Geithner Says No New Cash Is Needed for Bank Bailouts
The treasury secretary says the bailout fund has enough capital to help troubled banks
Even as Treasury Secretary Timothy Geithner prepares to be grilled by lawmakers on the $700 billion financial rescue plan today, he has said in a letter that the bailout fund, with about $109.6 billion left in its coffers, does not need any more money from taxpayers.
Ever since the Bush administration developed the Troubled Asset Relief Program in the fall, critics have claimed that the Treasury Department would have to return to taxpayers if it needed more bailout cash. For now, however, that doesn't seem necessary. "We have the resources to move forward implementing all aspects of our Financial Stability Plan," Geithner wrote in a letter to the Congressional Oversight Panel, which is monitoring the fund.
Officials anticipate that the fund will actually grow by about $25 billion over the next year as financial institutions start to pay back money, boosting the account to $134.6 billion. Some banks, including Goldman Sachs and JPMorgan, have already indicated that they are trying to find ways to repay the federal funding.
Although it seems as if the government should welcome the news because it is trying to restructure the financial system so that a similar crisis doesn't happen again—and because the funds come with strings helping it to do so—the situation is more complicated. "We want to be out of the financial system. We want people to be paying back the government. But we don't want people to be paying back the government in ways that will put themselves right back in trouble and leaving themselves with inadequate capital," Lawrence Summers, chairman of President Obama's National Economic Council, said on NBC this weekend.
In a recent interview, Geithner indicated that before allowing a bank to pay back funds, the government would have to consider factors broader than the health of that bank, such as the overall soundness of the financial system and how well credit was flowing.
Along with continued complications over how and when the money will be repaid, TARP has come under more fire for its remaining gaps in transparency. A report released by the special inspector general for TARP today particularly lambasted the program for failing to require recipients of funds to say exactly what they did with the money.
"Treasury announced that it would require CAP applicants to set forth how they intend to use CAP funding," the report said, referring to the Capital Assistance Program, which injects capital into financial institutions and specifies that those with more than $100 billion in assets have to participate in a "stress test" to determine if they need funding. "Notwithstanding this requirement, Treasury adamantly continues to refuse to adopt SIGTARP's recommendation that it requires CAP recipients (and indeed all TARP recipients) to report on how they actually used TARP funds."
Reader Comments
Can you spell FRAUD?
I'm after accountability. The CEO's and CFO's who committed acts of fraud need to be investigated and prosecuted. If government officials turned a blind eye, or supported the deregulation S-900 that enabled all of this corruption to happen, then they should be investigated and prosecuted.
Obama, Geithner and Summers need to follow the Prompt Corrective Action Law. The citizens of this county need the truth of what really happened. A Pecora Investigation would answer several unanswered questions and aid in the restoration of the publics trust.
In addition, any lobbyist or K-Street firm that participated in the watering down of the Georgia Fair Lending Act (GFLA) should be banned from lobbying any level of federal, state or local governments.
Until the people get the truth, individual investors should pull their money out of Wall Street and national banks.
Thank you Bill Moyers Journal (William K. Black) and Dan Rather Reports (Dirty Money Down South) for bringing us objective truth based news.
Geithner - toxic assets and Obama
I have no idea how Geithner is even remotely considered competent. I have no idea how he graduated from college. He cannot reason nor can he explain. He seems an acolyte of somebody else.
His reasoning, if it can be called reasoning, is absolutely moronic. It is clear that there are buyers for assets toxic or non toxic. For most bank owned homes, or homes with mortgage delinquencies, The asking price is ridiculous. A 500K home on the books will most likely sell for $250K today. Almost certainly will sell for $200K and will sell for $100K. The banks just want someone to pay a price ABOVE what a market buyer is willing to pay. i.e. The banks want to be subsidized by taxpayers for selling the house at market.
These bankers and Geithner, Larry Summers and the banking CEOs and all executives need to be shipped to Cuba and Venezuela, where they are protected by the government. Let's see how they like it.
Obama is a disaster now as he is staying above the fray and depending on charlatans speaking a language he does not comprehend or understand. He cannot say he does not understand. There are far smarter people in the US. They are neither lawyers or economists or MBAs. The are engineers, mathematicians, physicists and psychologists and many others. But these self-interested arrogant morons hired by Obama is a disgrace.
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