Geithner: need stimulus, not financial transactions tax

By Glenn Somerville

ST ANDREWS, Scotland (Reuters) - Treasury Secretary Timothy Geithner on Saturday stressed the necessity of keeping global economic stimulus in place until recovery is assured and opposed the utility of a tax on financial transactions as a way to dampen risky bank behavior.

Speaking at the conclusion of a two-day meeting of Group of 20 finance minister and central bankers, Geithner said there was broad agreement that "growth remains the dominant policy imperative across our economies."

He said high U.S. unemployment, which hit a 26-1/2-year high at 10.2 percent of the civilian workforce in October, highlighted a "very tough economic environment" that will a period of sustained growth to correct.

Earlier, British Prime Minister Gordon Brown had suggested that the G20 should levy on banks -- blamed for the excessive risk-taking that led the world into a now-easing financial crisis -- and used the proceeds to fund future bailouts.

Geithner played down that idea, noting that the Obama administration was already pushing an overhaul of financial market rules in Congress that would ensure that banks pay the costs of their failures in future from their own pocket.

"A day-by-day financial transaction tax is not something we are prepared to support," Geithner said in an interview with Sky News. In his concluding press conference, Geithner was asked repeatedly to say why he opposed such a tax on banks and indicated he doubted its effectiveness.

"This idea (of a bank transaction tax) has been around for a long time...I think frankly the experiences are mixed," he said, expressing an American view that there was no widespread backing for such a tax.

Canadian Finance Minister Jim Flaherty was similarly skeptical.