U.S. Treasury Extends $700 Billion Bank-Bailout Program

In a letter today to congressional leaders, Treasury Secretary Timothy Geithner said the department doesn’t expect to deploy more than $550 billion of the funds. The Treasury may expand the Federal Reserve’s Term Asset-Backed Securities Loan Facility, an effort to jumpstart securitization markets, and will continue to use the Troubled Asset Relief Program to help struggling homeowners and small companies, he said.

“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 wrote.

The TARP, passed in October 2008 to prevent a collapse of the financial system, has drawn criticism from lawmakers in both parties for aiding the biggest banks rather than average citizens. The Obama administration, in notifying Congress about the extension, emphasized that it is winding down assistance for Wall Street firms.

“There has rarely been a less loved or more necessary emergency program than TARP,” President Barack Obama said yesterday in a speech in Washington. “I’m asking my Treasury secretary to continue mobilizing the remaining TARP funds to facilitate lending to small businesses.”

While the TARP law called for the rescue to end on Dec. 31, it also gave the Treasury secretary authority to extend its duration until Oct. 3, 2010, by notifying Congress.