New focus on foreclosures and credit to small business
By Greg Robb, MarketWatch
WASHINGTON (MarketWatch) -- The Obama administration is extending its $700 billion financial-rescue program until next October, Treasury Secretary Timothy Geithner said Wednesday.
The Troubled Asset Relief Program, which has been a lightning rod for criticism that the government aided Wall Street while ignoring Main Street, had been set to expire Dec. 31.
A Congressional watchdog panel said TARP was instrumental in avoiding a global financial meltdown ,but has not stabilized the financial system. Read about report released by Elizabeth Warren
In a letter to congressional leaders, Geithner defended the program. But he said TARP will be refocused to aid homeowners facing foreclosure and to provide capital to small and community banks so that small businesses have access to credit.
Some funds may be used to increase Treasury's contribution to the Term Asset-Backed Securities Loan Facility.
Treasury does not expect to deploy more than $550 billion of the funds, Geithner said. He said $175 billion in repayments are expected by the end of next year.
Geithner said TARP would also function as a reserve if there is another shock to the financial system.
"As we wind down many of the government programs launched initially to address the crisis, it is imperative that we maintain this capacity to respond if financial conditions worsen and threaten our economy," Geithner said.
