Washington  - Timothy Geithner, chosen to be Treasury secretary by the newly inaugurated President Barack Obama, warned Wednesday that an already weak economy could suffer even greater damage and pledged swift action to address the ongoing financial crisis if he is confirmed.

Geithner's comments came in a critical confirmation hearing in the US Senate, where legislators weighed his close involvement in the financial crisis against a damaging tax scandal that emerged last week.

Geithner is set to become the face of Obama's efforts to stabilize the country's economy and crumbling financial system. Geithner warned of a "severe recession here and around the world" and a "catastrophic loss of confidence in our financial system."

In order to stabilize the economy "the most prudent course is the most forceful course," Geithner told the Senate Finance Committee, citing Obama's plans for an
825-billion-dollar stimulus package currently making its way through Congress.

As head of the Federal Reserve Bank in New York since 2003, Geithner has already played a key role in the former Bush administration's efforts to stabilize the financial system since September.

Geithner also faced a series of questions about his failure to pay Social Security and Medicare taxes over a four-year period while he was working for the International Monetary Fund. Geithner paid back the taxes and penalties when the mistake was uncovered in a 2006 audit by the Internal Revenue Service.

Geithner called them "careless mistakes, they were avoidable mistakes, but they were unintentional," but some senators questioned whether such a mistake was suitable for the man who is set to become head of the IRS.

The conflict gave the committee a "difficult road to travel," said Republican Senator Chuck Grassley.

"To some, (Geithner) isn't merely the best choice, to some he's the only choice" to revive the economy, Grassley said. But the committee also had to question: "how does this tax history reflect on his judgement?" (dpa)