WASHINGTON, July 26 (UPI) -- The U.S. treasury secretary told a Senate panel Thursday the Financial Stability Oversight Council has made progress repairing the nation's financial system.
Timothy Geithner, testifying before the Senate Committee on Banking, Housing and Urban Affairs, said the FSOC annual report indicates significant progress in "repairing and reforming" the financial sector since the passage of the Wall Street Reform Act two years ago.
"We have forced banks to raise more than $400 billion in capital to reduce leverage and to fund themselves more conservatively," Geithner said. "The size of the shadow banking system where much of the risk was concentrated has fallen by trillions of dollars."
Geithner noted the expansion and lower cost of credit is contributing to the economic turnaround, although with unemployment still higher than 8 percent and growth hovering around 2 percent, more work needs to be done. He cited the ongoing crisis in Europe as the major obstacle to global economic recovery and said reduced government spending at all levels has not helped.
Geithner also praised the Senate for passing a bill to extend tax cuts for the middle class.