BY VOA NEWS – The U.S. treasury chief says bailing out troubled financial institutions is likely to cost significantly less than once predicted.
In 2008, the U.S. government handed out $700 billion in loans to keep some of the country’s biggest financial firms from going out of business. The plan was criticized by many Americans who thought the government should not help companies that mismanaged their operations. Some U.S. officials and critics of the program predicted that taxpayers would lose $350 billion on the deals.
But Treasury Secretary Timothy Geithner said Thursday that as the companies have repaid their loans — sometimes with a profit for the country’s taxpayers — the loss might total $25 billion or less.
Geithner told a congressional oversight panel that the American economy is in a “much stronger position” than it was when the bailout plan was approved.
Geithner described the bailout as “one of the most effective crisis-response programs ever implemented.”
Even so, he said the American economy and its financial system showed “signs of significant damage” from the world recession. He said the “true cost” of the economic crisis, measured in lost jobs and wealth, is “much higher.”
But Geithner said the toll from the recession would have been worse without the bailout program.