- The Washington Times - Thursday, March 12, 2009

A top Treasury official told Congress Wednesday that the federal government should not micromanage banks that receive taxpayer assistance, a caution to lawmakers itching to see results from a $700 billion rescue program for the financial sector.

Neel Kashkari, interim assistant secretary for financial stability at Treasury, told a congressional oversight panel that banks should not be forced to make loans that bankers might deem risky.

“However well-intended, government officials are not positioned to make better commercial decisions than lenders in our communities,” he told a subcommittee of the House Oversight and Government Reform Committee.

Mr. Kashkari, who was put in the job during the Bush administration, testified amid growing impatience among members of Congress who want evidence that the taxpayer money and the Treasury strategies are actually loosening credit markets.

Within weeks, Treasury Secretary Timothy F. Geithner plans to unveil a new public-private investment fund that will be used to purchase illiquid assets, such as toxic mortgage related securities at the heart of the financial crisis.



Mr. Kashkari said the private sector has voiced interest in the program and said he expects pension funds and mutual funds that hold retirement savings to be among the major investors.

“My assumption is that most of the capital will come from the savings of the American people,” he said.

Mr. Kashkari said he didn’t expect the private-sector investment to get any advantage over the government’s investment.

“If the private sector wins, the taxpayer wins,” he said. “If the taxpayer loses, the private sector loses.”

Lawmakers voiced their frustration with what they said was a continued lack of clarity from the Treasury on how banks were spending money they have received under the Troubled Asset Relief Program.

Under the TARP initiative, the federal government has used more than $300 billion in taxpayer money to infuse financial institutions with cash, much of it by purchasing preferred stock and other assets.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide