A Year After Last September's Panic, Geithner Says It's Time to Phase Out Economic Rescue Programs
A year after September '08 panic, Treasury secy. says it's time to re-evaluate.
Sept. 10, 2009 -- With the country's economy improving and the financial system showing signs of repair, the time has come to start winding down government programs put in place to rescue the nation from recession, Treasury Secretary Tim Geithner said Thursday.
"Because of these signs of early progress, we are now in a position to start to adjust our strategy," Geithner told the Congressional Oversight Panel hearing today.
The Treasury chief praised the importance of an array of policy interventions: the stability in the financial system due to the $700 billion bailout, the transparency resulting from the stress tests for the nation's 19 biggest banks, the increased availability of credit thanks to government lending programs, the participation of servicers in the administration's mortgage modification plan, and the effectiveness of the stimulus package.
"As we enter this new phase, we have to begin winding down programs that are no longer necessary and that, by design, are less needed, less important, as the economy recovers," he said.
Accordingly, some Federal Reserve lending programs have already started to be phased down, the FDIC's program to guarantee senior debt has seen a drop in usage, Treasury's money-market guarantee program will be allowed to end later this month, having earned more than $1 billion in income, and a contingency fund of $750 billion put into President Obama's budget will not be used.
