US slashes bailout cost estimate

Treasury official says bank rescue plan will be at least $200bn less than expected.

    The remaining money could be put into a jobs scheme to tackle unemployment [EPA]

    Barack Obama, the US president, is expected to raise the idea of using the repaid funds for a jobs programme aimed at tackling the high unemployment in the US.

    Deficit fears

    That idea is likely to run into opposition from Republicans, many of whom are opposed to spending the remaining funds on a jobs bill and would rather see it used to lessen the budget deficit.

    The deficit for the 2009 budget year, which ended in September, hit a record $1.4 trillion and the administration has projected a slightly higher deficit for the current year.

    The US congress authorised $700bn for the financial rescue programme, known as the Troubled Asset Relief Programme (TARP) in October 2008, at the height of the worst financial crisis to hit the country since the 1930s.

    The first $350bn were released on in October, 2008, and congress voted to approve the release of the final $350bn in January this year.

    Banks have already repaid about $70bn in support they have received from the bailout fund, and Bank of America recently announced it was returning the $45bn in government support it had received.

    SOURCE: Agencies


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