Banks could get $750 billion more under Obama budget

By David Lawder and Caren Bohan

WASHINGTON (Reuters) - President Barack Obama could funnel up to $750 billion (524 billion pounds) in fresh government aid to the battered banks, more than doubling a financial bailout approved last year, his proposed budget revealed on Thursday.

The White House pencilled in a $250 billion "placeholder" amount for additional financial rescue efforts into the fiscal 2010 budget, but said this would represent the net cost of asset purchases from financial institutions.

It estimated a loss of 33 cents of every investment dollar, so if it invests $750 billion in bank shares or other assets, the cost to taxpayers would be only one-third of that amount.

But administration officials were quick to say that they may not ask for any new funds.

"We have no plans to go to Congress to ask for additional money, and again the hope is it will not be necessary," White House budget director Peter Orszag told a news briefing. "But just in case it is, the budget includes a placeholder should further stabilization efforts become necessary."

Orszag said the figure was added into the budget "in case the situation deteriorates".

The Bush administration used similar placeholder figures for estimated Iraq and Afghanistan war costs in recent budgets, updating them with specific requests later.

BANK STOCKS JUMP