Secretary of Treasury Timothy Geithner spoke before Congress about the condition of the economy, stating that he believes the market has shown signs of healing. The financial system has deleveraged itself much more than before, and banks are conservatively adding much needed capital. There were many issues raised during the meeting, however.
Criticism for the Treasury
Many critics of the banks say that they are still not lending enough, as more than $600 billion was granted to major banks in an effort to increase lending. Geithner took a position of concern and understanding to the criticism, and was quick to note that the measures taken thus far by the government to stabilize the financial system is just the beginning.
Government Intervention Working
Under the plan to rescue banks, $700 billion was allotted, with just over $600 billion having been used in total. Geithner also noted that about $25 billion would be repaid within the next year from several financial institutions, which could be recycled into the program for new lending. The long anticipated public-private plan to get rid of toxic assets would also come into action within the next 6 weeks. The aim of the program is to take toxic assets off the balance sheets of banks, allowing them to have the proper levels of capital to resume regular banking activities and work toward profitability.
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