The U.S. government will extend the financial bailout program until October 2010, Treasury Secretary Timothy Geithner said Wednesday.

Geithner said in a letter to Congress that the extension was "necessary to assist American families and stabilize financial markets."

The 700-billion-dollar bailout package, known as Troubled Asset Relief Program (TARP) was launched in October 2008 when the financial market was on the edge of collapse.

"These policies are working," Geithner said. "Credit is starting to flow again to consumers and businesses, and the economy is growing."

As a result of improved financial conditions and careful stewardship of the program, losses on TARP investments were likely to be significantly lower than previously expected.

Geithner said that banks that received support from the program will soon have repaid nearly half of the funds they received. TARP will cost taxpayers at least 200 billion dollars less than was projected in the August Mid-Session Review of the president's budget.

Despite the positive outcome, Geithner warned that significant challenges remain.

"Too many American families, homeowners, and small businesses still face severe financial pressure," he said. "Although the economy is recovering, foreclosures are increasing, and unemployment is unacceptably high."

The secretary said that businesses, especially small businesses, are still in difficult straits and the recovery of America's financial system remains incomplete.

"Near-term shocks to that system could undermine the economic recovery we have seen to date," he said.

President Obama announced Tuesday that some of the unspent 200 billion dollars in the financial bailout program would be diverted to job creation efforts.

(Xinhua News Agency December 9, 2009)