Treasury Secretary Timothy Geithner warned U.S. House Democrats on Saturday that the U.S. financial system remains "badly damaged," but that the Obama administration planned to act both quickly and aggressively to deal with the crisis, according to one lawmaker present.

"He did say that some institutions are so frail that they would not survive," said Rep. Brad Miller, a Democrat from North Carolina and a member of the House Financial Services Committee.

Geithner spoke at the House Democrat's three-day policy retreat in Williamsburg, Va., on Saturday. Miller said the secretary did not offer specific details about the Treasury's plan to use the second $350 billion of the financial rescue package, which is scheduled to be announced midday Monday in a much-anticipated speech by Geithner. His opening remarks were perhaps 10 minutes, Miller said, and the speech was delayed five or 10 minutes while Geithner spoke to President Barack Obama.

Instead of offering specifics, Geithner used the opportunity to discuss his own background as well as the challenges facing the U.S. economy. Miller said Geithner used the phrase "badly damaged" to describe the financial system and stressed the need to address the issue in one major policy push.

"He said it's clearly going to get worse but we have to act to prevent it from getting much worse," Miller said.

Geithner used the opportunity to address the widespread anger about the Treasury's use of the first $350 billion of the Troubled Asset Relief Program, calling it "justified," according to Miller. That acknowledgment, along with Geithner's recounting of his own life story to open his speech, reassured lawmakers that he can see beyond Wall Street's interests and deal with the economic plight of average Americans, the House Democrat said.

"The concern has been that the Obama economic team has been breathing rarefied air for so long that they've forgotten how ordinary Americans think," Miller said.

Regarding the administration's plan to use the second half of the TARP funds, Miller said Geithner's comments suggested the details were still being finalized. He did acknowledge that a portion of the plan will be used to stem foreclosures, including what Geithner called "careful bankruptcy reform."

Miller, who has sponsored legislation opposed by the financial services industry to allow bankruptcy judges to rework the terms of mortgage loans, said he would wait to see what "careful" means, but that he was glad that the administration is committed to dealing with foreclosures.

The speech made it clear, Miller said, that the financial system remains fragile.

"I don't think we know yet how bad the industry's insolvency problem is," Miller said. "If we had regulators go in and examine the books like we did at Fannie Mae and Freddie Mac a great number of our systemically important financial institutions could be insolvent."

-By Michael R. Crittenden, Dow Jones Newswires; 202-821-2159; michael.crittenden@dowjones.com