Geithner for extending TARP till October 2

US treasury secretary Timothy F Geithner wrote in a letter to House speaker Nancy Pelosi that the $700 billion bailout programme, due to expire by end December, will remain in place until 3 October 2010.

The move is aimed at helping troubled community banks, small businesses and troubled homeowners and to invigorate the financial system in case of another crisis.

''We want to see the capital base of our financial system return to private hands as quickly as possible,'' the treasury chief informed the Congress,'' Geithner said, adding that ''history suggests that exiting prematurely from policies designed to contain a financial crisis can significantly prolong an economic downturn.''

Geithner pointed out continuing weaknesses in the financial system and the economy to justify extending the programme till October next year.

Of the $700 billion authorised for TARP in late 2008, the treasury now expects to deploy just $550 billion. It also expects up to $175 billion in TARP repayments by the end of next year.

Early this week the treasury announced it expects the TARP will cost taxpayers $200 billion less than anticipated.