Geithner: Positive Return Expected From TARP

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Treasury Secretary Timothy Geithner said Thursday that the Troubled Asset Relief Program would cost tax payers about $200 billion less than originally projected.

Speaking before a Congressional oversight committee, Geithner said that banks have repaid nearly half of the TARP funds given to them and that a positive return from the government's investment in banks is expected.

The secretary did say, however, that not all TARP investments would generate positive returns.

"There is a significant likelihood that we will not be repaid for the full value of our investments in AIG, GM, and Chrysler," he said, though he added that he expected the companies to repay $14 billion more than originally expected.

Geithner credited the TARP, which was implemented during last year's financial crisis to purchase assets and equity from financial firms in an effort to strengthen the financial sector, with helping stabilize the financial system in the wake of the crisis, allowing banks, businesses, homeowners and municipalities raise capital through private sources.

"In sum, TARP has largely succeeded in achieving its primary goal, and we are winding down many initiatives established under the program," he said.

Geithner also highlighted elements of the Treasury's exit strategy from TARP. The secretary said that the administration will terminate and wind down programs that have supported large financial firms.

He also said that new investments in housing, small business, and securitization markets that facilitate consumer and small business loans would be limited.

Geithner said that officials would still maintain the capacity to respond to potential financial threats and would continue to "manage equity investments acquired through TARP in a commercial manner, while protecting taxpayers and unwinding those investments as soon as practicable."

The secretary added that extending TARP authority was necessary for the exit strategy to succeed and later added that the TARP still has more work ahead of it.

"Earlier this week I extended that authority until October 3, 2010," he said. "While we work to return taxpayer dollars, this Administration will not waver in its commitment to preserve the stability of our financial system and to help restore economic opportunity for American families and small businesses."

Treasury Secretary Timothy Geithner said Thursday that the Troubled Asset Relief Program would cost tax payers about $200 billion less than originally projected. Speaking before a Congressional oversight committee, Geithner said that banks have repaid nearly half of the TARP funds given to them and that a positive return from the government's investment in banks is expected. The secretary did say, however, that not all TARP investments would generate positive returns. (Market News Provided by RTTNews)