U.S. Treasury Secretary Timothy Geithner says the U.S. government's financial rescue plan will cost about $30 billion. It is considerably lower than what was estimated.
U.S. Treasury Secretary Timothy Geithner defended the $700 billion Troubled Asset Relief Program (TARP) on Thursday.
He told a congressional panel that the Treasury expected a positive return on its remaining support for banks, automakers, credit markets and American International Group (AIG).
Geithner said the U.S. government's financial rescue efforts will cost less than 1 percent of gross domestic product, considerably below past systemic crises.
[Timothy Geithner, U.S. Treasury Secretary]:
"These programs achieved their objective at a fraction of their cost that almost any observer predicted , even as recently as three, six , nine months ago."
The Treasury's most recent all-in cost estimate for TARP, including expected gains from AIG investments, is about $30 billion, down from a previous estimate of $350 billion by the Congressional Budget Office.
He said the U.S. economy and financial system have not yet recovered from the crisis, with the unemployment rate still near 10 percent and small businesses still having difficulty accessing credit.
[Timothy Geithner, U.S. Treasury Secretary]:
"Now the government's financial programs including TARP were not designed and cannot solve all those problems and cannot on their own solve all the damage caused by the crisis. But these programs do what they had to do, what they were designed to which was to protect the value of America' savings, to restore a measure of stability to the financial system at the edge of collapse, re-open access to credit and to restart economic growth."
He said the housing market also remains weak, and the Treasury is continuing to use mortgage finance giants Fannie Mae and Freddie Mac to apply downward pressure on rates.
3 years ago