Geithner & GOP at Odds on Rescue Efforts

Treasury Secretary Tim Geithner today strongly rebuffed Republican criticisms of the Obama administration's programs to rescue the nation from its current recession.

"There are encouraging signs that the financial system is starting to heal," Geithner told the Senate Banking Committee this morning. "Concern about systemic risk has diminished and overall credit conditions have started to improve. These are welcome signs, but we have a long way to go."

On Capitol Hill to give lawmakers a status report on the administration's rescue efforts, Geithner today estimated that there was about $100 billion left in the government's $700 billion bailout program.

He said 10 of the country's 19 biggest banks that need to raise more capital as a result of the stress tests have already raised $48 billion in the last two weeks alone. And he predicted that the administration's plan to entice private investors to partner with the government to buy toxic assets off of banks' balance sheets will begin in the next six weeks. Positive developments, he noted, are now evident.

"We've already seen a very substantial amount of adjustment in our financial system," the Treasury chief said.

But Republican senators on the committee had a status report of their own for Geithner. And some said the signs they were seeing were not so encouraging.

"The programs laid out thus far by you, Mr. Secretary, go well beyond what is appropriate and necessary," the committee's ranking member Richard Shelby told Geithner, adding that "the problems with our banking system remain unresolved despite Treasury having committed approximately $600 billion."

About the only thing the Troubled Asset Relief Program (TARP) has accomplished, Shelby said, other than being a "massive waste" of taxpayer money, was "covering up the egregious failures of our banking regulators over the past decade."

The Alabama lawmaker singled out the "failure" of the Federal Reserve, noting that before Geithner came to Treasury, he was in charge of the New York Fed.

Republicans Criticize White House Bailout Plan

From the government's $180 billion bailout of embattled insurance giant AIG to Treasury's plan to re-use taxpayer money that banks re-pay, Republicans queued up behind Shelby to voice their criticisms.

One key issue was the influence and involvement that the government now has in the private sector after all the recent rescue efforts. In March, General Motors CEO Rick Wagoner resigned at the administration's request.

"The frightening thing for me today is that you're speaking and we're questioning you as the chief executive officer of America's financial system, of our banks, of our largest auto company, of our largest insurance company, so we're playing right along," said Sen. Jim DeMint, R-S.C. "And to me this is not a mission creep -- this is a stampede of any traditional understanding of Constitutional boundaries."

While Geithner said he understood the lawmakers' concerns, he stated that it is the administration's "obligation" to make sure these companies have management capable of leading a successful restructuring effort.

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