Treasury Secretary Timothy Geithner said on Wednesday the Obama administration was making headway in settling financial markets and said a program to cleanse so-called toxic assets from banks' balance sheets will start operating over the next six weeks.

Testifying to the Senate Banking Committee, Geithner said the U.S. financial system was "starting to heal" after a period of severe trauma, and he estimated that $123.7 billion was left in a financial bailout fund approved by Congress in October.

But in opening remarks, the top Republican on the panel, Senator Richard Shelby of Alabama, said there had been "a massive waste of taxpayer dollars" because there was no clear strategy for deploying hundreds of billions of dollars in rescue funds.

Geithner said financial companies were adjusting their operations in ways that will make them less vulnerable to shocks like the one they have gone through.

"Leverage has declined, the most vulnerable parts of the non-bank financial system no longer pose the same risk, and banks are funding themselves more conservatively," he said.