Treasury considering more financial aid programs

WASHINGTON (Reuters) - The Treasury said on Wednesday it is considering additional programs to strengthen financial institutions under its $700 billion Troubled Asset Relief Program.

In a report to Congress required by the legislation that authorized the financial bailout, the Treasury said it has a policy team examining several promising areas for strengthening financial markets and preserving home ownership.

"Treasury is committed to deploying the TARP aggressively and is actively considering additional programs to strengthen financial institutions, restore the flow of lending, and address the many challenges to our financial markets posed by the ongoing housing correction," the Treasury said in its "tranche report" on the rescue program.

It said it will continue to ensure home loan modifications are sustainable and to help borrowers avoid default.

On Tuesday, a source familiar with the Treasury's thinking said the department was exploring how to best expand its capital injection program to provide more liquidity to credit markets, including help for specialty finance firms such as General Electric's (GE.N) GE Capital or CIT Group Inc (CIT.N).

The Treasury said it has made no final decisions on actions it might take, but said any further steps would be made in a "clear and efficient manner while ensuring that the taxpayer is properly protected."

The tranche report was issued because the Treasury has spent more than $100 billion in buying equity in nine large banks. It will issue another report when its outlays reach $150 billion.

The full report is available at: www.treas.gov/initiatives/eesa/docs/Tranche-Reportfinal.pdf

The Treasury said it was premature to assess the impact of the bank capital purchase program because less than half of the $250 billion allocated has been invested, and recipient banks have only had their funds for about a week.

"Nevertheless, Treasury is encouraged by recent signs of improvement in the markets and in the confidence in our financial institutions," it said.

Separately issued minutes of the program's oversight committee showed that Treasury representatives indicated that the Treasury was "continuing to move forward" with other rescue programs focused on troubled mortgage assets. The Treasury has yet to name asset managers who would purchase and manage troubled related assets, which was the program's original focus.

(Reporting by David Lawder; Editing by James Dalgleish)