WASHINGTON — Citing emerging financial-sector stability, Treasury Secretary Timothy Geithner said Thursday that a number of government rescue efforts in place since the Wall Street crisis are no longer needed and that banks will repay $50 billion in rescue funds over the next 18 months.
Geithner, testifying before a congressional watchdog panel, said the nation still has a ways to go before “true recovery takes hold.” But he said improved conditions in the banking industry have prompted Treasury to begin winding down emergency support programs implemented after the collapse of Lehman Brothers last year.
“The financial system is showing very important signs of repair,” Geithner said.
He added later: “I would not want anyone to be left with the impression that we’re not still facing really substantial, enormous challenges throughout the U.S. financial system.”
The cautious but upbeat tone reflects a growing push by the administration to present the government financial-rescue efforts as a success amid lingering public apprehension about the economy.
Geithner was testifying before the Congressional Oversight Panel that monitors Treasury’s $700 billion financial bailout that President George W. Bush and President Barack Obama used to shore up not only banks but the auto industry as well.
Banks have already paid back $70 billion of the $250 billion that the government injected over the past year to boost their liquidity.
Geithner noted that only $11 billion of that infusion has occurred since he became Treasury secretary earlier this year.
Geithner said a major Treasury program that had been used to guarantee up to $3 trillion in money-market mutual-fund assets would be closed down on schedule Sept. 18. The program had no direct cost to taxpayers and earned more than $1 billion in fees paid by the mutual-fund industry.
That program was established at the height of the financial crisis a year ago after a large money-market fund called the Reserve Primary Fund “broke the buck” — meaning the value of its underlying assets fell below $1 for each investor dollar put in.
