WASHINGTON — America’s banks are still broken despite all their bailout billions, Treasury Secretary Timothy Geith ner told impatient rescue overseers Tuesday as they pressed him on when things will get better and how much it will cost. A bleak new report estimated U.S. banks and other financial institutions could lose $2.7 trillion in all.
How well is the mostly spent $700 billion federal bailout working?
“To date, frankly, the evidence is mixed,” Geithner told a congressionally appointed oversight panel.
Confidence in the program is wearing thin on Capitol Hill. Even bailout supporters are skeptical that Congress — weary of bankers’ bonuses and still-scarce credit — would approve additional bank-rescue money if requested.
Geithner’s testimony signaled that the administration was not preparing to ask.
Wall Street was cheered by Geithner’s assessment that “the vast majority” of banks could be considered well-capitalized. Bank stocks slid Monday but bounced back Tuesday.
Still, the government’s effort to stabilize the financial sector and unclog credit markets has come under heavy scrutiny. Officials must do a better job in carrying out and explaining their efforts to shore up the financial system, the head of the oversight panel told Geithner.
“The sense of fear and uncertainty has . . . been joined by a new sense of anger and frustration,” said Elizabeth Warren, who is also a Harvard University law professor.
“People are angry that, even if they have consistently paid their bills on time and never missed a payment, their TARP assisted banks are unilaterally raising their interest rates or slashing their credit lines,” Warren said.
