Some of the government stimulus may be eased, “recovery will be gradual”

Reporting to the Congressional Oversight Panel for the $700 billion Troubled Asset Relief Program U.S. Treasury Secretary Timothy Geithner said that the strengthening trends in the US economy mean that the government can end some of the extraordinary support it put in place for markets and prepare for a slow recovery.

While there are a number of problems still remaining in the national economy Geithner noted that it is now in far better shape than a year ago when it was "on the verge of collapse.”

Meantime, TARP panel members were concerned about why taxpayers money were in big amounts injected into the banking sector and was not provided to other types of businesses. The Treasury Secretary explained that aid given to the banks is paying off.

Geithner reported that those banks that were granted capital injections have repaid more than $70 billion, reducing the government's total investment to $180 billion and estimated another $50 billion will be repaid over the next 12 to 18 months.

Geithner also was talking about achievements in the government’s work saying that the economy now was "back from the brink" of the free fall that it was in when the Obama administration took office in January even though recovery likely will be gradual at best.

Touching upon the ticklish question about automakers support he said that the aid provided to them helped to prevent substantial job losses and that a specially assembled Auto Task Force had avoided intervening in day-to-day decisions by management of General Motors Corp and Chrysler Corp.

Apart from this Geithner mentioned a row of problems still facing the US economy which includes "unacceptably high" unemployment, a shaky mortgage market outside those covered by mortgage finance sources Fannie Mae and Freddie Mac, strained financing for commercial real estate enterprises and tight credit for small business.

Geithner warned that in view of these conditions "it is realistic to assume recovery will be gradual, with more than the usual ups and downs.”