11 December 2009 / AP, WASHINGTON
The Obama administration has extended the $700 billion financial bailout program until October, setting up a struggle between Democrats who favor using some of the leftover money to help generate jobs and Republicans who say it should be used to shrink soaring budget deficits.
The administration insists the bailout fund is still needed to prevent further turmoil in the banking system. In announcing the decision Wednesday, Treasury Secretary Timothy Geithner said extending the program also will help homeowners struggling to avoid losing homes to foreclosures and small businesses having trouble getting loans. The decision came on the same day the administration acknowledged two key bailout programs lost a total of $61 billion. The bailout of insurance giant American International Group Inc. and the lifeline thrown to struggling automakers each cost more than $30 billion, according to Treasury data disclosed in a report from the Government Accountability Office. The administration is now projecting the losses to the government from the bailout program will be around $141 billion -- $200 billion less than it estimated two months ago.
President Barack Obama said the freed-up money can help reduce the record-high federal budget deficit and “invest in job creation on Main Street rather than Wall Street.”
