White House Reportedly Considering Spinoff of Bank Bailout to Target Small Businesses

The Obama administration is considering spinning off a program from the $700 billion financial industry bailout that would give banks government money without restrictions as long as they use it to make loans to small businesses, the Washington Post reported.

White House officials are expected to ask Congress to change the Troubled Assets Relief Program, or TARP, and ease pay limits and other restrictions that small businesses would have had to obey by, the newspaper reported.

The news come on the same day  Treasury Secretary Timothy Geithner defended his extension of the U.S. 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.

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."

The Associated Press contributed to this report.

Click here to read more on this story from the Washington Post.