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Banks that want to repay their government capital must show they have a lot more capital than they need and be able to raise private funds "on a substantial scale," U.S. Treasury Secretary Timothy Geithner said in an interview to air Friday.
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AP Timothy Geithner |
Geithner, in the taped interview with Bloomberg Television's "Political Capital with Al Hunt", said there was a "real concern" some banks would pay back capital too quickly.
The Treasury launched bank capital injections in October 2008 under the $700 billion Troubled Asset Relief Program.
To date, the Treasury has made capital investments totaling more than $200 billion in hundreds of U.S. bank holding companies to bolster their capital cushions against recession.
But Geithner added the Treasury won't require that banks commit to specific increases in lending as a precondition for repaying taxpayer funds.
U.S. regulators, in conjunction with the Treasury, are examining requests from some major institutions to pay back billions of dollars in capital. Some decisions on the requests could come the week of June 8.
Geithner also told Bloomberg Television that the Obama administration's proposals to revamp executive compensation for the overall financial sector will be rolled out by mid-June.
Geithner said he wants to realign pay with performance and that Wall Street's pay practices, including big year-end bonuses, encouraged excessive risk-taking and helped precipitate the financial crisis.
"I don't think we can go back to the way it was," said Geithner, 47, who has worked in the public sector for his entire career. "We're going to need to see very, very substantial change."
Geithner also said in the interview, conducted on Thursday as market concerns about U.S. creditworthiness deepened, it was "very important" to bring down the budget deficit to a sustainable level over the medium term.
He said the rise in Treasury debt yields this year "is a sign that things are improving" and that "there is a little less acute concern about the depth of the recession."
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