The government’s bailout program is working and costing taxpayers less than anticipated – but will be extended until October 2010 to help more small businesses secure credit and rescue more homeowners from foreclosure, Treasury Secretary Timothy Geithner said today. The bailout program extension would also serve as a safegaurd against any “immediate and substantial threat to the economy stemming from financial instability,” he said.

Checks totaling more than $1 billion will be mailed this week to more than a half million merchants in the final payouts from Visa and Mastercard stemming from a 2003 lawsuit settlement, said the National Retail Federation. The retailers alleged that Visa and Mastercard violated federal anti-trust law by requiring merchants who accept their credit cards to also accept their signature debit cards.

The combination of an already tight credit market and a reluctance to fall deeper into debt contributed to the ninth straight month of declining consumer borrowing in October, the Federal Reserve reported today. Consumer credit fell at a seasonally adjusted annual rate of 1.7 percent, or $3.5 billion, to$2.48 trillion in October, the Fed reported. The figure includes most loans, such as credit cards and car loans – but not real estate.

In its first study of “underbanked” households, the Federal Deposit Insurance Corp. found that only a quarter of 1,300 banks surveyed directly marketed their services to individuals who are under-served or not served at all by banking services in their community. The study’s results, released this week, seemed to go beyond the FDIC’s estimates: 73 percent of banks are aware that significant “unbanked and/or underbanked populations” are in their market areas, but less than 18 percent of banks identify expanding services to this sector as a priority in their business strategy.

The Federal Reserve issued rules today which will increase the number of credit rating agencies – beyond the big three – to review the soundness of securities pledged for loans. The Fed’s intent is to provide further safeguards and provide a possible catalyst to increase lending as credit tightening among financial institutions persists.

A merchant, from anywhere, can accept a customer’s credit card by swiping the card through a tiny, square gizmo on the edge of his or her iPhone or other smart phone. Twitter co-founder Jack Dorsey today announced his new venture, appropriately called Square. And he did it by tweeting on the social media network giant he helped launch three years ago.

The SBA announced that economic stimulus funds for its two top loan programs have run dry, and new loan volumes could shrink if assistance is not renewed. The SBA said $375 million in Recovery Act funds for use in “7(a)” and “504” loan programs ended this week, leaving thousands of small business applicants in limbo.