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Bailout fund nearly spent
And while downplaying speculation that he and the Obama administration would ask Congress for more money to help failed banks, Mr. Geithner didn’t dismiss the possibility either.
“The important thing is that we are going to work with the Congress to make sure that we have the resources needed to do this right,” he said on ABC’s “This Week” program. “The lesson of financial crises is governments tend to do too little. They wait too long to escalate.”
Mr. Geithner said about $135 billion in uncommitted resources is left of the $700 billion bailout fund, called the Troubled Asset Relief Program (TARP). He said the estimate was based on “very conservative judgment” about how much more money will be needed to help Wall Street in the coming months.
The Treasury secretary added that money left in the fund provides “substantial resources to move ahead with this broad-based suite of initiatives to help get the financial system back in the business of providing credit.”
When pressed on the matter on NBC’s “Meet the Press” program, Mr. Geithner again was noncommittal about whether Wall Street would need more government money to avoid future financial crises, saying only that “we’re moving forward to use those resources as quickly as we can to get them where they need in the economy.”
Mr. Geithner defended spending taxpayer money to help rescue private companies, saying that the problems are too big for the market to solve alone.
“If you compare this to the classic alternative, which is again, the government sits back, hopes the market solves this, which would be much more damaging to the economy, or the government takes on all the risk, buys all the assets itself … this proposal is a much better approach to solving this problem,” he said on “Meet the Press.”
But the secretary added that Wall Street must retool its business model if it expects more government aid, saying that “we’re going to make sure that capital comes with conditions.”
“This particular proposal is not going to solve all our problems, but it is a critical part of the solution and we think it’s the best approach to protect the taxpayer and make sure that the market is working with us,” he said.
Mr. Geithner added that, for the economy to rebound, banks must willing “to take risks again,” particularly by making affordable loans available to individuals and small businesses.
“The great danger for us now is [banks] are going to take too little risk, they’re not going to take a chance on a viable business or a family that wants to put their kids through college,” he said. “So we need to get them working with us in this context.”
About the Author
Sean Lengell covers Congress and national politics and can be reached at email@example.com.
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