Interest may wane in US toxic-asset plan

Improving confidence may lessen US banks' interest in programmes designed by the government to reduce toxic assets from their balance sheets, US Treasury Secretary Timothy Geithner said. Because banks are raising unexpectedly large amounts of capital from private investors, they may be able to sell more of their impaired assets in the market, Geithner told CNBC during a visit to Beijing. But he said President Barack Obama's administration would still work with the Federal Reserve and the Federal Deposit Insurance Corp (FDIC) to put asset-purchase programmes in place as insurance. "We still think they have some value," Geithner said. "We are going to work with the FDIC and the Fed to put those funds in place, and we think they will have some insurance value over time." Geithner said banks were having considerable success in raising new capital and that may mean it will be easier for them to handle soured assets on their own. "Maybe they will sell them to the markets as a whole," he said. Geithner added that some banks that had received big injections of capital from the government may soon be able to repay it. "I think... we are going to see substantial repayments from some institutions starting relatively quickly," he said. Geithner said there was legal flexibility for the Treasury to use any money repaid and that it would do so if necessary. "We will use that because, again, we want this economy to emerge as quickly as possible to a stronger foundation for growth," he said. Geithner added that he felt there was "a reasonable prospect" that taxpayers would get some return from the tens of billions of dollars invested in the domestic car industry. General Motors filed for bankruptcy on Monday as the Obama administration decided to push GM into a fast-track bankruptcy and provide $30 billion (Dh110.1bn) of additional taxpayer funds to restructure the automaker. Geithner called criticism of the Obama administration's significant investments in industry unjustified and said they would be temporary. "We are the exceptionally reluctant investor, when we have had to be an investor," Geithner said. "We will try to make sure we get out as quickly as we can." Despite the Federal Reserve's purchase of hundreds of billions worth of US Treasury debt, there was no suggestion it was effectively monetising debt, he said. Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here .