Treasury head: Give bailout a chance

June 4, 2009 10:06:07 AM PDT
President Barack Obama's pick to oversee the $700 billion bank bailout program told Congress Thursday that more time is needed for the recovery plan to work. Herbert Allison, who once led troubled mortgage buyer Fannie Mae, said the nation shouldn't be fooled that government aid is no longer needed because some banks have started repaying the money.

"I believe this is still a very serious economic time for this country, and much more has to be done to restore stability," Allison told the Senate Banking Committee.

"We have to see this program through and make sure it's well-administered all along the way," he later added.

If confirmed as assistant secretary for financial stability at the Treasury Department, Allison would be in charge of managing the largest bank bailout program in history. Congress established the Troubled Asset Relief Program, or TARP, last fall to inject capital into banks hit by the mortgage crisis.

TARP has become a lightning rod for criticism from some Republicans who say the money is government intervention at its worst. Treasury officials say it has been critical to staving off a market collapse.

Allison said if confirmed by the Senate, he would work to increase transparency of the program and share more details with Congress. He also vowed to do more to widen participation of the government's anti-foreclosures effort.

"We have to be vigilant. We can't be complacent," Allison said.

Members of the Senate Banking Committee indicated they would support Allison's nomination. Sen. Christopher Dodd, chairman of the Senate Banking Committee, said it was critical that the nation not lose momentum.

"We are not out of the woods yet," said Dodd, D-Conn.

Sen. Richard Shelby of Alabama, the panel's top Republican, said the bailout program must not become a permanent fixture in the financial landscape.

Allison noted that the program is set to conclude at the end of the year unless Treasury Secretary Timothy Geithner extends it through fall 2010.

"This program is designed to deal with an extremely serious financial crisis," Allison said. "It was not set up to be a long-term permanent program."

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