WASHINGTON — In its first two months, the government's signature initiative to boost consumer lending has fallen short of expectations, deploying only a fraction of the amount officials had hoped to extend to stimulate auto loans, student loans and credit card lending.

The slow rollout of the program has frustrated staff at government agencies working on the effort and diminished hopes that they could engineer a rapid return to healthy lending levels, according to interviews with government and industry sources. The initiative also serves as a window into the complexities of designing a giant rescue of the financial system.

Even without widespread use of the program, consumer lending has improved somewhat in recent weeks, and there are signs that the economy's free-fall is ending, raising questions about whether the program will ultimately be needed to get the economy going again.

But some private analysts and government officials attributed the improvement in credit availability in part to the mere existence of the program, which has bolstered confidence. They think that the Term Asset-Backed Securities Loan Facility, once operating at full speed, will play a big role in unclogging the markets that fund consumer loans.

Under TALF, private investors such as hedge funds put up a relatively small amount of money to be matched with a larger loan from the Federal Reserve. The combined funds are then used to purchase newly created, highly rated securities, which in turn fund a wide range of consumer and business lending.

If the securities become more valuable, the private investors stand to repay their government loans and make a profit; if the securities fall in value, the investors can lose only what they put up originally, and the government is at risk of losing money on its loans, too.

Officials envisioned TALF supporting tens of billions of dollars a month in new lending, saying it could eventually total $1 trillion. But in March, when it was launched, it backed only $4.7 billion in loans. For April, it logged only $1.7 billion.

Sources involved in the program said private investors have been reluctant to work with the government, which they view as an unreliable business partner. Separately, the brokerage houses that are crucial intermediaries are being exceptionally cautious in the contracts they draw up with participants in the program, in part out of wariness that any mistakes could draw the ire of Congress or the media.

In congressional testimony last week, Treasury Secretary Timothy Geithner said overall progress is "pretty good" for a program in its early days. Still, he acknowledged that participation was "lower than expected" because of "concern about the conditions that come with the assistance in the program ... and uncertainty about whether they may change in the future."

There are restrictions on the business activities of participants in the program. For example, investors who control more than 25 percent of a fund that benefits from the loans face restrictions on their ability to hire immigrants.

But perhaps more significant than any established limitation on the business practices of TALF participants is a fear that the government could retroactively change the terms, exacting new limits on what investors can pay their executives, for example, or trying to claw back profits that firms make in the program. The recent outcry over bonuses paid to executives at AIG has heightened those fears.

"The government is viewed as being unpredictable," said Warren Loui, a partner at the law firm Mayer Brown who has represented participating firms. "If the program is successful and the investor makes attractive returns, will the government want to come in and change the rules midstream?"

Federal Reserve officials have privately urged President Obama and congressional leaders to publicly state that the government views investors in voluntary programs such as TALF differently than it does companies that need a federal bailout.