WASHINGTON — Treasury Secretary Timothy Geithner on Thursday defended his extension of the government's unpopular financial bailout as necessary to safely wind down the program.
"It would be irresponsible to do otherwise," Geithner told a skeptical watchdog panel.
The Troubled Asset Relief Program (TARP) was due to go out of business at the end of this month, but Geithner said Wednesday it would run through Oct. 3, as the original legislation allowed.
Elizabeth Warren, who heads the independent oversight panel that Congress set up to monitor the bailout program, said the aid was "an important part of the government's rescue strategy" and saved the financial system from "imminent collapse."
But the Harvard University law professor told Geithner that it "has been far from an unmitigated success." She said consumers and small businesses still are having trouble obtaining loans even if big banks are getting back on their feet because of the program.
"There must never be a TARP 2.0," she told Geithner.
Panel member Paul S. Atkins, once on the Securities and Exchange Commission, said extending the program "borders on irresponsibility" and is a "a free option at taxpayer expense."
When the program was enacted in October 2008, financial markets were in free fall. The rescue package had an original price tag of $700 billion.
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