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Bush May Ask Congress To Tap The Remaining Bailout Money Next Week
WASHINGTON — The Bush administration is considering telling Congress as early as next week that it wants to tap the unused $350 billion of the financial industry bailout, officials said Friday night on the heels of more dismal economic news.
They said White House Chief of Staff Josh Bolten and House Speaker Nancy Pelosi discussed the issue earlier in the day in a telephone conversation that also touched on a possible bailout of the auto industry.
Tony Fratto, a White House spokesman, said, "No decision has been made to request the second installment. I can't speculate what may or may not happen next week, but no decision at this time."
But another Republican said the chances were greater than 50-50.
It was not immediately clear, however, how the administration might use the additional money.
The officials spoke on condition of anonymity because they were not authorized to disclose any developments.
Any administration decision to tap the remaining $350 billion would go into effect unless both houses of Congress disprove by a two-thirds vote within a fixed time limit, but such a move nevertheless would almost certainly prompt Capitol Hill critics of the bailout to try to block use of the funds.
In an unusual development, Democrats said President-elect Barack Obama has offered to allow his aides to participate in talks over possible uses of the money. At the same time, they said Obama, who takes office on Jan. 20, wants Treasury Secretary Henry Paulson to take the lead in fashioning a plan for the money in the face of broad congressional skepticism.
Congress approved the financial industry bailout last fall in response to urgent pleas from President George W. Bush, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, all of whom said it was needed to restore the nation's credit markets to normal operation.
While Obama and his campaign rival, Sen. John McCain, supported the measure, it was intensely controversial, drawing opposition from both sides of the political aisle.
Pelosi as well as other Democrats want some of the funds to be used to help homeowners facing foreclosure.
Senate Banking Committee Chairman Christopher Dodd said Thursday that it would be very hard to convince him that the current administration deserves access to the second $350 billion.
Dodd spokeswoman Kate Szostak said he wants the administration to do more to ensure banks are increasing their lending after receiving funds.
The Connecticut Democrat also thinks the Treasury should do more to prevent foreclosures and ensure the funds aren't used for executive compensation, Szostak said.
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Associated Press reporter Jim Kuhnhenn contributed to this story.
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DAVID ESPO | December 6, 2008 01:54 AM EST |