WASHINGTON — The Obama administration has indicated for the first time that it will let some big banks repay their bailout cash early, estimating that at least $25 billion will come back to the government in the next year.
With that money, and at least $110 billion remaining in the $700-billion financial rescue fund, the Obama administration will have enough to pay for its economic initiatives without further action by Congress, Treasury Secretary Timothy F. Geithner said Tuesday in remarks before a panel overseeing the bailout program.
Geithner disclosed the new numbers as he defended the administration's bailout efforts in his first appearance before the panel.
The Treasury secretary also lent some assurance to the stock market a day after it had been shaken by huge loan losses reported Monday by Bank of America Corp.
In his written testimony, Geithner said the vast majority of banks "have more capital than they need to be considered well-capitalized by their regulators."
The Dow Jones industrials jumped 1.6%, and the Standard & Poor's 500 index surged 2.3%, as each gauge erased almost half its decline recorded Monday.
Several financial institutions have indicated they want to return their federal infusions of capital, saying the assistance makes them appear in need of help when they aren't or comes with onerous conditions such as restrictions on executive pay.
Geithner was questioned sharply Tuesday about recent comments indicating that even if some of the largest recipients of bailout money wanted to return the money, government officials might not allow it.
"If there are firms that wish to repay taxpayers their money . . . why wouldn't you take the money back?" asked Rep. Jeb Hensarling (R-Texas), one of two lawmakers on the panel.
Geithner said that "nothing would make me happier" but that administration officials and bank regulators would need to weigh the potential effect on the economy.
"One is: Do the institutions themselves have enough capital to be able to lend?" he said. And the overall financial system must be working well enough to start pulling back the extra cushion that the bailout money provides, he said.
Geithner also told the panel that federal funding had helped stimulate consumer and business lending, but that more work was needed to revive an economy mired in recession.
