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UPDATE 2-Geithner says confidence in U.S. policies high

Published 10/16/2009, 10:53 AM

(Recasts lead, adds details)

WASHINGTON, Oct 16 (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Friday the United States must work to preserve the dollar's status, but that global confidence in U.S. economic policies remains high.

Geithner said in a CNBC television interview the dollar's status as a key reserve currency carries special responsibilities to keep the country's economy in order and said he was determined to do so.

"It is very important that Americans understand that we need to do everything possible to sustain confidence in our ability to keep inflation low and stable over time and to make sure we're getting our fiscal house in order."

Geithner said that developments over the past year, when many investors put their money into U.S. Treasury securities and the dollar rose at times, showed there was a great deal of confidence in U.S. economic management.

"The world wanted to be in (U.S.) treasuries, in the safest and most liquid markets, and you saw the dollar rose when people were most concerned about the future of the world," he said.

"That is a very important thing. It's not something you can count on. It's something we can understand, and we can continue to foster, and we're going to that," Geithner added.

Geithner was interviewed on Thursday, and CNBC issued a transcript of his remarks on Friday ahead of an on-air showing of the interview.

While access to credit within the overall economy has improved dramatically, Geithner said small businesses that typically create many jobs still faced borrowing constraints.

"They're more dependent on banks. They're more dependent on credit cards, home equity loans, other types of things that got washed away by this crisis," he said.

The Obama administration is working on measures to help small businesses get easier access to credit -- possibly by diverting some bank bailout funds to them -- but hasn't yet announced a program to do so.

Geithner indicated he was open to the idea of extending unemployment insurance benefits for people who have been out of work for an extended period and face the prospect of running out of the jobless payment.

He denied that the administration was ready to consider a second economic stimulus program, but said it was "looking at a set of programs like unemployment insurance, other sets of things that ... are set to expire. And there's a good case for extending them." (Reporting by Glenn Somerville; editing by Jeffrey Benkoe)

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