Banks Have Repaid 75% of Bailout, Geithner Says
By THE ASSOCIATED PRESS
WASHINGTON (AP) — The Treasury secretary, Timothy F. Geithner, said on Tuesday that taxpayers were recovering their investment from the financial bailouts as the program was wound down. But he acknowledged there would probably be a loss from the rescue of the insurer American International Group.
Mr. Geithner told a watchdog panel that banks had repaid about 75 percent of the bailout money they received, and the government’s investments in those banks had brought taxpayers $21 billion.
Mary F. Calvert for The New York Times
Mr. Geithner also said at a hearing of the Congressional Oversight Panel that the auto industry had made significant structural changes, and that the chances that General Motors and Chrysler would repay their bailout money had improved.
The oversight panel was created by Congress to oversee the Treasury Department’s $700 billion financial bailout program, created at the height of the financial crisis in the fall of 2008. The panel has been critical of the program, known as the Troubled Asset Relief Program, or TARP.
TARP “has helped restore financial stability at a much lower cost than anticipated,” Mr. Geithner said in his testimony.
The panel’s chairwoman, Elizabeth Warren, said that with the program’s Oct. 3 expiration approaching, “this panel must know whether Treasury has carefully monitored the financial system to measure potential risks.”
She criticized the department for not conducting additional stress tests of the financial system, as was done with the 19 biggest banks.
Panel members also criticized the Obama administration’s flagship effort to help people in danger of losing their homes, which is falling flat, according to numbers released Monday. More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out.
Richard Neiman, an oversight panel member who is New York’s top banking regulator, said many families that relied on the government’s program to keep their homes “may be left out in the cold.” He asked Mr. Geithner why thousands of mortgage modifications had been canceled.
Mr. Geithner said the homeowners involved had been unable to prove income and therefore their eligibility for the program.
Mr. Geithner said A.I.G. was making progress in restructuring its operations and divesting businesses so that taxpayers could recoup their investment. However, he added, the government’s investment “will likely still result in some loss.” The Congressional Budget Office has estimated that taxpayers will lose $36 billion. Much of the money needed to repay the government will come from the sale of assets.