Geithner talks tough against Wall Street
Appearing before the Congressional Oversight Panel, Secretary of the Treasury Timothy Geithner faced populist anger over bailout terms.
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“The evidence is mixed” as to the effectiveness of the financial stability efforts undertaken by the Bush and Obama administrations, said Geithner.Skip to next paragraph
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TARP paybacks accepted? Maybe.
Asked whether the US would allow banks to repay bailout money from the Troubled Asset Relief Program, as Goldman Sachs and J.P. Morgan have indicated they would like to do, Geithner said that under certain conditions “we would welcome it”.
Repaying TARP cash could help indicate which financial institutions are the strongest, said the Treasury chief.
In recent weeks, US officials have sounded leery of such repayments, saying they might also highlight which banks are weakest, perhaps further destabilizing the nation’s financial system. And Geithner did indicate that considerations besides a bank’s individual position would enter into TARP repayment decisions.
“Again, the critical thing we care about is whether the system as a whole has the capacity to support the credit the economy requires,” said Geithner.
'Stress tests' controversial
So-called “stress tests” run on the nation’s biggest banks may soon provide Treasury with a better idea as to how the financial system is doing. Asked whether the results of these tests will be made public -- a controversial issue on Capitol Hill -- Geithner punted, saying that the Federal Reserve and other bank regulators are in the process of deciding what to do.
“They are careful and pragmatic people and they’ll get it right,” said Geithner, in a response that drew a sardonic smile and rolled eyes from at least one commissioner.
The Treasury Secretary indicated that his staff is drawing up proposed regulations that may apply limits on executive compensation to participants in the public-private asset program. And he reiterated that there is no handbook for reestablishing stable financial systems, and that he and other administration officials are doing what they believe is in the nation’s interest, with due regard for US free market traditions.
“Anybody who lived through the fourth quarter of last year should be somewhat chastened … in thinking about how we get that balance right,” said Geithner, who served as head of the Federal Reserve Bank of New York under President Bush.