ABC News’ Arlette Saenz reports:
Treasury Secretary Timothy Geithner told a congressional oversight panel this morning that the cost of the federal financial rescue program will ultimately be only a “fraction” of the cost originally estimated by the Congressional Budget Office.
“We have brought stability to the financial system and the economy at a fraction of the expected costs,” Geithner said in prepared remarks for the hearing.
Recently, the CBO estimated that the TARP program will cost the government $25 billion, far lower than the original estimate of $350 billion, and Geithner suspected that the $25 billion estimate might be “too high.” Geithner further said the combined costs of efforts by the Federal Reserve and FDIC coupled with TARP and the losses inflicted by Fannie Mae and Freddie Mac will amount to less than 1% of the GDP.
Geithner defended the TARP program calling it “one of the most effective crisis response programs ever implemented.”
“The American financial system today is in a much stronger position than it was before the crisis. There's been a very dramatic restructuring of our financial system. The weakest parts of the system no longer exist today.”
But the panel’s chairman, Sen. Ted Kaufman, pointed out that Americans still feel the stress of the financial crisis despite the recovery of large financial institutions, comparing it to a “let them eat cake” situation.
“Many people simply feel their lives have not gotten better during this period, even as the financial system has stabilized and banks have returned to profitability,” Kaufman said. “The problem we have out there now is people don't have jobs, and people can't borrow money.”
Geithner assured the panel that the government will continue to invest in programs to bring greater relief to individuals while also attempting to stave off any future financial collapse.
“We have to worry how to clean up this mess for the future, make sure we don't get into this kind of mess in the future again,” Geithner said. “Our overwhelming preoccupation now is, what can we do to make sure that we're helping people stay in their homes who can afford to, and make sure we get through the damage remaining, at least risk to the innocent people that have suffered so much in this crisis.”