Treasury sees need for TARP contingency funds

WASHINGTON (Reuters) - The U.S. Treasury could consider a second round of capital investments in banks in the second phase of its $700 billion financial rescue fund, but also needs to set aside money for systemically significant institutions, a senior Treasury official said on Tuesday.

Neel Kashkari, the Treasury's interim assistant secretary for financial stability, said the second half of the bailout fund needs to stay focused on the financial sector.

"It's impossible to predict what's going to happen. We hope that the actions that we've taken are sufficient, but we're we are also going to have enough dry powder on the side to deal with any one-offs that arise," Kashkari told business students at Georgetown University.

(Reporting by David Lawder; Editing by Tom Hals)