Geithner disputes stress test doubts

Treasury Secretary Tim Geithner downplayed suggestions that the government’s stress tests of major financial institutions needed to be redone, saying national economic variables were laregely unimportant in determining their outcome.

In a briefing with reporters ahead of his trip to Italy tomorrow, Geithner downplayed TARP Oversight Committee Chairwoman Elizabeth Warren’s suggestion that the economy had worsened to an extent such that the original stress tests on banks were no longer reliable measures of those institutions’ health.

“The critical constraining factors in the stress tests were the loss estimates confined and the projections for future earnings,” Geithner told reporters. “The macro factors and unemployment were not the binding constraints.”

The government let 10 large financial institutions pay back $68 billion in bailout funds earlier today. Warren’s statements were seen as publicly disputing whether or not those banks were healthy enough to repay their loans from the government.

The secretary also said that one of the most significant factors allowing for that repayment were the companies’ abilities to assure investment from private sources in order to raise capital for their operations.

On a broader level, Geithner said that while the government still forecasts “significant challenges” in the economy, there are signs that the global economic downturn has begun to recede.