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."