HIGHLIGHTS: Geithner testifies on TARP

GEITHNER, HENSARLING ON BANK REPAYMENTS OF TARP FUNDS

REP. JEB HENSARLING: "If there are firms that wish to repay their taxpayer money, if the taxpayer money is at risk, if their relevant regulator certifies that commensurate with safety and soundness of the financial institution, they can return that capital, if this is an accurate assessment of your position, why wouldn't you take the money back?"

GEITHNER: "In those conditions, we would welcome it. It would be very helpful, it helps differentiate, it helps to show progress, it helps to underscore the basic point that the institutions of our financial system are in very different circumstances. But I just want to underscore what's really important...My basic obligation and our responsibility is to make sure that the system as a whole -- as a whole -- has the ability to provide the credit that recovery requires. And so we need to make a careful judgment about what policies are going to best promote that objective.

"Ultimately we have to look at two things -- one, do the institutions themselves have enough capital to be able to lend and the system as a whole, is it working for the American people for recovery, and that's the standard we're going to look at. But of course, nothing would make me happier..."

HENSARLING: "Just to understand you, there will be other considerations besides the individual institutions' financial stability?"

GEITHNER: "This is a judgment that I don't make. This is a judgment that the federal banking agencies make under the conditions established under the Recovery Act; they are in the process now of trying to make these judgments. The critical thing we care about is whether the system as a whole is in a position where it has the capacity to support the credit that recovery requires. That's the ultimate test."

GEITHNER ON IMPORTANCE OF RELEASING STRESS TEST RESULTS

"I do believe it's valuable and this is at the core of the objectives of this process that we worked out with the Fed, to bring more transparency, more disclosure to potential losses on banks' balance sheets. Without that, it's harder for banks to raise capital. Without that, they are going to live with a deeper cloud of uncertainty over their financial health than they need to. Transparency will be helpful in resolving that and they are in the process of working through what will be sensible."

GEITHNER ON CONDITIONALITY FOR BANKS RECEIVING GOV'T FUNDS

"In assessing what was necessary going forward to solve the problems we inherited, we made it clear that, where we're going to provide capital in the future, we want to target it to where it's necessary, we want to do it on a differentiated basis, we want to do it with conditions -- not unconditionally, but with conditions -- not just to help protect the taxpayer, but to try to help ensure that the system emerges stronger, not weaker. That's a very important principle. And we've said, the president has said publicly, that where we provide exceptional assistance, because that's necessary to make sure there's capital in the system, it will come with conditions to make sure there's restructuring, accountability to make sure these firms emerge stronger in the future."