- The Washington Times - Wednesday, June 10, 2009

President Obama said Tuesday the bank bailout has so far been a pretty good deal because the federal government “turned a profit” of $1.8 billion in interest payments on the first set of bank loans that were repaid.

But the president warned that not all of the bailout will be so sweet, saying the country “will not escape the worst financial crisis in decades without losses to the taxpayers.”

For the second straight day, Mr. Obama sought to boost public confidence in his handling of the economy and bolster his argument that government intervention can work. He made the announcement a week after authorizing the government to take a majority stake in General Motors Corp.

Treasury Department officials said they are allowing 10 of the nation’s biggest banks to repay $68 billion in funds lent to them last fall at the height of the financial crisis as part of the $700 billion Troubled Asset Relief Program, or TARP. The banks have paid $1.8 billion in interest on the loans, which constitutes the profit promoted by Mr. Obama.

Mr. Obama spoke during an event at the White House touting a move to tighten spending controls on the federal budget. His preferred method: requiring Congress to offset some new spending with cuts or tax increases.

The president said the so-called pay-as-you-go rules would help ensure that a massive expansion of health care coverage - of the kind he is pressing this year - would not add to the deficit.

The $1.8 billion in profits were announced as the administration faces questions over its ability to manage private companies in industries ranging from finance to health care.

The president addressed these doubts head-on.

“I’ve said repeatedly that I have no interest in managing the banking system or for that matter running auto companies or other private institutions. So today’s announcement is welcome news to me,” he said.

In response to the announcement, 20 House Republicans signed a letter to Treasury Secretary Timothy F. Geithner urging him to use the money to pay down the national debt.

“The American taxpayer deserves to be the first one repaid on this debt,” the letter said.

Still, one key Republican lawmaker, Sen. Judd Gregg of New Hampshire, the top Republican on the Senate Budget Committee, gave a positive endorsement of the move.

“Taxpayers should know that their government has accomplished what it set out to do in helping the financial system regain some of its footing lost last year, and further, that we are working to address and remedy the concerns over the rising federal debt,” said Mr. Gregg, who accepted the president’s nomination to be commerce secretary earlier this year before backing out, citing irreconcilable ideological differences with Mr. Obama.

The Treasury did not announce which banks would be allowed to pay back the money, but institutions such as Goldman Sachs Inc., JP Morgan Chase & Co., and American Express Co. have made no secret for weeks that they wanted to repay their portion of TARP funds.

The institutions have grown uncomfortable with the prospect of government influence over business decisions, but until this week Mr. Geithner had indicated they would not be allowed to buy back warrants held by the Treasury until the government deemed it appropriate.

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