By Peter Schroeder - 03/20/12 05:01 PM EDT
"The IMF has played a critical role in every major post-war financial crisis, while consistently returning to the United States and other IMF members any resources, with interest, that it has temporarily drawn upon," he said.
He also noted that another attempt by a U.S. institution to boost Europe — the Federal Reserve's reduction in the price it charges foreign banks to borrow in dollars — has actually turned a profit for the government.
U.S. exposure to Europe's woes via the IMF has become a point of concern among GOP lawmakers recently, which has only heightened since the IMF approved its $37 billion contribution to a broad bailout package for Greece.
"We cannot be expected to and cannot afford to bail out foreign countries," said Rep. Jeb Hensarling (R-Texas), who chaired the hearing. "The IMF is venturing into uncharted territory. Never before has it lent money to countries to the extent it has [in Europe]."
Rep. Barney Frank (D-Mass.), the ranking member on the panel, accused Republicans of "economic mindlessness" over their IMF concerns, saying the United States has an interest in contributing to the health of the global economy.
"The fact is that the IMF is playing a very important role and has been somewhat successful," he said, warning that a European meltdown would have "a disastrous effect on the American economy."
Geithner also confirmed that if the White House did want to increase lending to the IMF, it would have to gain the approval of Congress beforehand, a requirement he said he fully supported.
Meanwhile, the secretary cautioned that European nations should not pursue drastic austerity measures as they work to recover, saying they must "carefully calibrate" a strategy that allows for immediate financial support to the economy with longer-term moves to a healthier fiscal picture.