Treasury Secretary Timothy Geithner projects financial institutions will repay $25 billion of their government rescue funds over the coming year.
Geithner also said the U.S. financial system was "starting to heal" after a period of severe trauma, and estimated that $123.7 billion was left in a financial bailout fund approved by Congress in October. MSNBC
Here is the transcript of Geithner's statement:
Chairman Dodd, Ranking Member Shelby, members of the Senate Banking Committee, thank you for the opportunity to testify before you today.Reminder: check out where the recovery act funds are going here. Treasury says it's posted 240 investments so far.
On October 3, 2008, during a time of tremendous financial upheaval and economic uncertainty, Congress passed the Emergency Economic Stabilization Act (EESA) with the specific goal of stabilizing the nation's financial system and preventing catastrophic collapse. Soon after taking office, this Administration rebuilt the EESA programs from the ground up with a new foundation. We also unveiled a financial stability plan to restore the flow of credit to consumers and businesses, tackle the foreclosure crisis in order to help millions of Americans stay in their homes, and comprehensively reform the nation's financial regulatory system so that a crisis like this one never happens again.
Today, just four months into President Obama's term of office, there are important indications that our financial system is starting to heal. For example, spreads for investment grade corporate bonds have fallen about 210 basis points and spreads on high yield corporate bonds are down about 770 basis points since the end of November. Spreads on AAA municipal bonds have come down 150 basis points since October. Risk premiums in short-term, inter-bank markets have fallen 280 basis points over roughly the same period and the cost of credit protection for the largest U.S. banks has fallen by about 180 basis points just since early April. Treasury is continuing to look into additional metrics that gauge the markets more broadly, as well as additional economic metrics, to determine the effectiveness of the current strategy and whether additional or different steps are needed.
With the help of our lending facility with the Federal Reserve, new securities issuance has started to revive. Spreads for AAA credit card receivables asset-backed securities (ABS) have fallen about 330 basis points from their peak. There has been more issuance of consumer ABS in the past two months than in the preceding five months combined. In our housing market, interest rates on 30-year mortgages have dropped to historic lows and refinancing has surged.
Finally, we have already seen a substantial amount of adjustment in our financial system. Leverage has declined, the most vulnerable parts of the non-bank financial system no longer pose the same risk, and banks are funding themselves more conservatively.
These are all welcome signs. However, the process of financial recovery and repair will take time. Read the rest here. There is a lot of information
Geithner's schedule tomorrow:
Thursday, May 21, 2009
10:00 AM
Secretary Geithner
Testimony before the House Appropriations Subcommittee on Financial Services and General Government
Rayburn House Office Building
Room 2359
U.S. Capital
Washington, DC
This event is open press.
Thursday, May 21
10:00 AM
Alan Krueger, Assistant Secretary for Economic Policy
Appearing before the House Ways and Means Subcommittee on Select Revenue Measures
Hearing on Tax-Exempt and Taxable Government Bonds
Longworth House Office Building
Room 1100
U.S. Capitol
Washington, DC
