Bush, Obama unite to get bailout funds

Request would force Congress to vote to block or release $350B

WASHINGTON (AP) — Senate Democrats prepared Sunday to answer a request for the remaining $350 billion in financial industry bailout funds as the Bush administration and President-elect Barack Obama undertook a tag-team effort to obtain the money from reluctant lawmakers.

A vote in Congress is likely as early as this week, several senators predicted after receiving a rare Sunday briefing from top Obama economic adviser Larry Summers on the Wall Street bailout, as well as on Obama’s separate $800 billion-or-so economic recovery plan.

President George W. Bush would request the additional money for the Troubled Asset Relief Program, or TARP, but the incoming administration would make the case for it by laying out a series of changes in how the program is run. More of the money would go directly to relieve homeowners threatened with foreclosure, said Senate Banking Committee Chairman Christopher Dodd, D-Conn. A fuller accounting of the money already spent is needed as well, Dodd said.

“Larry Summers made a very strong argument for why it’s important and critical for the overall recovery,” said Sen. John Kerry, D-Mass. “And I think that’s an argument that most senators understand.”

Summers sought to win over Senate Democrats even as the GOP leader of the House, John Boehner of Ohio, warned that any effort to release the additional money would “be a pretty tough sell.” Boehner appeared on CBS’ “Face The Nation.”

A request would force a vote within days on whether to block the funding, but the deck is stacked in favor of Bush and Obama winning release of the remaining $350 billion. Congress can pass a resolution disapproving the request, but the White House could veto the resolution; then, just one-third of either chamber would be needed to uphold the veto and win release of the money. Senate leaders would prefer to win a majority vote, Dodd said.

The idea is to make the money available to the new administration shortly after Obama takes office Jan. 20. The unpopular bailout has featured unconditional infusions of money into financial institutions that have done little to reveal what they’ve done with it.

Treasury Secretary Henry Paulson originally promised the money would be used to buy up toxic mortgage-related securities whose falling values have clogged up credit markets and brought many financial institutions to the brink of failure.

Senate Majority Leader Harry Reid indicated Sunday that Bush and Obama officials are near agreement on submitting notice to Congress about using the remaining $350 billion.

But to prevail, Obama and his team must soothe senators who feel burned by the way the Bush administration has used the TARP.

Dodd said lawmakers were demanding other conditions, such as more concrete steps to limit executive compensation and make recipients of the funds be more accountable.

The Congressional Oversight Panel raised detailed questions last week about how banks are spending the first $350 billion, how the money will combat the rising tide of home foreclosures and Treasury’s overall strategy for the rescue. In instance after instance, the panel said, the Treasury Department did not offer adequate responses.