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Banks have repaid approximately 75 percent of TARP funds they received, and TARP investments in banks have generated taxpayers $21 billion in income, US Treasury Secretary Timothy Geithner said. However, TARP investments in AIG will likely still result in some loss.
TARP “has helped restore financial stability at a much lower cost than anticipated,” Mr. Geithner said in his testimony before the Congressional Oversight Panel.
The panel’s chairwoman, Elizabeth Warren, said that with the program’s Oct. 3 expiration approaching, “this panel must know whether Treasury has carefully monitored the financial system to measure potential risks.”
She criticized the department for not conducting additional stress tests of the financial system, as was done with the 19 biggest banks.
Congress is currently passing comprehensive reforms for financial institutions and markets.
The new law will create an independent consumer financial protection agency, and will require stronger capital and liquidity requirements for banks and other financial companies.
The reforms will end “too big to fail”, Geithner said. “Non-bank financial firms, such as AIG, will no longer be allowed to exploit regulatory cracks.
Large, interconnected financial companies will be subject to stricter requirements. And derivatives will be subject to strong regulation and transparency.
The federal government will have the authority to close large failing financial firms in an orderly and fair way, without putting taxpayers and the economy at risk.”