New TARP overseer-economy mending, vigilance needed

WASHINGTON, June 24 (Reuters) - The new overseer of the U.S. government's $700-billion bank bailout fund said on Wednesday the U.S. economy shows signs of mending but not enough to ease up on recovery efforts.

"Our financial system and our economy remain vulnerable, with unemployment still rising, house prices falling and pressure on commercial real estate continuing to build," Herb Allison said in prepared testimony for the Congressional Oversight Panel.

Allison was confirmed by the Senate last week as Treasury assistant secretary to head the Treasury Department's Office of Financial Stability that manages the Troubled Assets Relief Program (TARP) that Congress approved last year under the former Bush administration.

He noted that some 30 firms that received cash injections from the government have repaid $70 billion and added that about $5 billion has been received in dividends on stock that the government received in return for investing in firms.

Allison, a former chief executive of mortgage finance company Fannie Mae, replaces Neel Kashkari who was appointed to head TARP by the former Bush administration but carried over in the Obama administration until early May.

Allison said he will review the controls over the use of the taxpayers' money that funds TARP and try to make sure its operations are transparent so that people can see what is being done and why. (Reporting by Glenn Somerville; Editing by James Dalgleish)