s conduct of activities directly related to the development of nuclear weapons. Now, this report from the IAEA is not the United States or our European partners making accusations; this is the result of an independent review and it reflects the judgment of the international community.

 

There have to be consequences for such behavior. So on Friday, Iran was condemned in votes at the UN in New York and at the IAEA in Vienna. And earlier today, the UN General Assembly again strongly reprimanded Iran for continuing human rights abuses, persecution of minorities, and forcible restrictions on political freedom. The message is clear: If Iran’s intransigence continues, it will face increasing pressure and isolation.

 

Today the United States is taking a series of steps to sharpen this choice.

 

First, President Obama signed an Executive Order that, for the first time, specifically targets Iran’s petrochemical industry, a significant source of export revenues and a cover for imports for sanctioned activities. This will allow us to sanction the provision of goods, services, and technology to the petrochemical sector. To accompany this new measure, we will launch a worldwide diplomatic campaign to encourage other countries to shift any purchases of Iranian petrochemical products to other suppliers.

 

Second, in the same Executive Order, we are expanding sanctions on Iran’s oil and gas business. U.S. law already sanctions large-scale investments in up-stream exploration and development of oil and gas, and now it will also be sanctionable to provide goods, services, and technology for those activities as well. This will make it more difficult for Iran to work around the sanctions and will further impede efforts to maintain and modernize its oil and gas sector.

 

Third, under an existing Executive Order, we are designating a number of individuals and entities

 

for their roles in assisting Iran’s prohibited nuclear programs, including its enrichment and heavy water programs. Their assets subject to U.S. jurisdiction will be frozen and American individuals and entities will be prohibited from engaging in any transactions with them.

 

And finally, as Secretary Geithner will discuss in more detail, the Treasury Department is formally identifying Iran as a jurisdiction of primary money laundering concern. This is the strongest official warning we can give that any transaction with Iran poses serious risks of deception or diversion.

 

These steps were accompanied today by complementary measures by the UK and Canada, and we expect additional sanctions by other international partners in the days ahead.

 

Together, these measures represent a significant ratcheting up of pressure on Iran, its sources of income, and its illegal activities. They build on an extensive existing sanctions regime put into place by the UN Security Council and a large number of countries, including our own, acting nationally and multilaterally to implement the Council’s measures. And these sanctions are already having a dramatic effect. They have almost completely isolated Iran from the international financial sector and have made it very risky and costly a place to do business.

 

Most of the world’s major energy companies have left, undermining Iran’s efforts to boost its declining oil production, its main source of revenues. Iran has found it much more difficult to operate its national airline and shipping companies, and to procure equipment and technology for its prohibited weapons programs. And those individuals and organizations responsible for terrorism and human rights abuses, including the Revolutionary Guard Corps and its Qods Force, have been specifically targeted.

 

The impact will only grow unless Iran’s leaders decide to change course and meet their international obligations. And let me be clear: Today’s actions do not exhaust our opportunities to sanction Iran. We continue actively to consider a range of increasingly aggressive measures. We have worked closely with Congress and have put to effective use the legislative tools they have provided. We are committed to continuing our collaboration to develop additional sanctions that will have the effect we all want: putting strong pressure on Iran.

 

Now, the Administration’s dual-track strategy is not only about pressure. It is also about engaging Iran, engagement that would be aimed at resolving the international community’s serious and growing concerns about Iran’s nuclear program. And the United States is committed to engagement, but only – and I say only – if Iran is prepared to engage seriously and concretely without preconditions. So far, we have seen little indication that Iran is serious about negotiations on its nuclear program. And until we do, and until Iran’s leaders live up to their international obligations, they will face increasing consequences.

 

Now I would like to invite Secretary Geithner to explain in more depth how some of these sanctions will be working.

 

Tim.

 

SECRETARY GEITHNER: Thank you, Secretary Clinton, and my compliments also to your colleagues and to ours – to mine, led by David Cohen and Danny Glaser, for doing such a great job today on these very significant financial actions.

 

Since the President came into office, this Administration has executed a very aggressive strategy to stop Iran’s illicit activities. A key part of this strategy has been to impose overwhelming financial pressure on Iran, and because of this strategy, Iran has been subjected to new and damaging levels of financial and commercial isolation.

 

First, we have dramatically reduced Iran’s access to the international financial system. Iranian banks are losing the ability to do business around the world, which in turn has reduced the ability of the government to finance activities opposed by the international community.

 

Second, Iran’s national shipping line, which has transported material in support of Iran’s missile program, is now shut off from many of the world’s major ports and routinely finds its ships seized or turned away.

 

And third, Iran’s primary source of revenue, its oil sector, is in decline because it cannot attract the foreign investment that it desperately needs to maintain levels of production.

 

Together, the intensification of sanctions by this Administration, alongside our partners around the world, has inflicted substantial damage to the Iranian economy. To continue these efforts, the Treasury Department today is designating additional entities for their support of Iran’s nuclear and proliferation-related activities.

 

Today, we are taking the very significant step of acting under Section 311 of the Patriot Act. For the first time, we are identifying the entire Iranian banking sector, including the Central Bank of Iran, as a threat to governments or financial institutions that do business with Iranian banks. If you are a financial institutions anywhere in the world and you engage in any transaction involving Iran’s central bank or any other Iranian bank operating inside or outside Iran, then you are at risk of supporting Iran’s illicit activities: its support – its pursuit of nuclear weapons, its support for terrorism, and its efforts to deceive responsible financial institutions and to evade sanctions. Any and every financial transaction with Iran poses grave risk of supporting those activities, so financial institutions around the world should think hard about the risks of doing business with Iran.

 

We are taking this action, as the Secretary said, alongside our partners in the United Kingdom and Canada, who announced earlier today that they were implementing similar measures to insulate their banks from Iran. And as a result of this coordinated effort, Iran is now cut off from three of the world’s largest financial sectors. We encourage other leaders around the world to take forceful steps like these actions to prevent Iran from simply shifting financial activity to banks within their nations.

 

As we put these new measures in place and as we continue to work to expand their reach around the world, we will continue to explore other measures. No option is off the table, including the possibility of imposing additional sanctions on the Central Bank of Iran. The policies Iran is pursuing are unacceptable, and until Iran’s leadership agrees to abandon this dangerous course, we will continue to use tough and innovative means to impose severe economic and financial consequences on Iran’s leadership.

 

Thank you.

 

SECRETARY CLINTON: Thank you all very much.

Remarks by Treasury Secretary Tim Geithner on “America’s Leadership in the Multilateral Development Banks”

Hosted by the U.S. Chamber of Commerce and the U.S. Global Leadership Coalition

As Prepared for Delivery

WASHINGTON – In remarks to business leaders at an event hosted by the U.S. Chamber of Commerce and the U.S. Global Leadership Coalition this afternoon, Treasury Secretary Tim Geithner discussed the importance of maintaining America’s legacy of leadership and support for the Multilateral Development Banks (MDBs). During the discussion, Secretary Geithner emphasized the role of the MDBs in fostering opportunities for U.S. businesses, creating jobs for American workers and promoting our national security interests and humanitarian goals abroad. He also expressed appreciation for the recent Senate action in support of these programs and said that he looks forward to working with Congress in this critical period to maintain America’s leadership in these vital institutions. His remarks are as follows:

“Having emerged from crisis, the global economy today still faces a great many challenges, from a difficult recovery in the United States to ongoing uncertainty in Europe.  Here at home, we are intensely focused on creating jobs, increasing competitiveness, and laying a strong foundation for long-term prosperity.

“Stronger global growth is essential to achieving these objectives.  If the emerging markets and developing nations grow, we can export more.  We can expand our businesses.  We can hire more workers.  That is why U.S. leadership in global development matters—because if we are going to benefit from global growth, we need to support it.

“The multilateral development banks (MDBs) are vital contributors to this growth equation.

“First, these institutions help establish both the hard and soft economic infrastructure that is needed to connect countries with our farms and factories and to get our goods to new markets and consumers.  They help finance the roads, ports, bridges and railways that make commerce flow and economies prosper.  We’ve seen the results: our exports to countries that borrow from the MDBs amount to approximately 40 percent of our total exports, and this number is growing as more economies come online.  The MDBs help open markets in a way that promotes American values.  They implement policy reforms that include strict procurement processes and safeguards to strengthen property rights and protect the environment and vulnerable populations. Too often, the only alternative to MDB financing is low-cost financing from countries like China.

“Second, these institutions help economies transition to democratic and open markets.  In 1988, during the Reagan Administration, the United States made a one-time investment of $420 million for the World Bank’s capital increase.  That investment enabled $325 billion in development investments over two decades, creating new market economies in Central and Eastern Europe following the fall of communism, and restoring economic stability during the Mexican and Asian crises in the 1990s.  Today, the MDBs are playing the same role by supporting the transitions of the Arab Spring as young people and entrepreneurs seek support for their aspirations and growth.

“Finally, the MDBs play a critical role in helping economies prevent and recover from crises.  In 2008, these institutions provided $222 billion in financing to developing countries and reached more than 130 countries, representing more than 40 percent of the global economy and more than 30 percent of America’s export markets.  This stabilization was vital to restarting growth in American exports following the crisis, and their swift action helped restore trade finance at a pivotal moment.  The MDBs also help maintain the trade flows that are the lifeblood of the global economy.

“At a time when we face constrained resources at home, our investments in the MDBs are the most highly leveraged of our entire foreign aid portfolio, and they sustain our 60-year legacy of leadership and bipartisan support.  We know that American businesses are strong supporters of these investments.  We appreciate the recent Senate action in support of these programs and look forward to working with Congress to maintain America’s leadership in these vital institutions during this critical period.”​​

Secretary Geithner Visits UPS Worldport in Kentucky, Highlighting Importance of Investments in Infrastructure

Visit Underscores Need for Congress to Pass the American Jobs Act

LOUISVILLE, KY – Highlighting the need for Congress to pass President Obama’s American Jobs Act proposals to create jobs and invest in our nation’s infrastructure, Treasury Secretary Tim Geithner today toured UPS’s international air hub and met with local business leaders in Louisville, Kentucky.  As a company that interfaces with almost every facet of the country’s transportation system, UPS believes there needs to be immediate short term investment as well as long term planning to maintain and grow our transportation system.

“One of the most important parts of the President’s American Jobs Act is to put people to work right now rebuilding America’s infrastructure,” said Secretary Geithner. “In order to be as productive and efficient as possible, American businesses need the foundation of a strong, reliable, modern infrastructure – and that means they need government to do its part.  Investing in infrastructure creates good, middle-class jobs and helps our economy run at its full potential, which keeps us competitive and helps lower costs for businesses and consumers alike.”

“I am encouraged that both the President and Congressional leaders are working to develop bipartisan solutions to put people back to work, modernize and create an interconnected transportation system of ports, rails, roadways and runways, create jobs by expanding access to overseas markets for businesses large and small and reform America's tax system so we can get this economy moving again,” said Scott Davis, Chairman and CEO of UPS.

The Secretary’s visit highlighted the value government investment in 21st century infrastructure provides by increasing productivity and efficiency in our economy and strengthening the competitiveness of American businesses.  UPS estimates that a five minute daily delay for every UPS vehicle costs the company $100 million annually. Across the U.S., clogged roads cost our country at least $80 billion a year in lost productivity and wasted fuel.  Flight delays cost another $33 billion in lost productivity. 

With more than 137,000 flights worldwide in 2010, and more than 31,000 of those from the Worldport Facility, the cost of routine flight delays and traffic congestion have a significant effect on UPS’s bottom line.  Because UPS’s operations require interactions with every level of American infrastructure – beyond just roads and bridges – the Secretary’s visit also highlighted the need to invest in the next generation of systems to help modernize air traffic control and create a 21st century energy grid.  

Earlier this month, President Obama sent to Congress the American Jobs Act, which creates jobs and cuts taxes for middle-class Americans.  The President’s plan addresses the problem of our nation’s crumbling infrastructure while putting hundreds of thousands of workers back on the job with a strategy that combines immediate investments in infrastructure with innovative reforms to ensure that the best projects get financing.  These investments would put people to work now and yield lasting benefits for our economy.

For additional information on the American Jobs Act’s proposals to put Americans back to work while rebuilding and modernizing our infrastructure, see the White House fact sheet here: WhiteHouse.gov/the-press-office/2011/09/08/fact-sheet-and-overview.

Geithner Op-Ed: ‘What the world must do to boost growth’

WASHINGTON – Ahead of tomorrow’s meeting of the G-7 Finance Ministers and Central Bank Governors in Marseille, France, Treasury Secretary Tim Geithner, in an op-ed to be published in the September 9, 2011 edition of the Financial Times, outlines steps necessary for the world economy to regain momentum, including strengthening growth and employment at home through the President’s American Jobs Act package and forceful action by Europeans to generate confidence and quell instability.

What the world must do to boost growth

By Tim Geithner

The world economy is in the midst of the second slowdown of this recovery from the financial crisis of 2008 and 2009. The question is not whether we have the economic or financial capacity to act to strengthen growth, but whether we have the political ability to do the right things.

The shocks behind the slowdown – oil prices, Japan’s disaster, the crisis in Europe – are severe enough to have been dangerous even if they had happened during a global boom. They are more dangerous now because they hit a world still healing from financial crisis and because of the general fear that political constraints will prevent governments and central banks from acting sensibly with the tools available.

With interest rates very low in the major economies, budget deficits swollen by the crisis, and the financial imbalances of the crisis only partly resolved, there are limits on what policy can do to help strengthen growth.

But the biggest constraints on action in the major developed economies now have less to do with those economic realities and more to do with political paralysis, misplaced fears about inflation and moral hazard, and unwarranted disaffection with the efficacy of the traditional fiscal tools of tax cuts and investment to encourage growth.

The three most important things that have to happen for the world economy to regain momentum are these. First, the U.S. should act to strengthen growth and employment. President Barack Obama will push for the very substantial package of public investments, tax incentives, and targeted jobs measures he will put forward tonight, combined with a carefully balanced mix of fiscal reforms designed to restore fiscal sustainability over the medium term.

Second, Europe needs to take more forceful action to generate confidence that it can and will resolve its crisis. This requires governments working together and alongside the European Central Bank in an unequivocal commitment to support Europe’s financial system and ensure governments can borrow at sustainable interest rates as they reform. Finally, China and other emerging economies need to continue to strengthen domestic demand and allow their exchange rates to adjust to market forces.

In early 2009, the world showed remarkable unity and deployed remarkable financial force in rescuing the global economy. The challenges now are different and cannot realistically be confronted by a repeat of that coordinated global response of financial stabilisation and fiscal and monetary stimulus.

But the imperative remains to strengthen economic growth. Fiscal policy everywhere has to be guided by the imperatives of growth. Where deficits and interest rates are too high, governments have no choice but to consolidate. Where fiscal positions are stronger and interest rates low, some countries have room to take more action to support growth, and others can at least slow the pace of consolidation. Where more fiscal reforms are necessary to achieve long-run sustainability, the emphasis should be on policy changes that take effect over the medium term.

As for monetary policy, with growth slower and oil prices lower, inflation risks are on average, though not everywhere, less acute. This means some central banks will continue to ease policy, while some will keep rates lower longer and slow the pace of expected tightening. None of the major central banks are out of ammunition. The repair and restructuring of financial systems has to be accelerated where it has lagged. Countries that forced more capital into their banking systems early in the crisis are better placed to support the recovery. Those that did not should move more forcefully now.

Financial reforms designed to prevent the next crisis need to be designed and implemented in a way that does not exacerbate the slowdown. We need more progress in rebalancing global demand, with broader and faster appreciation of the remnimbi and the other policies necessary to strengthen domestic consumption in China and other emerging economies with large external surpluses.

The outlook is not all dark. Oil prices have eased somewhat, relieving pressures on consumers and businesses. Growth in emerging markets remains quite strong. Most private forecasters expect U.S. growth to be stronger in the quarters ahead than during the first half of this year. The IMF expects the world economy as a whole to continue to expand at a moderate pace.

But the risks of a longer period of relatively weak growth are significant, and it makes sense for policy makers to act to reduce the risk of that outcome. One of the most important lessons from the history of financial crises is that the political will to act to secure recovery fades too quickly in the face of the political costs of the initial response and early optimism about growth. This was a terrible crisis. Recovery was always going to be slow, fragile, and take time. We have more work to do. We are better off doing it together.

The writer is US Treasury Secretary

Treasury Statement from Assistant Secretary for Public Affairs Jenni LeCompte

WASHINGTON – The U.S. Department of the Treasury today released the following statement from Assistant Secretary for Public Affairs Jenni LeCompte on Secretary Geithner’s plans to remain in his post at the Treasury Department:

“Secretary Geithner has let the President know that he plans to stay on in his position at Treasury. He looks forward to the important work ahead on the challenges facing our great country.”

Statement from Secretary Geithner on the Leadership of the Consumer Financial Protection Bureau

WASHINGTON – Today, the U.S. Department of the Treasury issued the following statement from Secretary Tim Geithner in response to the announcement by the White House that President Obama will announce tomorrow his intent to nominate Richard Cordray as the Director of the Consumer Financial Protection Bureau (CFPB). 

“As Ohio’s Attorney General and while at the Consumer Financial Protection Bureau, Richard Cordray has earned a reputation as one of America's strongest advocates for the interests of consumers. He is an effective leader who is committed to making sure American families and consumers have all the necessary tools to make the best possible choices. We are grateful that he has agreed to take on this important position and know he will build upon the powerful legacy that Professor Elizabeth Warren has established at the CFPB. Professor Warren has done an outstanding job at standing up this agency and has been a tremendous asset to us all during the Bureau’s first year. She has helped initiate critical work to simplify mortgage disclosure, improve credit card transparency and shield military families from predatory lenders and has done the agency a great service in recruiting top talent to take the CFPB and its mission forward.”

Treasury Kicks Off Billions Of Dollars In Main Street Lending Through The Small Business Lending Fund

Community Banks Receive Funding to Help Small Businesses Access Capital,

Create New Jobs 

WASHINGTON – Today, the U.S. Department of the Treasury announced that six community banks received a total of $123 million as part of the first wave of capital provided by the Small Business Lending Fund (SBLF). The SBLF, which was established as part of the Small Business Jobs Act that President Obama signed into law, encourages community banks to increase their lending to small businesses, helping those companies expand their operations and create new jobs.          

“Expanding access to credit for small businesses will provide a powerful spark for growth and job creation,” said Treasury Secretary Tim Geithner. “These funds will help ensure that more Main Street entrepreneurs have the opportunity to expand their businesses, invest in their local communities, and create new jobs.” 

Small businesses play a critical role in the U.S. economy and are central to growth and job creation. Small businesses employ roughly one-half of all Americans and account for about 60 percent of gross job creation. But small business owners faced disproportionate challenges in the aftermath of the recession and credit crisis, including difficulty accessing capital.

The SBLF helps small businesses meet this challenge by providing capital to community banks that hold under $10 billion in assets. The dividend rate a community bank pays on SBLF funding is reduced as that bank increases its lending to small businesses – providing a strong incentive for new lending to small businesses so they can expand and create jobs.

The SBLF is one part of the Obama Administration’s comprehensive agenda to help small businesses access the capital they need to invest and hire. The State Small Business Credit Initiative (SSBCI), which is also a key part of the Small Business Jobs Act, allocates $1.5 billion to new and existing state programs that will leverage private financing to spur $15 billion in new lending to small businesses and small manufacturers.  A total of 54 states and territories applied to take part in the SSBCI and 14 states have already had their applications approved for $488 million in SSBCI funding. 

The Obama Administration has also supported 17 direct tax breaks that provide tax relief of more than $50 billion for small businesses. These tax breaks were designed to support job creation and retention, entrepreneurship, investment, and growth. The Administration has also worked with Congress to extend and expand existing Small Business Administration loan programs that helped put more than $42 billion in the hands of small businesses and deliver other important benefits to help small businesses expand and hire. 

The full list of community banks that received funding through the first wave of SBLF capital includes the following:

•Community Trust Financial Corporation (Ruston, Louisiana) – $48.3 million

•Level One Bancorp, Inc (Farmington Hills, Michigan) – $11.3 million

•Pioneer Bank, SSB (Drippings Springs, Texas) – $3.0 million

•ServisFirst Bancshares Inc. (Birmingham, Alabama) – $40.0 million

•U&I Financial Corp (Lynnwood, Washington) – $5.5 million

•Virginia Heritage Bank (Fairfax, Virginia) – $15.3 million

Tom Broughton, President and CEO of ServisFirst Bancshares, Inc. said: "This lending fund program will enable us to continue to grow our small business loan portfolio and assist in the economic recovery in our markets.”  

Additional SBLF funding announcements will be made on a rolling basis in the weeks ahead. For more details on the SBLF program, please visit, link and http://www.treasury.gov/resource-center/sb-programs/DocumentsSBLFTransactions/SBLF%20Transactions%20Report%20-%20THRU%2007062011.pdf

Treasury: No Change to August 2 Estimate Regarding Exhaustion of U.S. Borrowing Authority

WASHINGTON – Today, Mary Miller, Assistant Secretary for Financial Markets at the U.S. Department of the Treasury, issued the following statement reaffirming the projected date on which the United States will exhaust borrowing authority under the statutory debt limit.

“The Treasury Department continues to project that the United States will exhaust its borrowing authority under the debt limit on August 2, 2011.  Secretary Geithner urges Congress to avoid the catastrophic economic and market consequences of a default crisis by raising the statutory debt limit in a timely manner.”

Secretary Geithner Supports Christine Lagarde For IMF Managing Director

WASHINGTON – Today, the U.S. Department of the Treasury issued the following statement from Secretary Tim Geithner.

“I am pleased to announce our decision to support Christine Lagarde to head the International Monetary Fund. Minister Lagarde’s exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy. We are encouraged by the broad support she has secured among the Fund’s membership, including from the emerging economies. I also want to commend my friend, Agustin Carstens, on his strong and very credible candidacy.”

Joint Statement of Secretary Geithner and Secretary Clinton On Iran Sanctions

WASHINGTON – The U.S. Departments of Treasury and State today released the following statement from Secretary Tim Geithner and Secretary Hillary Clinton on additional U.S. sanctions against Iran:

“Today, the United States imposed sanctions on Tidewater Middle East Company, an operator of Iranian ports owned by the Islamic Revolutionary Guard Corps (IRGC) that has links to Iranian proliferation activities. We also imposed sanctions against Iran Air, which was designated for providing material support and services to the IRGC and Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL), and also has facilitated proliferation-related activities.  Today’s sanctions also exposed an Iranian individual and entity for their ties to a company that provided support and weapons to Hizballah on behalf of the IRGC.

“The IRGC’s illicit activities and its increasing displacement of the legitimate Iranian private sector in major strategic industries, including in the commercial and energy sectors, are deeply troubling.  The IRGC also serves as the domestic “enforcer” for the Iranian regime, continues to play an important proliferation role by orchestrating the import and export of prohibited items to and from Iran, is involved in support of terrorism throughout the region, and is responsible for serious human rights abuses against peaceful Iranian protestors and other opposition participants.

“Preventing Iran from developing nuclear weapons is a top U.S. government priority and we remain deeply concerned about Iran’s nuclear intentions.  The United States is committed to a dual-track policy of applying pressure in pursuit of constructive engagement, and a negotiated solution. 

“On June 9, 2011, the P5+1 countries (China, France, Germany, the Russian Federation, the United Kingdom, and the United States) re-affirmed their concerns about Iran’s nuclear program and their commitment to a diplomatic solution in their statement to the International Atomic Energy Agency’s Board of Governors.  Many other governments have also expressed serious concerns about the behavior and policies of the Iranian leadership and have urged Iran to change course and seek a path of negotiation.  Yet, in the face of this unified international message, Iran has continued to violate its international obligations and disregard our attempts to start meaningful negotiations over its nuclear program. 

“For this reason, the United States is convinced that the international community must continue to increase and broaden the scope of pressures on Iran.  We welcome steps such as the European Union’s designation of more than 100 entities and individuals last month and the improved implementation of sanctions against Iran that we are seeing around the world.

“This month, the United States amplified our sanctions against Iran’s leadership through a comprehensive initiative aimed at Iran’s dangerous behavior--its continued proliferation activities, its human rights abuses, and its destabilizing activities in the region. 

“On June 9, we sanctioned the Iranian security forces for human rights abuses.  Earlier this week, we continued our efforts against the Islamic Republic of Iran Shipping Lines (IRISL), which the UN Security Council 1737 Sanctions Committee noted has been involved in several violations of UN Security Council resolutions on Iran. 

“The steps we have taken this week seek to limit Iran’s ability to use the global financial system to pursue illicit activities.  We have made important progress in isolating Iran, but we cannot waver.  Our efforts must be unrelenting to sharpen the choice for Iran’s leaders to abandon their dangerous course.

“The United States and our partners remain fully committed to a diplomatic solution with Iran.  However, until Iran is prepared to engage seriously with us on such a solution, we will continue to increase pressure against Iranian entities of concern.”

Excerpts of Treasury Secretary Tim Geithner’s Remarks to the International Monetary Conference

6/6/2011

Atlanta, Georgia 

“We are committed to building a more level playing field internationally, as we move ahead with reforms in the United States. 

We don’t want to see another race to the bottom around the world.  As we act to contain risk in the US, we want to minimize the chances that it simply moves to other markets around the world.

The United Kingdom’s experiment in a strategy of “light touch” regulation to attract business to London away from New York and Frankfurt ended tragically.  That should be a cautionary note for other countries deciding whether to try to take advantage of the rise in standards in the United States. 

But it is important to note that the strength of the United States financial system in the decades that followed the Great Depression was that we had the highest standards for disclosure and investor protection, we had the strongest protections for depositors and against money laundering, and we had the best exchanges.  We did not lower our sights to match the more limited ambitions of others.  We knew we would be more vulnerable if we did.

So we will do what we need to do to make the United States financial system stronger.  We will do so carefully.  And as we do it, we will bring the world with us.”

“Now, as we work with our international counterparts on this range of issues, we need to develop a global margin standard. 

Just as we have global minimum standards for bank capital – expressed in a tangible international agreement – we need global minimum standards for margins on uncleared derivatives trades.  

Without international consensus, the broader cause of central clearing will be undermined.  Risk in derivatives will become concentrated in those jurisdictions with the least oversight.  This is a recipe for another crisis. 

A global approach to margin will help prevent regulatory arbitrage and a “race to the bottom.”  It will make our global financial system safer and stronger.”

Geithner Op-Ed: ‘A Rescue Worth Fueling’

WASHINGTON (5/31/2011) – In an Op-ed to be published in the June 1, 2011 edition of The Washington Post, Treasury Secretary Tim Geithner discusses the Obama Administration's successful restructuring of GM and Chrysler.

A rescue worth fueling

By Timothy Geithner

On June 1, 2009, General Motors filed for bankruptcy, backed by $30 billion in support from the federal government. The same day, in the same New York courthouse, a judge approved Chrysler’s plan to forge an alliance with Fiat and emerge from bankruptcy as a restructured business with an uncertain future.

Two years later, all three American automakers have returned to profitability, the industry has added new shifts and 115,000 jobs, and GM and Chrysler have returned more than 50 percent of the government’s investment. The industry is mounting one of the most improbable turnarounds in recent history.

This outcome was anything but assured. In December 2008, the industry faced the prospect of uncontrolled liquidations just as our financial system was reeling from the worst financial crisis since the Great Depression. President George W. Bush provided more than $17 billion in temporary loans to GM and Chrysler to avert that disaster, but those efforts, while important, were not enough. President Obama took office faced with an industry that was burning and had to determine whether additional government support made sense. 

In a series of meetings in early 2009, the administration’s autos team sought to examine an interwoven web of options and to highlight the risks each entailed. The companies needed to make dramatic changes. Years of bad decisions had caused them to progressively lose market share to foreign competitors, and the financial crisis had dried up financing for almost everything, compounding the collapse in demand for vehicles. It was not clear whether there was a responsible way to put taxpayer dollars on the line in a way that helped ensure the companies emerged stronger, not weaker.

The challenges extended beyond GM and Chrysler. The restructuring of these automakers could affect companies throughout the supply chain that employed nearly 400,000 American workers. Ford and other automakers depended on those suppliers, increasing the risk of damage if they liquidated or moved overseas. With the credit markets frozen and no major sources of private financing available, government inaction meant devastating liquidations. Nonetheless, even a federally supported bankruptcy could aggravate the situation by causing car buyers to lose confidence. And the automakers realistically could have taken a long time to emerge from bankruptcy. In the balance hung thousands of auto dealerships nationwide and small businesses in communities with concentrations of auto workers.  It was the uniquely deep linkages between the auto companies and suppliers, dealers and communities that led some experts to estimate that at least 1 million jobs could have been lost if GM and Chrysler went under.

Ultimately, the most difficult decisions centered on Chrysler, which was ailing even more than its larger counterparts and was, we determined, no longer viable as a stand-alone company. The choice was backing Chrysler’s effort to partner with Fiat or letting the company fail. A rich internal debate ensued. Our team presented the president with a range of stark options, including the fact that standing behind Chrysler’s restructuring still gave only a slightly higher than 50 percent chance of long-term success.  

Nothing about the president’s call was popular. It may have been more politically expedient to let Chrysler fail. But the president knew that if Chrysler collapsed, tens of thousands of jobs would have been shed in the near term — a body blow to an economy already on the ropes. 

In return for government support, we demanded tough concessions from Chrysler and from GM — substantially tougher than had been proposed before. They were forced to go through bankruptcy, clean their balance sheets and adopt stringent plans to move toward profitability. We gave the companies enough space to make sound business decisions and push ahead as they would in a private restructuring. That meant sacrifices across the board — from managers, unions, stockholders, creditors and dealers. These investments offered Chrysler and GM a second chance but also helped the workers, communities and suppliers depending on them. 

Today, six years earlier than planned, Chrysler has repaid its outstanding government loans. While it has a long way to go, Chrysler has made enormous strides. Tough decisions, stemming from the restructuring, have helped Chrysler post five consecutive quarters of operating profit. It has announced more than $3 billion in investments in plants and technology since emerging from bankruptcy and is poised to hire back workers.

The story has been similar for GM — and the industry as a whole. The domestic automakers are getting stronger. For the first time since 2004, each has achieved positive quarterly net income.

While it remains unacceptably high, Detroit’s unemployment has fallen nearly one-third over the past two years. The car companies are leading a comeback in American manufacturing. And while we will not get back all of our investments in the industry, we will recover much more than most predicted, and far sooner.

What happens next for Chrysler and GM is up to their executives, managers and workers — just as with any other company. We cannot guarantee their success, and at some point they may stumble. But we’ve given them a better shot. The choice to stop the American automobile industry from unraveling was the right one. 

The writer is secretary of the Treasury.