Tags: bush | bailout | funds

Bush Asks Congress for $350B More in Bailout Funds

Monday, 12 Jan 2009 11:39 AM

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WASHINGTON – The White House says President George W. Bush has asked Congress to release the remaining $350 billion intended to help the nation deal with its financial crisis.

White House press secretary Dana Perino said Bush acted on a request of President-elect Barack Obama. She said the Bush White House will continue working with Obama's transition team and with Congress on how best to proceed on the release of the money.

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 account for it.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

WASHINGTON (AP) — President George W. Bush is letting President-elect Barack Obama dictate when to seek access to the remaining $350 billion in financial sector rescue funds and said Monday that his successor had yet to ask for the bailout money.

"He hasn't asked me to make a request yet," Bush told reporters Monday in what is likely the last press conference of his presidency. "And I don't intend to make a request unless he specifically asks me to make it."

A request to Congress for the money could still come as early as Monday to permit Obama's administration to have the ability to use it shortly after taking office. Obama officials had no immediate comment following Bush's press conference.

Bush's assertion that the decision to tap the money rests with Obama was an acknowledgment of what has been an extraordinary ceding of power to the incoming administration. In fact, when it comes to the economy, Bush in recent weeks has let Obama be the driving force behind most recovery efforts.

A vote in Congress is likely soon, possibly this week, several senators predicted after a briefing from Obama economic adviser Larry Summers on the Wall Street bailout, as well as on Obama's separate plan for roughly $800 billion in spending and tax breaks to spur the economy.

"I feel better this morning, and I am told the Obama team will be giving us these specifics" on precisely how the additional money would be disbursed, Senate Banking Committee Chairman Christopher Dodd, D-Conn., said Monday, after talks with Summers.

Bush would request the additional money for the Troubled Asset Relief Program but the incoming administration would sell the plan 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, Dodd had said Sunday. He said at that time that 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 tough sell.

At his press conference, Bush defended the financial industry bailout, a massive government intervention that has drawn criticism from Republicans as intrusion into the financial markets and from Democrats who complain the money has not helped stabilize or reduce mortgage foreclosures.

"I readily concede I chunked aside some of my free market principles when I was told by chief economic advisers that the situation we were facing could be worse than the Great Depression," Bush said.

He credited the program for improving the lending landscape.

"Credit spreads are beginning to shrink," he said. "Lending is just beginning to pick up."

A request to Congress 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.

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 account for it.

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

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

"We're waiting to hear from President Bush and-or President-elect Obama as to what, if anything, they're going to do," said Reid, D-Nev., "and that's occurring as we speak."

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

"The (incoming) administration ... is going to fundamentally alter how this is being managed," Dodd said. "The concept is still very sound and solid and it is needed. But it's not going to pass around here unless there's a strong commitment to foreclosure mitigation."

"These assurances have to be forthcoming, if they're not, we're going to have trouble passing this," he said Monday on CBS's "The Early Show." Dodd said that it is of paramount importance that federal policymakers "put a tourniquet on the 9,000 foreclosures that are occurring every day in this country."

Work continued through the weekend on Obama's economic recovery plan, which features aid to cash-strapped state governments, $500 to $1,000 tax cuts for most workers and working couples, a huge spending package blending old-fashioned public works projects with aid to the poor and unemployed, and a variety of other initiatives.

Advocates for using tax cuts to promote alternative energy won concessions and the Obama team promised to make a $3,000 job creation tax credit — which has attracted considerable criticism — more workable.

Meanwhile, transition officials were resisting efforts to use the economic recovery bill to address the alternative minimum tax, which has affected more and more middle-income families.

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