Stocks are rising in afternoon trading after Treasury Secretary Timothy Geithner told Congress that some banks could be allowed to repay financial bailout funds.

At 1:24 pm ET, the Russell 2000 (NYSE:IWM) is up 2.47% at 463.65, while the Dow is up 0.74% and the S&P 500 is climbing 1.13%.

Small caps on the move today include retailer Pacific Sunwear (Nasdaq:PSUN), up nearly 20% after it renewed an extension agreement with Alliance Data Systems, and retailer Charming Shoppes, Inc. (Nasdaq:CHRS), which is up 14% on lower-than-average volume.

*****Treasury Secretary Tim Geithner is having his “Lucy” moment today. Yes, he’s got “a lot of explaining to do …”

He spoke Congress today to answer questions as to how the Public-Private Investment Program will actually remove toxic assets and protect taxpayer money at the same time. Also up for explanation is how the remaining $110 billion in TARP money is enough to fund any future bank rescues.

I don’t envy Geithner one bit. That’s because there’s no way he can adequately answer these questions:

If TARP’s $110 billion is sufficient, why is the government talking about accepting equity in return for as much as $200 billion in bailout funds?

How can you provide loans to private investors to minimize the risk of toxic asset purchases, pay the banks a premium for those assets and still believe that taxpayers can make off the deal?

There’s no way everybody can make money of these deals. The taxpayer is taking on the most risk and has the most to lose. 

*****No word on why Geithner thinks $110 billion is sufficient to keep the bailouts rolling. Goldman Sachs mortgage analysts think another $400 in bank . . .

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