The financial system averted a meltdown but it is not yet back up to full strength, Treasury Secretary Timothy Geithner said on Wednesday.
The financial system is healing, but still damaged, and we have a lot of repair work still ahead, Geithner said in a statement accompanying a summary of the administration's efforts to stabilize financial markets over the past year.
Despite a federal government shutdown due to a blizzard, the Treasury Department released the statement on the one-year anniversary of Geithner's widely criticized unveiling of his plan to rescue the financial sector.
That day, the Dow Jones industrial average <.DJI> dropped 382 points to 7,889. On Wednesday it closed at 10,038.
Geithner now says the economy has stepped out of a deep recession and that is in no small part a result of efforts of the Obama administration.
The actions we took, alongside the Recovery Act, have worked to restore economic growth and financial stability. Access to credit is improving and the cost of borrowing for businesses, consumers, homeowners, and state and local governments have fallen sharply, the Treasury chief said.
Geithner specifically noted that the $700 billion bailout initiated by his predecessor, Henry Paulson, could turn out to cost taxpayers nothing.
If Congress joins the president in adopting a Financial Crisis Responsibility Fee, Americans will not have to pay one cent for TARP, Geithner said, referring to President Barack Obama's recent proposal to impose a tax on big banks and the Troubled Asset Relief Program, the bailout's official name.
Obama has proposed a fee on the largest financial companies to collect around $90 billion over 10 years to recoup taxpayer losses resulting from financial bailouts.
Even without the bank fee, the White House this year estimated the cost of the bailout would be about $120 billion as many firms that received government money have paid back the Treasury Department.
The White House has shifted to a more aggressive stance on Wall Street since the Democrats lost a Senate seat in a special election in Massachusetts in January. The election highlighted voter resentment against big banks and big bonuses in the wake of massive bailouts during the financial crisis.
At the same time, Obama said on Tuesday he doesn't begrudge the chief executives of JPMorgan Chase and Goldman Sachs their bonuses but called their pay extraordinary.
I, like most of the American people, don't begrudge people success or wealth. That is part of the free-market system, the president said in an interview with Bloomberg BusinessWeek.
(Reporting by Corbett B. Daly; Editing by James Dalgleish and Diane Craft)