Treasury Will Likely Seek TARP Extension

The Treasury Department “is unlikely to discontinue its $700-billion relief program by the year’s end,” according to The Hill.

Lawmakers originally scheduled the Troubled Asset Relief Program (TARP) to conclude this December, but they also permitted Treasury Secretary Tim Geithner to extend the program until October if he felt he needed the extra time to rehabilitate struggling firms.

While lawmakers have recently signaled their dissatisfaction with that idea, Assistant Secretary for Financial Stability Herbert M. Allison suggested to the Senate Banking Committee on Thursday that an extension was still likely.

"Declining prices in the commercial real estate market could put additional pressure on bank balance sheets and capital positions, while continued downward pressure on housing prices could stall a nationwide recovery," he said during the hearing. "In this context, it is prudent to maintain capacity to address new developments. By bolstering confidence, having such capacity may actually reduce the need to use it."