- The Washington Times - Wednesday, December 9, 2009

Treasury Secretary Timothy F. Geithner has announced an extension of the financial bailout authority to October 2010 — despite recent estimates that the program will cost taxpayers less than expected.

In letters sent Wednesday to congressional leaders, Mr. Geithner said the extension will enable the Treasury Department to continue programs to address the slumping housing market and the needs of small businesses. The action also was will allow Treasury to respond to unforeseen threats to the financial markets.

The Troubled Asset Relief Program (TARP) was set to expire at the end of the month, although Treasury has the option of extending the program to October 2010 if it provides a justification to Congress. No congressional approval is required.

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The $700 billion program, proposed by the administration of President George W. Bush and passed by Congress last fall, was credited with helping avoid a catastrophic meltdown of the economy by offering financial institutions government loans.

The Obama administration announced this month that the cost of the taxpayer-financed bank bailout will be about $200 billion less than projected, thanks to Wall Street paying back the loans at a faster rate than expected on the heels of a gradually improving economy. About half of the initial TARP funds remain.

But with the economy still shaky, the secretary said he felt uneasy allowing the program to end on its scheduled Dec. 31 sunset date.

“Although the economy is recovering, foreclosures are increasing, and unemployment is unacceptably high,” said Mr. Geither in letters to addressed to House Speak Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada, both Democrats. “Businesses are still cautious in the face of uncertainty about the strength of the recovery, and many small businesses face very difficult credit conditions.”

He added that the since the recovery of our financial system remains incomplete, “near-term shocks to that system could undermine the economic recovery we have seen to date.”

Mr. Geithner’s announcement comes a day after President Obama said he wanted to use some of the remaining TARP money for job-creation programs.

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