2nd UPDATE: Spain Deputy PM: Geithner Supporting Spain's Efforts To Resolve Bank Crisis
By Tom Barkley and Ian Talley Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--
Spain's Deputy Prime Minister Soraya Saenz de Santamaria said Thursday that U.S. Treasury Secretary Timothy Geithner said the U.S. would continue to work with Madrid in its fight to fix its escalating banking crisis.
Spain's No. 2 official said Geithner "has signaled that we're all working together in the same direction and that we have to find a solution for the banks."
Speaking after a meeting with Geithner, she said there is still a debate in Europe whether ailing European banks, including those in Spain, should be able to get direct financing from the euro zone.
The Treasury Department said in a statement that the two "discussed the significant progress that Spain has made on fiscal and structural reforms, the Spanish government's plans to strengthen its financial sector and support recovery and job creation, and the broader challenges facing Europe and the global economy."
She also met with International Monetary Fund Managing Director Christine Lagarde for about an hour earlier Thursday, and said the IMF chief dismissed any speculation about Spain needing IMF funding.
Saenz de Santamaria said it's "normal" for a top official like herself to travel to discuss global economic conditions.
She said the meetings should help to improve confidence in Spain and restore market stability.
Lagarde said in a separate statement that the IMF isn't doing "any work in relation to any financial support" for Spain and hasn't received a request from Madrid.
Spain is facing difficulties raising funds needed to bail out its third-largest bank by assets, Bankia SA (BKIA.MC). Germany won't allow Europe's emergency funds to be used to directly inject capital into Spanish banks, as suggested by the IMF. That means Madrid likely would have to borrow the cash from Europe if it can't raise it in the markets, boosting its debt burden and exacerbating fears it won't be able to pay off its obligations, particularly as its borrowing costs rise to offset the risk. Some economists are speculating Spain ultimately may need a joint European-IMF bailout.
The U.S. has pushed Europe to expand its bailout funds and make them more flexible.
-By Tom Barkley and Ian Talley, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com, ian.talley@dowjones.com
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By Tom Barkley and Ian Talley Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--
Spain's Deputy Prime Minister Soraya Saenz de Santamaria said Thursday that U.S. Treasury Secretary Timothy Geithner said the U.S. would continue to work with Madrid in its fight to fix its escalating banking crisis.
Spain's No. 2 official said Geithner "has signaled that we're all working together in the same direction and that we have to find a solution for the banks."
Speaking after a meeting with Geithner, she said there is still a debate in Europe whether ailing European banks, including those in Spain, should be able to get direct financing from the euro zone.
The Treasury Department said in a statement that the two "discussed the significant progress that Spain has made on fiscal and structural reforms, the Spanish government's plans to strengthen its financial sector and support recovery and job creation, and the broader challenges facing Europe and the global economy."
She also met with International Monetary Fund Managing Director Christine Lagarde for about an hour earlier Thursday, and said the IMF chief dismissed any speculation about Spain needing IMF funding.
Saenz de Santamaria said it's "normal" for a top official like herself to travel to discuss global economic conditions.
She said the meetings should help to improve confidence in Spain and restore market stability.
Lagarde said in a separate statement that the IMF isn't doing "any work in relation to any financial support" for Spain and hasn't received a request from Madrid.
Spain is facing difficulties raising funds needed to bail out its third-largest bank by assets, Bankia SA (BKIA.MC). Germany won't allow Europe's emergency funds to be used to directly inject capital into Spanish banks, as suggested by the IMF. That means Madrid likely would have to borrow the cash from Europe if it can't raise it in the markets, boosting its debt burden and exacerbating fears it won't be able to pay off its obligations, particularly as its borrowing costs rise to offset the risk. Some economists are speculating Spain ultimately may need a joint European-IMF bailout.
The U.S. has pushed Europe to expand its bailout funds and make them more flexible.
-By Tom Barkley and Ian Talley, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com, ian.talley@dowjones.com
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