U.S. Treasury Secretary
Timothy Geithner said on Monday that borrowing costs were falling as
credit markets gradually thaw, but warned a painful period lies ahead
for American consumers.

questions at a luncheon sponsored by Newsweek magazine, Geithner said
unemployment likely will keep rising for some time as the Obama
administration tries to find a way to wrench the economy out of

We're not going to have a steady, even process of
repair. It's going to be bumpy, still feel fragile for a while, he
said. Even as growth starts to turn positive, which will happen...it's
not going to feel better for a long time for millions of Americans.

taking over Treasury in January, Geithner has been immersed in the
effort to administer a government bailout for the severely stressed
financial sector. He said proposals for a broad regulatory overhaul
will be made public within a few weeks and suggested it will be

We have an incredibly archaic, segmented, complex
oversight regime across our system, he said. It did not prevent huge
amounts of risk building up in pockets of the system...and we're going
to have to change a lot of aspects of the regulatory system to reduce
the risks.


Geithner said huge paychecks for
Wall Street figures during the boom years of the 1990s and early 2000s
angered many Americans and said compensation needs to be changed,
though he rejected the idea of setting upper limits on executive pay
for companies receiving taxpayer-financed bailouts.

I don't
think our government should set caps on compensation, Geithner said.
What I think we need to do is make sure we set in place some broad
constraints on the incentives (that) compensation systems create.

said the financial crisis was fueled by excessive risk-taking in search
of short-term pay incentives but there were means for controlling that.

supervisory standards and through the kind of disclosure requirements
the SEC (Securities and Exchange Commission) can put in place I think
we can bring about broader reforms to compensation...that will make it
much less likely that people will get paid to take large amounts of
short-term risk at the expense of their firms, Geithner said.


Geithner defended himself against published
charges that Treasury was moving slowly on policy decisions because
many key positions were unfilled and lines of managements were blurred.
There is no deputy Treasury secretary, no nominee for under secretary
for domestic finance and the candidate for under secretary for
international affairs is not yet confirmed.

I actually think
we're doing quite well in terms of speed, quality of policy. he said,
insisting that Treasury has moved swiftly on an extraordinarily
complex set of programs to deal with the housing crisis and financial
system turmoil.

Geithner said there is pressure to act now to
overhaul financial rules while memories are fresh about the upheaval
that has been caused by reckless lending and risk-taking and chances
are best for shaping attitudes.

I think the American people want
to see us moving to change things, not just waiting, he said, adding
that means there may be some areas in which we're going to err on the
side of constraining risk rather than letting it get around the new