Obama aides offer more assurances on bailout money
WASHINGTON (Reuters) - President-elect Barack Obama's aides indicated that $350 billion (240 billion pounds) in remaining financial bailout aid would not be used for ailing industries in other sectors, Republican senators said on Wednesday, adding such assurances could boost support for the plan.
Facing a key vote in the Senate on whether the $350 billion should be released to the Treasury Department at Obama's behest, his aides met with sceptical Republican senators.
Several of those senators said that as early as Thursday, the incoming Obama administration could float a letter providing reassurances the money would be focussed on trying to fix the financial industry crisis that has also left millions of families experiencing home foreclosures.
South Dakota Republican Sen. John Thune said a public statement might be helpful in easing the concerns of some Republicans and South Carolina Republican Sen. Jim DeMint said he believed such a statement would be made by Obama's team.
They were among several Republican senators who met with Rahm Emanuel, Obama's pick to be White House chief of staff, and National Economic Council Director-designate Larry Summers as they tried to bolster support for releasing the money. The two officials did not comment on the meeting.
Senate Majority Leader Harry Reid, a Nevada Democrat, plans to hold a vote on Thursday on a resolution by Louisiana Republican Sen. David Vitter that would block releasing the money, Reid's spokesman said, adding he was "hopeful that there are the votes to defeat."
The vote comes with bank stocks under pressure due to expected enormous quarterly losses. Additionally, Bank of America Corp is close to receiving billions of dollars of additional support from the U.S. government as it tries to digest investment bank Merrill Lynch & Co Inc.
In October, Congress passed legislation for $700 billion in financial industry bailout aid, amid the collapse of some large Wall Street firms. Many Republicans were angered last month when some bailout funds were provided to U.S. automakers.
Half the bailout funds have been allocated by the Treasury Department, which now wants authorization to use the other half. Both President George W. Bush and Obama, who takes office on Tuesday, support the release of the money.
DeMint, one of several Republican senators trying to block the release of the $350 billion, said Obama's aides "could've changed (senators') minds but this isn't one of them that got changed."
"I don't think we have any other alternative than to go forward with it," said Sen. George Voinovich, a Republican from Ohio, which has been hit hard by mortgage foreclosures and growing unemployment in the yearlong recession.
House Majority Leader Steny Hoyer, a Maryland Democrat, said earlier on Wednesday he thought there was only a "very small" chance that Congress would end up blocking the money.
"GET IT DONE"
House Speaker Nancy Pelosi said there was progress towards finalizing a massive economic stimulus bill and that the details could be made public by Thursday.
"We are zeroing in on a final number," Pelosi told reporters. "We are containing it, recognizing that what we have in the package must create jobs immediately."
One government source, who asked not to be identified, said it would likely total around $850 billion over two years.
For weeks, Democrats have been talking about a combination of tax cuts and government public works projects aimed at creating or maintaining 3 million jobs. Republicans have been more sceptical about huge new spending programs.
"This is a package that I think is gonna make sense. I have every confidence that it's gonna work," Obama told the "CBS Evening News" in an interview broadcast on Wednesday. "But it's gonna take some time and we've gotta do it with some speed. So my main message to Congress right now is "get it done.'"
In a related issue, the House could vote as soon as Thursday on legislation tightening the rules on the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program, or TARP.
While making the program more transparent, the legislation also would refocus where the next batch of money is spent -- away from government investments in troubled banks and towards reductions in home foreclosures and aid for cash-strapped towns and cities suffering during the recession.
The fate of the bill was less certain in the Senate.
Hoyer said that even if the bill, written by House Financial Services Committee Chairman Barney Frank of Massachusetts, was not enacted into law, its provisions likely would be enforced by the Obama administration.
(Additional reporting by Thomas Ferraro, Patrick Rucker and Kevin Drawbaugh; Editing by Peter Cooney)
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