Geithner says banks must modify loans-sources

WILLIAMSBURG, Va., Feb 7 (Reuters) - U.S. Treasury Secretary Timothy Geithner on Saturday told lawmakers that financial institutions that receive government assistance will have to make loan modifications and meet other new standards, according to Democratic sources.

Geithner, during a briefing with House of Representatives' Democrats, was asked about a New York Times report that the Obama administration would not require banks to increase their lending as part of revamped government effort to restore stability to the financial sector.

According to the sources, who asked not to be identified, Geithner said: "We are not doing what they wrote ... Institutions that get assistance will have to participate in loan modifications and meet other standards that we set."

Geithner also told the lawmakers, according to the sources, "We must strengthen the banking system" and "it is going to take time for it to work but it will work."

(Reporting by Richard Cowan, editing by Patricia Zengerle) Keywords: FINANCIAL/BAILOUT GEITHNER

(richard.cowan@thomsonreuters.com; Reuters Messaging: richard.cowan.reuters.com@reuters.net; 202-898-8391)

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