Marking one year since the outline of the Obama Administration’s Financial Stability Plan, Tim Geithner, US Secretary of the Treasury, has reviewed the outcomes of the scheme, reporting generally positive results with prospects even greater levels of economic and fiscal recovery.

In his statement, issued on February 10th, Tim Geithner stated that the actions taken by the US Government during the financial crisis have worked well to restore the nation’s economic growth and financial stability. The recovery scheme has run at a much lower cost to Government than the original USD550 billion projection, with the current estimates being at approximately USD120 billion. The Treasurer further claimed that the Government had already recovered over two-thirds of its Troubled Asset Relief Program (TARP) investments, and earned USD17 billion from them. Tim Geithner encouraged the US Congress to accept President Obama’s Financial Crisis Responsibility Fee in order to further minimize the financial impact of the TARP and Financial Stability Program.

The Treasurer highlighted several fiscal indicators to illustrate the positive effects of the Financial Stability Program. Residential mortgage rates have fallen to below crisis levels, with a 30-year conventional rate at lower 5.5 percent. Home prices, which were projected to fall up to 30 percent, have remained stable since March 2009. Interbank lending rates, a proxy for consumer and business lending rates, have fallen to 2007 levels. The spreads on AAA rated municipal bonds have fallen by 260 points since their financial crisis peak.

Despite the largely positive results, Tim Geithner highlighted some shortcomings that are yet to be remedied by Government action. Financial credit facilities is still constrained for many small businesses. Both residential and commercial mortgages are seeing increasing levels of delinquency and foreclosure. Small banks are still struggling to handle continuing losses from commercial real estate loans.

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