The Obama administration is urging European leaders to deal more forcefully with a debt crisis that could significantly damage the U.S. and global economy.
President Barack Obama on Thursday said he has pressed both German Chancellor Angela Merkel and French President Nicolas Sarkozy to act quickly to control the crisis.
Obama said the uncertainly it has caused in financial markets is the "biggest headwind" affecting the U.S. economy.
Treasury Secretary Timothy Geithner made similar remarks during two congressional hearings. He said the crisis could undermine U.S. growth if it spread.
Obama and other leaders of the Group of 20 major world economies are scheduled to hold a summit meeting Nov. 3-4 in Cannes, France.
"They've got to act fast," Obama told reporters at a White House news conference. "My strong hope is that by the time of the G-20 meeting, they have a very clear, concrete plan of action that is sufficient to the task."
In his congressional testimony, Geithner said the debt crisis had already slowed growth significantly in Europe and around the world.
"Europe is so large and so closely integrated with the U.S. and world economies that a severe crisis in Europe could cause significant damage by undermining confidence and weakening demand," Geithner said during a hearing of the Senate Banking Committee.
Geithner told the panel that major U.S. banks and money market funds have moved to substantially reduce their exposure to the countries facing the most pressure. He called their direct exposure "very modest." But he said the crisis was slowing economic growth in Europe, which he said did represent a threat to the U.S. economy.
"We want Europe to move and we want to make sure they move more aggressively," Geithner told the committee.
Geithner said a key difference between the current European crisis and the 2008 financial crisis is that U.S. banks have greater capital reserves to hold against losses.
European leaders are moving to have their banks boost capital reserves, too. That would help them cover losses should Greece or another heavily indebted nation default on its debt.
On Wednesday, Chancellor Merkel, the head of Europe's biggest economy, backed the effort to recapitalize banks.
Geithner said European leaders must move more quickly to build up rescue funds. The funds would help assure financial markets that European banks could minimize any damage caused if Greece or another troubled nation defaults on its debt.
Geithner told both the Senate committee and the House Financial Services Committee that it was important for Congress to boost U.S. economic growth by passing Obama's $447 billion jobs program. He said faster economic growth would better position the U.S. to weather the impact on financial markets caused by a European default.
Republican lawmakers, who oppose Obama's jobs program, said the biggest drag on the economy was excessive government regulations. As an example, the singled out new rules in last year's financial regulatory overhaul aimed at U.S. banks.
Democrats on both panels criticized the administration for failing to do enough to help people facing foreclosure.
Geithner said the financial regulations are aimed at addressing the excesses exposed by the financial crisis and not stifling legitimate banking operations. He conceded that the administration's foreclosure-relief programs have fallen short of their original goals. But he said the administration is working to improve those programs.
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