Treasury Secretary Timothy Geithner affirmed Wednesday the U.S. administration's intent to soon end the $700 billion financial bailout program.
Geithner did not provide details, but said the government is close to the point at which "we can wind down this program" and end it.
"Nothing would make me happier," he told the Senate Agriculture Committee.
Some lawmakers have been agitating for an exit from the politically unpopular bailout program, approved by Congress at the height of the financial crisis in October 2008 as a way to supply banks with fresh capital.
Geithner also said legislation to bring transparency to the global, unregulated $600 trillion derivatives market was needed soon to restore confidence in the U.S. financial system.
Across the Capitol, meanwhile, a key House panel voted to slap new restraints on big Wall Street banks and to demand greater openness from the Federal Reserve. That cleared a significant hurdle in the drive for a sweeping overhaul of financial regulations, including the new derivatives restraints, and set the stage for a vote by the full House next week.
Geithner faced friendly questioning from the agriculture panel, in sharp contrast to a sometimes contentious hearing two weeks ago by Congress' Joint Economic Committee with one lawmaker calling on him to resign.
But there was gentle prodding from some senators Wednesday regarding the Treasury Department's so-called Troubled Asset Relief Program.
Geithner said at the Nov. 19 hearing that "substantial resources" remaining in the TARP fund would be used to pay down the national debt, which is being pushed higher by record deficits including a $1.42 billion imbalance for the budget year that ended Sept. 30. Even hundreds of billions of dollars would be a tiny fraction of the $12 trillion debt, but it could lessen political unhappiness if portions of the bailout program are allowed to continue.
With regard to derivatives, the complex instruments blamed for hastening the financial crisis, some lawmakers want to exempt companies that use them to hedge against risk from new requirements in the overhaul legislation.
A potent coalition of about 170 end user companies including Boeing Co., Caterpillar Inc., Ford Motor Co., General Electric Co. and Shell Oil Co. has been lobbying Congress with the message that regulation of derivatives without exceptions could severely increase costs for corporate America. That could mean higher costs passed on to consumers and imperiled jobs, they contend.
"Many end users have told me this would add considerable costs and would likely be passed along to consumers," said Sen. Saxby Chambliss, the committee's senior Republican.
An executive of JPMorgan Chase & Co., one of a handful of Wall Street banks that dominate worldwide derivatives trading, said universal requirements for clearing the trades could drive business from the U.S. to overseas. And "the man on the street" could pay the cost with higher prices if end-user companies are driven away from using derivatives by excessive financial requirements, said Blythe Masters, head of global commodities at JPMorgan.
Geithner said exemptions should apply to a "limited number of nonfinancial companies ... people that are making things and selling things across the country."
"There is a growing strong consensus about the nature and scope of reforms necessary to make our derivatives markets more transparent, more efficient, more fair and more stable," Geithner testified. "The longer we wait, the harder it's going to be ... (and) forces that always fight reform" will be able to block progress as time slips by.
The value of derivatives hinges on an underlying investment or commodity such as currency rates, oil futures or interest rates. The derivative is designed to reduce the risk of loss from the underlying asset.
Credit default swaps, a form of insurance against loan defaults, account for an estimated $60 trillion of the worldwide derivatives market. The collapse of the swaps brought the downfall of Wall Street banking house Lehman Brothers Holdings Inc. and nearly toppled American International Group Inc. last year at the height of the crisis, spurring the government to support the insurance conglomerate with about $180 billion in aid.
The Obama administration's proposal is close to legislation in the House, requiring most derivatives trades to go through clearinghouses to bring transparency, and subjecting financial firms dealing in the instruments to new capital requirements.
All derivatives contracts that are "liquid and standardized" backed with cash and not designed for specific users in a transaction should go through well regulated clearinghouses, Geithner said. There should be a presumption that a contract accepted for clearing by one of the houses and approved by the Commodity Futures Trading Commission or the Securities and Exchange Commission must be centrally cleared.