By Mark Felsenthal
WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Wednesday he would inform Congress as soon as possible if more taxpayer money were needed to salvage the banking sector as part of the effort to reinvigorate the economy.
Testifying for a second day on a financial stability plan he sketched out on Tuesday, Geithner said bold action now to halt the deep financial crisis would prove less costly to taxpayers over the long haul than acting too timidly.
"If we are not forceful now, ultimately it will be harder for us to get our fiscal position back into a sustainable position ... and all those challenges will be more difficult to solve," Geithner told the Senate Budget Committee.
Committee Chairman Kent Conrad, Democrat of North Dakota, said it was incumbent on Geithner to tell Congress soon if more money beyond the already approved $700 billion financial rescue fund was need.
Geithner said a supervisory review of banks would help determine whether more money would be needed.
"If we believe that we think there's a compelling case for additional resources and authority, we will come to you and lay that out as quickly as we can," he said.
"We're going to move forward very quickly to come out with detailed design elements on these proposals I outlined yesterday," Geithner said, adding that should take several weeks."
Geithner's bank rescue plan was criticized for lacking detail and clarity, particularly with respect to how public-private partnership would buy up bad assets, and U.S. stocks plunged on Tuesday when he unveiled it.
The plan would use an unspecified amount of money from the bailout fund to set up a public-private partnership to mop up as much as $1 trillion of bad assets clogging bank balance sheets.
The hope is that would make it possible for banks to renew lending, which, in turn, should help ease a U.S. recession that is likely to be the longest since the Great Depression.
The plan will also use $100 billion in taxpayer funds to expand a Fed program to support up to $1 trillion in consumer, small business and commercial real estate lending.
Geithner told lawmakers the crisis would take a long time to resolve and promised to consult closely with Capitol Hill as details of the plan are established.
"I completely understand the desire for details and commitments, but we're going to do this carefully, consult carefully so we don't put ourselves in the position again where we're laying out details ahead of the care and substance necessary to get it right," he said.
(Additional reporting by Glenn Somerville, Lucia Mutikani, Doug Palmer and Corbett Daly; Editing by Kenneth Barry)
