U.S. Treasury Secretary Timothy Geithner has defended the Obama administration's program to rescue financially troubled banks. Secretary Geithner spoke before a congressional panel overseeing the massive bailout.
It was Treasury Secretary Timothy Geithner's first appearance before the Congressional Oversight Panel, which was established as part of the $700 billion Troubled Asset Relief Program approved by Congress at the height of the global financial crisis last October.
Geithner told the panel there appears to be signs of confidence returning to credit markets:
"Indicators on inter-bank lending [on corporate issuance] and credit [spread] suggest some improvement in confidence in both the stability of the system and some thawing in credit markets over the last several weeks and months," he said.
But he added a cautionary note.
"It is important to note that evaluating the impact of these programs is difficult because it is impossible to judge how the financial markets, how banks would have operated in the absence of these actions," he said.
Although confidence in credit markets appears to be rising, Geithner said the cost of credit remains too high. He said reports on bank lending show significant declines in consumer loans, including credit card loans, and commercial and industrial loans.
His testimony comes as an inspector general for the bailout released a report to Congress that concludes the Treasury Department is not doing enough to adequately oversee the program, which uses public and private funds. Inspector General Neil Barofsky expressed concern about the potential for fraud, and called on banks receiving bailout funds to report on their use of taxpayer funds.
It is a point underscored by the panel's chairwoman, Harvard Law School Professor Elizabeth Warren.
"In a crisis, transparency, accountability, and a coherent plan with clear goals are essential to maintain the confidence of the public and capital markets," she said.
Geithner agreed on the importance of oversight and accountability, and he pledged to provide the panel with the information it needs.
Inspector General Barofsky is to testify before Congress on Thursday.
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