Congress must adopt a “balanced strategy” to address the country’s long-term fiscal health and avert the looming crisis over the national debt limit, said U.S. Treasury Secretary Timothy F. Geithner at an event hosted by the Joan Shorenstein Center on the Press, Politics and Public Policy.Geithner’s remarks came as part of a wide-ranging session moderated by Shorenstein Center Director Alex S. Jones at The Harvard Club of New York City. The forum, titled “A Conversation on the Economy and our Fiscal Challenge,” took place before a room of reporters and guests, including family members of Walter H. Shorenstein, in whose memory the event was dedicated.With Congress now debating the highly contentious issue of raising the nation’s debt limit, Secretary Geithner reiterated his view that Congress needs to act by Aug. 2, or else risk defaulting on outstanding obligations. “It’s not the kind of thing you want to take to the edge,” he said, noting that markets could begin to react negatively if brinksmanship brings the government close to that deadline. “That itself has the same dynamics as default.”Many fiscal conservatives in Congress are asking for deep spending cuts before signing off on any deal to raise the debt limit. On Monday, the government officially hit the debt ceiling and began borrowing from federal pension plans and using other emergency measures to continue making payments on outstanding debt.Given that global investors are closely watching the U.S. debt negotiations, Geithner said, “It makes no sense to wait until they force action upon us.” Echoing a theme that guided the Obama administration’s policies during the financial crisis and rescue package, he stated: “Confidence is much more expensive to recover than to keep.”Watch the video of the conversation with Secretary Geithner
Dutch supervisor De Nederlandsche Bank (DNB) has fined asset manager GSFS €5m for illegally using its pension fund as an investment vehicle.The regulator also issued the pension fund a €10,000 penalty, while fining the scheme’s three trustees €25,000 each and the sponsor’s chief executive €50,000.According to DNB, the GSFS Pensionfund had carried out large-scale dividend arbitrage activities, which it said largely benefited the employer.In the opinion of DNB, this policy was inappropriate for a pension fund, as pension funds are exempt from paying dividend tax, the FD said. Although the basic fine for similar violations is €500,000, DNB said the punishment reflected the benefits the asset manager enjoyed from its dealing.The pension scheme, for its turn, disagreed with DNB’s intention to remove its legal status as a pension fund, taking the supervisor to court. The pension fund lost its case, also after lodging an appeal following a negative verdict by a lower court.Financial news daily Het Financieele Dagblad (FD) quoted Jasper Hagers, the pension fund’s legal adviser, as saying that the scheme’s board was “baffled” by the fines.“DNB already knew the facts in 2012 and the activities have ceased since then. It feels as if the pension fund has received a kick when it is down,” he said.Hagers added that GSFS would fight DNB’s decision.Commenting on the case, Frank Vogel, board member at the asset manager, described the fines as “coming much too late in the day”.The FD reported that DNB and the pension fund have met each other regularly in court about the sponsor’s unorthodox investment policy over the past five years. The pension fund managed €354m of assets for its 20 members, according to the paper.This article has been updated to correct the spelling of Jasper Hagers’ name.