US to extend $700 bn bailout programme till Oct `10: Geithner
US Treasury Secretary Timothy Geithner has said the government will extend the USD 700 billion bailout initiative till October 2010.
Washington: US Treasury Secretary Timothy
Geithner has said the government will extend the USD 700
billion bailout initiative till October 2010.
Unveiled more than a year ago in the wake of the raging
financial crisis, the Troubled Asset Relief Programme (TARP)
worth USD 700 billion has mainly provided fresh capital to
major banking entities.
Geithner in a letter to the US House of Representatives
Speaker Nancy Pelosi said the program would be extended till
October 3, 2010. In the coming months, the funds would be
utilised for mitigating foreclosures, providing loans for
small businesses and improving credit flow in the system.
"While we are extending the USD 700 billion programme, we
do not expect to deploy more than USD 550 billion. We also
expect up to USD 175 billion in repayments by the end of the
next year," Geithner said.
According to the Treasury, the cost of the programme for
the taxpayers would be at least USD 200 billion less than
Meanwhile, the US Congressional Oversight Panel in its
progress report for TARP, has said the program helped in
"stopping economic panic".
However, the panel, which is the watchdog for TARP,
noted that the long-term stabilising effects of the initiative
on the American economy are less clear.
"... there is a broad consensus that the TARP was an
important part of a broader government strategy that
stabilised the US financial system by renewing the flow of
credit and averting a more acute crisis," it said.
On the other hand, the panel pointed out that many
problems in the economy like soaring bank failures, job losses
and toxic assets, continue to remain.
Going by the report, markets are dependent on government
support and it is still not clear whether the market can
withstand the removal of federal aid.
Moreover, the panel noted that there is yet to be a
consensus among experts or policymakers, on preventing
financial institutions from taking large risks that may
adversely impact the national economy.
Regarding the extension of TARP, Geithner said, "History
suggests that exiting prematurely from policies designed to
contain a financial crisis can significantly prolong an
economic downturn. We must not waver in our resolve to ensure