In a letter sent to House and Senate leaders Wednesday, Treasury Secretary Timothy Geithner revealed that the Troubled Asset Relief Program (TARP) is being extended to October 2010.
Geithner said the move was "necessary to assist American families and stabilize financial markets because it will, among other things, enable us to continue to implement programs that address housing markets and the needs of small businesses, and to maintain the capacity to respond to unforeseen threats."
The Treasury Secretary also laid out an exit strategy, saying that the government would continue to terminate and wind down many of the government programs put in place last fall.
He noted that the government has already ended its Money Market Fund Guarantee Program, which guaranteed at its peak over $3 trillion worth of assets.
"This program incurred no losses," Geithner said, "and generated $1.2 billion in fees."
Further, Geithner said that the Capital Purchase Program, through which the majority of TARP investments in banks have been made, is effectively closed.
In terms of steps that will be taken in the coming months to exit out of the TARP, Geithner said the government will limit its commitment to three key areas.
The first area, Geithner said, will be continuing to "mitigate foreclosure for responsible American homeowners as we take the steps necessary to stabilize our housing market."
In the second area, Geithner said the U.S. "recently launched initiatives to provide capital to small and community banks, which are important sources of credit for small businesses."
"We are also reserving funds for additional efforts to facilitate small business lending," he added.
Finally, Geithner said the U.S. may "increase our commitment to the Term Asset-Backed Securities Loan Facility (TALF), which is improving securitization markets that facilitate consumer and small business loans, as well as commercial mortgage loans."
He added that he does not expect increasing the commitment to TALF to result in additional cost to taxpayers.
Additionally, Geithner said the U.S. would not use the remaining Emergency Economic Stabilization Act funds "unless necessary to respond to an immediate and substantial threat to the economy stemming from financial instability."
Geithner stated that, while the government is extending the $700 billion program, "we do not expect to deploy more than $550 billion. We also expect up to $175 billion in repayments by the end of next year, and substantial additional repayments thereafter."
He also argued that, even with the extension, TARP will cost taxpayers "at least $200 billion less than was projected in the August Mid-Session Review of the President's Budget, including $25 billion in potential costs from new TARP commitments in 2010."
Following the news, Senator Judd Gregg, R-N.H., released a statement in which he said he "strongly opposes" the decision to extend the TARP.
"For a program that (President Barack Obama) claimed yesterday is so unloved, my Democratic colleagues sure love to abuse it," Gregg said. "It should expire this year, and, as originally intended and required by law, all funds be paid back to the American taxpayer."
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.