UPDATE 1-U.S. Treasury says bank rescue a success so far

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WASHINGTON, Dec 5 (Reuters) - The U.S. Treasury's program to give banks billions of dollars in fresh capital has been a success in helping stabilize financial markets, a senior Treasury official said on Friday.

"We did not allow the financial system to collapse. That is the most direct, important information. Second, we know the system is more stable than it was when Congress passed the legislation," said Neel Kashkari, the Treasury Department official charged with administering the Troubled Assets Relief Program.

Congress authorized the Treasury to spend up to $700 billion under that plan to help stabilize financial markets.

The Treasury Department has said it will devote $250 billion of its rescue kitty to buy stakes in banks, giving them additional capital to stabilize their balance sheets and increase lending.

"The Capital Purchase Program was designed to first stabilize the financial system by increasing the capital in our banks, and then to restore confidence so credit could flow to our consumers and businesses," Kashkari said of the program at a Mortgage Bankers Association conference.

Kashkari said his team meets daily to review dozens of applications from banks seeking an investment from the government and that the review process will continue for months more.

(Reporting by Patrick Rucker; Editing by Chizu Nomiyama)