The Treasury Department is reopening its Capital Purchase Program (CPP) for six months so small banks can get another shot of capital and increase their lending capacity.

Current CPP recipients and other small banks with less than $500 million in assets can apply for capital assistance that will be funded through the Troubled Asset Relief Program (TARP).

"In addition, we will extend the deadline for small banks to form a holding company," which is a prerequisite for applying for the capital assistance, Treasury secretary Timothy Geithner said. "Both the window to form a holding company and the window to apply or re-apply for CPP will be open for six months," he added.

The Treasury secretary also told the Independent Community Bankers of America that the Obama administration is working on regulatory reform that will simplify and consolidate the oversight of financial institutions and provide better supervision in the consumer area. The new rules will be sensible, conservative and apply to all lenders so there is a level playing field. The administration also wants "greater simplicity" in core financial products.

"We want a standardized, simple product that consumers can choose to opt out of to meet their individual needs," Geithner said.

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