Treasury Secretary Timothy Geithner on Thursday said that a bailout for
banks was steadying the financial system but care must be taken to
ensure that normal market forces are allowed to operate.
While TARP (the Troubled Asset Relief Program) is proving effective
at improving the immediate stability of the financial system, the scope
of the issues this administration and this department face ... include
striking the delicate balance between intervention and allowing market
participants latitude to operate, he said in prepared remarks for
delivery to a U.S. House of Representatives appropriations subcommittee.
laid out a tough agenda for Treasury, including devising a new and more
effective regulatory structure and deciding what form
government-sponsored enterprises Fannie Mae and Freddie Mac should
assume in the future.
He said that, once economic recovery is
under way, the government will have to move swiftly to ratchet down
deficits that are swelling as the government pumps hundreds of billions
of dollars of capital into banks.
We must get our fiscal house
in order or risk having government borrowing crowd out productive
private investment, Geithner said.