The Obama administration is leaning toward extending the $700 billion Troubled Asset Relief Program (TARP), which is set to end at the end of this year, through next October, according to reports from several news outlets.

Government sources told the Washington Post that the administration is grappling with how best to announce a continuance of the financial bailout program, which has become increasingly unpopular with Main Street America. The paper said officials are hoping to temper any opposition by pledging to put the leftover TARP funds, roughly $300 billion, toward reducing the $12 trillion national debt.

According to the political Web site TheHill.com, pressure is building to do new things with TARP to address the continued lack of credit from banks and rising unemployment, which would warrant giving new life to the program.

Treasury Secretary Timothy Geithner announced in October that the administration would be winding down the initial TARP programs that provided capital injections to banks and other companies deemed “too big to fail,” namely the Capital Purchase Program (CPP) and the Targeted Investment Program.

But that still leave a host of other financial stability initiatives that could continue if TARP is extended: the Making Home Affordable program for starters, the Public-Private Investment Program (PPIP), and the Consumer and Business Lending Initiative, among others.

Secretary Geithner avoided the topic of a TARP extension when he spoke to the Senate Joint Economic Committee Thursday on financial regulatory reform. Committee member Sen. Jim DeMint (R-South Carolina) tweeted from the hearing, “Asked Treasury Sec Geithner for real deadline when TARP bailout will finally end, he refused to give an end date.”

TARP Special Inspector General Neil Barofsky has repeatedly voiced concern that taxpayers may never recoup the billions of dollars that the government has funneled to the nation’s financial institutions. This presumption and the sticky politics surrounding Main Street’s distrust of the program have prompted a number of lawmakers to lean on the Treasury to let TARP in its entirety expire at the end of the year.

After reviewing a stinging report from the program’s inspector general last month, Sen. Chuck Grassley (R-Iowa) echoed what seems to be the growing sentiment among legislators when he said, “It looks like TARP continues to be used as a slush fund for the Treasury Department to pick winners and losers in the private sector. That’s not what Congress agreed to or what taxpayers support.”

Sen. John Thune (R- South Dakota) introduced a bill Tuesday that would block the Secretary Geithner from extending TARP past the December 31st termination date. According to the Wall Street Journal, the legislation wouldn’t affect the money that has already been invested in the nation’s banks and other troubled corporations like General Motors and AIG, but it would halt any new capital injections and immediately return the fund’s surplus back to the government.
Thune told the government-focused news site Politico.com that he wants to make what’s left of the $700 billion TARP purse doesn’t “get used as a political slush fund and are used actually for a purpose that I think most people in the country would support — and that is to pay down the federal debt.”