Geithner Puts Brakes on Bank Repayments

Treasury sec reluctant to free Goldman, others from constraints
By Jason Farago,  Newser Staff
Posted Apr 21, 2009 8:01 AM CDT
President Barack Obama talks with Treasury Secretary Timothy Geithner in the Roosevelt Room of the White House in Washington, Thursday, April 9, 2009, after making remarks on housing refinancing.   (AP Photo/Gerald Herbert)
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(Newser) – Tim Geithner is warning Wall Street that he will consider more than banks' individual financial fitness when deciding whether they can pay back bailout funds—and escape from the strings attached to them. In an interview with the Wall Street Journal, the Treasury secretary says that the whole banking system, and in turn the wider economy, has to be considered before he'd allow Goldman Sachs, JPMorgan Chase, and others to pay back their debts.

"We want to make sure that the financial system is not just stable, but also not inducing a deeper contraction in economic activity," Geithner said. The Obama administration has been worried that banks showing signs of life will pull out of the governments' programs too soon and create further woes for the broader economy. Geithner's interview echoes comments by Larry Summers this weekend, who warned that banks that pay back Washington too soon "will put themselves right back in trouble."