US Treasury Secretary Timothy Geithner said the government will have about $135 billion left after banks give back some bailout money and declined to say whether he will ask Congress for more.
Treasury expects the banks this year to return about $25 billion of money that they received from the government, because they were able to replace it with private capital or decided that they do not want money with strings attached.
“We have roughly $135 billion left of uncommitted resources. The rest is out the door,” Geithner said on ABC-TV's “This Week with George Stephanopoulos” program. That means some $565 billion out of $700 billion approved by lawmakers last October already has been deployed and Geithner said banks still need help.
“A core part of our plan involves making sure banks have enough capital to provide the lending we're going to need to get recovery back on track,” he said, adding that banks need to take risks and need to be in sound condition to do so.
“Some banks are going to need large amounts of assistance and we're going to make sure that assistance comes with conditions designed to make sure they restructure, provide accountability for management and ensure that these institutions are cleaner and stronger going forward.”
A few banks, unhappy at limits on executive pay and other government scrutiny that has accompanied the bailout money, have said they intend to return the money to the Treasury.
Geithner said his estimate of funds remaining in the Troubled Asset Relief Program, or TARP, included “a very conservative judgment about how much money is likely to come back from banks that are strong enough not to need this capital now to get through a recession.”
On NBC television's “Meet the Press” program, Geithner said it was essential the government step in to ensure that banks clean up their balance sheets, as it is doing so by promoting the establishment of public-private partnerships to rid banks of soured assets.
That program is supposed to take $500 billion of bad loans and assets off bank balance sheets, in the process attracting private capital into the bank-rescue effort and inducing banks to resume lending.
“We have two choices: we can leave it as it is, hope banks will earn their way out of this process over time, and I am certain that will create the risk of a deeper, longer recession,” Geithner said.
On the ABC program, Geithner would not specify whether he expects to ask Congress for more money this year, though he did not rule it out.
“We have substantial resources, we're going to use them quickly, as carefully as we can ... to get credit flowing again and we'll cross that bridge when we come to it in terms of whether we'll need additional resources,” he said.
Asked about aid for struggling US auto companies, Geithner indicated it was coming provided that the automakers are ready to take tough measures to make sure they can make a competitive product for the long haul.
“That's going to require a lot of restructuring, and we're prepared as a government to help that process if we believe it's going to provide the basis for a stronger industry in the future,” Geithner said.
President Barack Obama, on CBS television's “Face the Nation,” said General Motors and Chrysler are “not quite there yet” with the restructuring progress needed to obtain more federal bailout money. Sacrifices are required from auto industry management, labor unions, shareholders, creditors, suppliers and dealers, he said.
In an acknowledgment of anger at bonuses that companies like insurer American International Group paid out while getting bailout money, Obama also said financial industry chieftains need to show some restraint if they want help.
“It's very difficult for me as president to call on the American people to make sacrifices to help shore up the financial system if there's no sense of mutual obligation and mutual help,” he said.
Geithner was making a one-day trip to Colombia on Sunday to speak to the annual meeting of the Inter-American Development Bank, adding his voice to calls for institutions such as the International Monetary Fund to help counter the impact on emerging economies of the global financial downturn.
He will travel to London with Obama to attend a one-day session on Thursday of the Group of 20 rich and emerging-market countries where a commitment for increased funding for the IMF is widely seen as likely to be agreed. (Reuters)