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Geithner warns lack of loans may slow recovery

Treasury Secretary Timothy Geithner on Wednesday called on banks to "get back to the business of lending" and said a tough credit environment for small businesses will slow economic recovery.
US Treasury Secretary Geithner testifies on Capitol Hill in Washington
Treasury Secretary Timothy Geithner testifies before a Senate hearing Tuesday, telling lawmakers that efforts to strengthen the global financial system will falter if the U.S. drops the ball on overhauling regulation of its own banking system. Kevin Lamarque / REUTERS
/ Source: msnbc.com news services

Treasury Secretary Timothy Geithner on Wednesday called on banks to "get back to the business of lending" and said a tough credit environment for small businesses will slow economic recovery.

"Without increased access to credit for American families and small businesses, growth will be weaker, companies will defer long-term investments and we will not be able to create a recovery that is self-sustaining and led by private demand," Geithner said in opening remarks to a small-business financing forum hosted by the Treasury.

His comments come one day after Geithner told Congress efforts to strengthen the global financial system to prevent another deep crisis will falter if the United States drops the ball on overhauling regulation of its own banking system.

"We need to move on the reform agenda when the memory of the crisis is still acute," Geithner said in testimony to the Senate Foreign Relations Committee.

Geithner also echoed remarks Tuesday by President Barack Obama in Asia that, while the global economy is moving toward a recovery, countries can no longer rely on American consumers to serve as the sole engine of economic growth.

With the president in China wrapping up his first Asian trip, the treasury secretary emphasized that the United States and China "must be at the center of efforts to put the global economy on a more sustainable and balanced growth path."

"China has to move to take steps away from excessive reliance on exports and toward domestic consumption-led growth," Geithner said.

He said that significant cooperation among the world's 20 major economies had helped "put out the financial fire" around the world and restart economic growth.

"To establish a more global foundation for growth and avert future crises of this nature, we must rebalance global demand," Geithner said.

The G-20 includes these nations and adds Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, Turkey, and the rotating European Union presidency.

The AP and Reuters contributed to this report.