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Treasury Secretary Timothy Geithner Updates Capitol Hill On The TARP

DARREN GERSH: Now that grim pension situation could improve when the economy improves. Treasury Secretary Timothy Geithner told lawmakers today the financial system is starting to heal. Still, Geithner said it could take years for the government to unwind its bailout of banks and insurance firms. As Stephanie Dhue reports, the big question lawmakers want answered is what happens next with those bailout bucks?

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Treasury has taken an unprecedented role supporting banks, insurance giant AIG and the auto industry. Lawmakers want to know when and how it will end. Treasury Secretary Timothy Geithner told them not so fast.

TIMOTHY GEITHNER, TREASURY SECRETARY: There will be a time when we will be able to come to you and say, here's how the unwinding process will work, but it's too early to do that now. This is still a -- you know, the economy is still shrinking. The financial system is still quite damaged and we'll get to that point, but we're not quite there yet.

DHUE: To date, the government has pumped $600 billion into the financial system under what's known as the TARP. $270 billion has gone into banks, $70 for AIG, $40 for auto makers and their suppliers, $50 for a foreclosure prevention plan and $170 billion for various lending programs. There's about $100 billion left in the fund and with several big banks now eager to pay back their loans there will be more. Treasury plans to recycle those funds back into the program. That prompted this exchange between Geithner and Senator Jim Demint.

SEN. JIM DEMINT, (R) SOUTH CAROLINA: Instead of backing out of this whole intervention, you see now, instead of fixing the problem of the banks that were too big to fail, that the Treasury is going to be a permanent player in the financial system.

GEITHNER: No, I would not support that. I would not want that to happen. We're going to do what it takes to fix this system. We're going to do no more than what it takes. We are going to try to get out as quickly as possible because it is not going to be healthy for the system or the economy for the prospect of a sustained government involved in either the automobile industry or the financial sector as a whole.

DHUE: The bailout program is supposed to expire at the end of this year. But the way the law reads, the Treasury secretary can write a note saying he needs it and continue the program for another two years. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.