WASHINGTON, D.C. ( TheStreet) -- Treasury Secretary Timothy Geithner Wednesday told Congress he was extending the Troubled Asset Relief Program, or TARP, until October 2010, saying the program is working but significant challenges remain.
"As we wind down many of the government programs launched initially to address the crisis, it is imperative that we maintain this capacity to respond if financial conditions worsen and threaten our economy," he states in a letter sent to select members of the House of Representatives and Senate.
Geithner also provides some estimates for the breadth of the program in the coming year, forecasting new TARP commitments of $25 billion in 2010, and noting the program overall is expected to cost at least $200 billion less than was projected during a review in mid-August.
He says the Treasury anticipates it will receive $175 billion in repayments by the end of 2010, and put the total deployment for the program, which has an authorization of $700 billion, at $550 billion. Since January 20, only $7 billion in TARP funds have been distributed, the letter states, mostly to small institutions. Geithner also forecasts "substantial additional repayments" after 2010, and states that losses on TARP investments are likely to be "significantly lower previously expected."Specifically, Geithner says the government now expects to recover "all but $42 billion of the $364 billion in TARP funds disbursed in FY2009" and that it expects a positive return on its investments in banks, who will soon have paid back "nearly half of the TARP funds they received," according to the letter.