U.S. Treasury Secretary Timothy Geithner said the Obama administration is making progress in calming financial markets. Testifying before the Senate Banking committee, Geithner said a program to help banks and other financial institutions get rid of bad investments will start operating in about six weeks.
Treasury Secretary Geithner told members of the Senate banking committee that economic recovery efforts are beginning to take effect.
"Today I am pleased to report that there are encouraging signs that the financial system is starting to heal," said Timothy Geithner. "Concern about systemic risk has diminished, and overall credit conditions have started to improve."
Geithner said government and private investors will work together to purchase bad loans from banks, so-called "toxic assets", so the banks can resume lending and get the economy going again.
The treasury secretary faced some skepticism from some members of the panel as he gave a progress report on his oversight of the $700-billion effort, known as the Troubled Asset Relief Program, or "TARP." Ranking Republican member, Senator Richard Shelby of Alabama, accused the Obama administration of not have having a well-conceived plan for the country's banks.
"The failure to devise a clear, Mr. Secretary, and credible plan for employing TARP, has also resulted in a massive waste, some people believe, of taxpayer dollars," said Senator Shelby.
Senator Shelby said the massive TARP plan approved late last year had actually scared investors instead of calming them. Several other Republican members expressed concern about the level of government intervention in the market economy. Geithner defended his administration's actions.
"Crises don't burn themselves out," he said. "Crises this severe don't burn themselves out. To fix them requires the action of government."
Geithner confirmed media reports that the Obama administration is considering the creation of a regulatory commission that would have broad authority to protect consumers of financial products such as mortgages, credit cards and mutual funds. He said discussions are still ongoing.