The U.S. Treasury on Monday extended the deadline for fund managers to apply to its toxic securities purchase program by two weeks and said it eased selection criteria for these firms.

The new deadline for application to run public-private investment funds to buy so-called legacy securities weighing down bank balance sheets is now April 24, with preliminary selections decisions expected by May 15.

The new guidance extends the deadline for the application to the program and clarifies that participation criteria will be viewed holistically -- failure to meet any one criterion will not necessarily disqualify a proposal, the Treasury said in a statement.

The securities investment program is one part of the Treasury's effort to flush $500 billion to $1 trillion worth of distressed assets from bank balance sheets. It also includes a program with the Federal Deposit Insurance Corp. to auction whole loans to investors and an expansion of the Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF) to help provide financing for these purchases.

When the program was first detailed last month, the Treasury said that for money managers to be selected to run one of about five public-private investment funds, firms had to prove an ability to raise $500 million in private capital, have a minimum of $10 billion in mortgage backed securities under management, a proven track record in these securities and headquarters in the United States.

While it said it is maintaining these criteria, the holistic approach will allow it more discretion in selecting fund managers based on the available applications.

The number of fund managers may be increased depending on the Treasury's evaluation of the applications received and determination of what is in the best interests of taxpayers, the Treasury said in its guidance. Treasury will consider expanding the program through additional fundings in the future.

The Treasury also said it was encouraging smaller firms and those owned byminorities and women to partner with the major fund manager applicants to help broaden participation in the program.

A Treasury official said of the Treasury's $100 billion in funding allocatied for the bank asset cleanup program, $25 billion would go to expand the securities used as collateral for the Fed's TALF program, while $75 billion would be split between support for the FDIC loan auctions and the legacy securities funds. The split between the two would be determined by market demand, he said.

(Reporting by David Lawder and Patrick Rucker, Editing by Walker Simon)