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Treasury Secretary Timothy Geithner unveiled his program to fix our ailing economy in on OpEd piece in the Wall Street Journal. Before the crisis hit, business and individuals took an overdose of risk and are now fearful of assuming any risk at all, he says. Now investors need to take on a more level-headed amount of risk to work our way out of this mess. The “rule of law” gives us confidence to take on this risk, he explains.
But if Congress can retroactively change contract rule, how much confidence can he expect investors to shoulder going forward? Mr. Geithner writes:
We cannot solve this crisis without making it possible for investors to take risks. While this crisis was caused by banks taking too much risk, the danger now is that they will take too little. In working with Congress to put in place strong conditions to prevent misuse of taxpayer assistance, we need to be very careful not to discourage those investments the economy needs to recover from recession. The rule of law gives responsible entrepreneurs and investors the confidence to invest and create jobs in our nation. Our nation’s commitment to pursue economic policies that promote confidence and stability dates back to the very first secretary of the Treasury, Alexander Hamilton, who first made it clear that when our government gives its word we mean it.