Treasury Secretary Timothy F. Geithner told a Senate panel Tuesday that he won’t know until autumn if the government’s efforts to stabilize the faltering housing market will work.
“The pace of the housing crisis has slowed…but realistically I think you will see a challenging time ahead for homeowners,” Mr. Geithner said while testifying before the Senate Financial Services and General Government Subcommittee.
The secretary said the government failed to respond quickly enough to deal slumping in the housing industry, which he said was at the center of the current recession.
“The government should’ve done more,” he said. “We were late and behind the curve.”
Mr. Geithner earlier in the day approved 10 unnamed banks to buy back $68 billion of government shares issued as part of capital purchases in the $700 billion Troubled Asset Relief Program, or TARP. The money is part of the $700 billion taxpayer-funded bank bailout fund approved last fall to avert a Wall Street meltdown.
Many banks have made clear they want to get out of the program to escape government operating restrictions such as caps on executive compensation.
All eight banks that took TARP money and last month passed government “stress tests” confirmed that they received permission to repay the bailout funds. They are JPMorgan Chase & Co., American Express Co., Goldman Sachs Group Inc., U.S. Bancorp, Capital One Financial Corp., Bank of New York Mellon Corp., State Street Corp. and BB&T Corp.
Morgan Stanley did not pass the government test, but on Tuesday said it had raised enough capital quickly and was approved to repay its TARP money.
The Treasury Department in recent months has unveiled several programs to make it easier for struggling homeowner to refinance their mortgages and tax credits for first-time home buyers.
Mr. Geithner said that overall efforts such as TARP made by the federal government designed to jump-start the economy are working.
“We see some initial signs of economic improvement and the financial system,” he said. “The storm is weakening.”
The secretary was appearing before the panel to brief Congress of his department’s 2010 fiscal year $13.4 billion budget request — a 5.3 percent increase compared with his department’s current budget.
A total of $332 million would be devoted to new Internal Revenue Service (IRS) enforcement efforts, including $128.1 million to add nearly 800 new IRS employees to combat offshore tax evasion and improve compliance with U.S. international tax laws by businesses and high-income individuals.
Another $130 million would go to bolster the security of the IRS information technology, improve the efficiency of its business systems and upgrade its fraud detection capabilities.
Sean Lengell covers Congress and national politics and can be reached at firstname.lastname@example.org.
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