Geithner: Banks to pay back $25 billion gov't money over next year

Treasury Secretary Timothy Geithner says a new public-private partnership to help U.S. banks shed their bad assets will begin operating in the next six weeks. The program would combine up to $100 billion in government funds with private investments in hopes of building a purchasing pool of up to $1 trillion. Bank lending has in part been hindered by the amount of real estate-related loans and securities on their balance sheets. Treasury has received applications from more than 100 potential fund managers to help run the program. Geithner says Treasury will inform applicants of their preliminary approval in the "next several weeks." The program was announced March 23 and some lawmakers have questioned why the program is not yet up and running. In prepared testimony for the Senate Banking Committee, Geithner projected U.S. financial institutions will repay $25 billion of their government rescue funds over the coming year. He said the money will be used to further assist institutions in need of government help. Some critics want paybacks to return to government coffers. With that amount, Geithner said, the government should have nearly $124 billion remaining in the $700 financial bailout fund that Congress approved last fall. Geithner said that money will be used to further capitalize banks and to assist the auto industry. The federal government is now providing financial aid to Chrysler and General Motors. Geithner also told senators that consumers and investors need protections against manipulation and deception in financial services. He said new financial products have resulted in benefits, but lax regulation has exposed Americans to abuses. Administration and industry officials say the Obama administration is considering creation of a regulatory commission to protect consumers of financial products such as credit cards and mortgages. Geithner hosted a dinner Tuesday to discuss such steps. Geithner told senators Wednesday that government rules should ensure that financial choices are clear, reasonable and appropriate.