Treasury Secretary Timothy Geithner said on Tuesday that U.S. banks will be in a better position to resume lending as they pay back the unprecedented cash injections the government provided to keep them afloat during the financial crisis.

As confidence in the financial system has been restored, we see private capital replacing government investments, he said. As private investment comes in to replace the government's investments banks will be ... in a stronger position to lend.

Geithner, in remarks at the Treasury, said that with Wells Fargo & Co's announcement late on Monday that it will repay $25 billion in funds from the Troubled Asset Relief Program, a total of more than $185 billion in government bank investments is now slated to be returned to the Treasury.

Banks are repaying taxpayers with interest, Geithner said, adding that TARP has earned more than $15 billion in income from the sector. He credited strengthening confidence in the financial sector, as evidenced by rising asset values, for allowing the assistance to be paid back.

This is good news for everyone. The government never intended to be long-term shareholders in private companies, Geithner said. The purpose of our investment was not to gain leverage over private institutions, but to prevent a collapse of the financial system, to prevent a second Great Depression, and to lay the foundation for growth -- the growth we're now seeing across the economy today.

The Treasury secretary noted, however, that there was much work to be done to improve access to credit for small business and spur job creation.

(Reporting by Mark Felsenthal and David Lawder; Editing by Leslie Adler)

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