Geithner set to scale back bank support
US TREASURY secretary Timothy Geithner said yesterday that Obama’s administration could end some of the extraordinary support it has put in place for the markets, and start to prepare for a slow recovery as the economy begins to strengthen.
Speaking to the Congressional Oversight Panel for the $700bn (£420bn) Troubled Asset Relief Programme (Tarp), Geithner said the economy was now in far better shape than a year ago, when it was “on the verge of collapse”, though it still had problems.
“As we enter this new phase, we must begin winding down some of the extraordinary support we put in place for the financial system,” he said. “We are now in a position to evolve our strategy as we move from crisis response to recovery.”
Geithner also said he supported a review from the Federal Deposit Insurance Corporation’s (FDIC), which will make it much harder for banks to get funding guarantees.
Geithner faced a grilling from the Tarp panel members, who wanted to know why taxpayer-provided aid was readily available for financial firms but not for other types of businesses. He said the decision to aid banks was helping the wider economy.
Geithner said banks that received capital injections have repaid more than $70bn, reducing the government’s total investment to $180bn. He estimated another $50bn will be repaid over the next 12 to 18 months.
He added that it would be necessary to keep applying stimulus measures as required to get growth firmly back on track.
FAST FACTS US STIMULUS
Treasury secretary says the US is ready to prepare for a slow recovery.
The economy was “on the verge of collapse”, last year, but is now ready for the government to end some of its stimulus measures.