Geithner Testifies Before Congressional Panel

Posted by Orb Staff on April 21, 2009 No Comments
Categories : Mortgage Servicing

easury currently needs no new capital, the department's secretary, Timothy Geithner, has told the Congressional Oversight Panel. ‘Indicators on interbank lending, corporate issuance and credit spreads generally suggest improvements in confidence in the stability of the system and some thawing in credit markets,’ Geithner said in prepared remarks, adding that the ‘vast majority’ of banks are well capitalized. Prior to his testimony, [u][link=http://www.financialstability.gov/docs/Ltr-to-Warren-re-EESA_42009.pdf ]Geithner wrote[/link][/u] panel Chair Elizabeth Warren and several members of Congress to update them on the bailout's status. According to the letter, the Treasury projects the total usage of programs announced under the Bush administration will be $355.4 billion. The department further estimates that there is at least $109.6 billion authorized under the Emergency Economic Stabilization Act still available and that $25 billion will be paid back under the Capital Purchase Program in the next year, totaling $134.6 billion. "This figure assumes – as reported by the Government Accountability Office – that the projected amount committed to existing programs will be $590.4 billion," the letter says. Geithner also suggests the estimates are conservative, as they assume 100% take-up on the $220 billion available under the housing and liquidity program, and the $25 billion payback amount is lower than private analysts' expectations. During the testimony, New York's superintendent of banks, Richard H. Neiman, asked Geithner about the government's foreclosure-prevention efforts, citing concerns about servicers' uncertainty regarding implementation. "We're moving," Geithner replied, admitting the program will take time to develop as loan modification patterns become apparent. When pressed by Warren on what the administration is doing to aid borrowers who are underwater, Geithner answered that Making Home Affordable "is not going to solve all these problems," and said homeowners that are in a negative-equity position may be helped by legislative proposals to improve the Federal Housing Administration's Hope for Homeowners program. SOURCES: Congressional Oversight Panel, T

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