Stress-tested banks seeking $56B
Treasury chief briefs Senate panel on state of the administration's bailout efforts.
WASHINGTON (CNNMoney.com) -- Banks that underwent stress tests earlier this month have set out raise $56 billion to plug holes in their books caused by big losses, Treasury Secretary Tim Geithner told a Senate panel on Wednesday.
Geithner was called to Capitol Hill to give a review of the $700 billion Troubled Asset Relief Program, which Congress passed last fall to save banks and financial institutions deemed too big to fail.
Of the $56 billion announced or raised by the 19 largest banks, $48 billion is by banks that were ordered by regulators to raise money because they performed more poorly than their competitors in the stress tests, Geithner said.
Sen. Chris Dodd, D-Conn., chairman of the Banking Committee, made clear he intended to have Geithner update Congress monthly on the bailout program.
"I'll try not to abuse the relationship between the legislative and executive branches, but the American people have a lot on the line right now," Dodd said.
The committee's lead Republican, Sen. Richard Shelby of Alabama, asked Geithner his plans for getting the government out of the bailout businesses.
Geithner said that was an "important" goal but "it's not quite time yet."
"Crises this severe don't burn themselves out; to fix them requires the action of government," Geithner said. "But for the thing to work, there needs to be credible limits to walk this back, unwind it as quickly as conditions permit. That's central to the effectiveness of the strategy."
At the same time, Geithner gave an upbeat analysis of the financial system.
"[There are] important indications that our financial system is starting to heal," he said.
Since the stress tests, the pressure banks to hoard TARP funding has eased in recent weeks.
At least four companies -- BB&T (BBT, Fortune 500), U.S. Bancorp (USB, Fortune 500), Capital One (COF, Fortune 500) and Bank of New York Mellon (BK, Fortune 500) -- are pledging to return their bailout dollars.
Treasury might need the money. Geithner said there is $123.7 billion remaining in the $700 billion program - including potential repayments.
Last week, Treasury started officially offering as much as $22 billion in TARP funds to six big life insurers. Two of those firms have said they don't need the money.
In recent months, the TARP Congressional Oversight Panel and the special investigator tasked to investigate fraud with TARP have been hammering Treasury about the need for more transparency and accountability, especially with how banks have actually used TARP dollars.
Much of Geithner's testimony was a recap of the last year of bailout programs.
Several senators pounded the Treasury secretary about the way the government continues to pump money into bailed-out insurer American International Group (AIG, Fortune 500).
Geithner explained that the government's hands were tied and that they had no legal authority to reduce the payments owed to AIG's counterparties. He also explained that AIG has not had a lot of luck in finding good buyers for the companies it plans to sell, to repay the federal government.
"This is the worst financial crisis in 50 years, and all companies are finding it harder to sell," Geithner said. 
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