Geithner updates panel on TARP, crisis

WASHINGTON, May 20 (UPI) -- The U.S. financial system is starting to mend, but the process and repair will take time, Treasury Secretary Tim Geithner told a Senate panel Wednesday.

"Today ... there are important indications that our financial system is starting to heal," Geithner testified before the Senate Banking Committee as part of its oversight of the Troubled Asset Relief Program.

Positive changes in metrics for different yields, declining leverage and banks funding themselves more conservatively "are all welcome signs," Geithner said. "However, the process of financial recovery and repair will take time."

Results of the so-called "stress tests" to determine the financial health of the nation's 19 largest financial institutions found that nine firms have enough funds to weather lousy conditions while 10 need to add a total of $75 billion to their capital buffers, he said.

"This review is helping to increase confidence in the financial system," he said. "To date, more than $56 billion in funds have been raised or announced by the 19 banks ... . Banks without a shortfall have signaled their intent to use funds to repay (the federal bailout funds) if approved."

The government's $1 trillion program to buy troubled assets from banks using a public-private partnerships likely will begin within six weeks, he said.

Less than $100 billion of the $700 billion federal bailout still remained, Geithner said.

Committee Chairman Christopher Dodd, D-Conn., said he and other committee members hope to explore what role TARP would play in getting the financial system back on track as well as what other tools would be needed.

Sen. Richard Shelby of Alabama, the committee's ranking Republican, said he remained skeptical about the successes of TARP and other decisions the Treasury Department made to respond to Wall Street's deterioration last year.