Geithner Updates Congress on Government Foreclosures Program

The uncertainty surrounding the health of the banking industry has continued to depress bank lending and overall confidence, according to Treasury Secretary Timothy Geithner, who testified for the Troubled Asset Relief Program, including government foreclosures program, before members of the Congressional Oversight Panel.

Geithner said most of the nation’s banks are adequately capitalized, but problems related to legacy assets and other shortfalls and problems related to breakdowns in the securities markets have been preventing banks from providing the credit needed by small business and families.

The TARP program, now supervised by a congressional panel headed by Harvard professor Elizabeth Warren, is the federal $700-billion program funded by Congress to stabilize the financial sector and the car manufacturing sector and to support the foreclosure houses program.

Geithner reiterated that the housing crisis continues to be the major block to economic recovery and that the inadequacy of regulatory controls helped hasten the crisis.

Nevertheless, Geithner explained that most banks have capital levels higher than what is required and that economic indexes in the past weeks have been suggesting general improvements in confidence and in the credit markets.

Geithner said there is still around $134.5 billion remaining from the TARP funds that has not been allocated to any of the TARP and government foreclosures program.

Warren, who has expressed her opposition to some of the bailout schemes in the past weeks, questioned Geithner why people who have been faithfully making their payments on time are getting increases in mortgage rates by the banks bailed out with TARP funds.

Warren also noted that several banks helped by TARP have not been providing loans needed by responsible families and individuals with small businesses under the government foreclosures program. She also criticized many banks which have not made significant management changes after receiving billions of bailout money from TARP.

Richard Neiman, banking superintendent for New York State, urged Geithner to create metrics to evaluate the progress of TARP and the government foreclosures program and present the metrics on the Treasury’s web site.

Members of the liberal women’s group CodePink, which has been opposing the bailout, sat behind Secretary Geithner with their signs signifying their opposition to the bailout program.

In response to some questions, Geithner explained that there are decisions related to TARP, including the government foreclosures program, which are made by many of the nation’s financial regulators that report to him.

By Cassiano Travareli