WASHINGTON - Members of a watchdog panel on Tuesday pressed Treasury Secretary Timothy Geithner on looming losses for banks and foreclosure relief for struggling homeowners, as he assured them that taxpayers are recovering their investment from the $700 billion financial bailout.
Geithner told the Congressional Oversight Panel at a hearing that banks have repaid about 75 percent of the bailout money they received, and the government's investments in aided banks have brought taxpayers $21 billion. He acknowledged there likely will be a partial loss from the rescue of giant insurer American International Group Inc., into which the government plowed $182 billion.
Geithner also said the auto industry has made significant structural changes, and the prospects that General Motors and Chrysler will repay the nearly $60 billion in bailout money have improved.
The oversight panel was created by Congress to oversee the Treasury Department's financial bailout program that came in at the height of the financial crisis in the fall of 2008. The panel has been critical of the politically unpopular program, known as the Troubled Asset Relief Program or TARP, which included aid to banks, AIG and the automakers. It is scheduled to expire on Oct. 3, and no new money will be available after that.
The panel's chair, Elizabeth Warren, underlined concerns that regional and small banks could be facing $200 billion to $300 billion in losses in the next few years on commercial real estate loans, and thousands of banks could fail as a result.
"This panel must know whether Treasury has carefully monitored the financial system to measure potential risks," Warren said. She criticized the department for not conducting additional stress tests of the financial system, as was done with the 19 biggest banks.
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