WASHINGTON — A top Treasury official told Congress on 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.
Neel Kashkari, interim assistant secretary for financial stability, 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.
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 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.
