Washington (AP) - Seeking to reassure wary lawmakers, President-elect Barack Obama's top economic adviser told congressional leaders Monday that Obama intends to broaden the goals of the remaining $350 billion financial bailout and impose tougher restrictions and oversight on how the money is spent.
Larry Summers, Obama's choice for National Economic Council director, told House and Senate leaders in a letter from the transition team that the need to tap the second half of the $700 billion fund is "imminent and urgent."
The letter spells out how Obama intends to use the Troubled Asset Relief Program to help community banks, small businesses, consumers and homeowners as well as large financial institutions. He also specified that Obama intends to launch a "sweeping effort" to mitigate foreclosures.
Obama on Monday asked Bush to seek the remaining bailout money so that Obama can have it at his disposal promptly after taking office Jan. 20.
Summers' letter included tacit acknowledgment of bipartisan congressional dissatisfaction with the manner in which the Bush administration has administered the first half of the funds.
"The president-elect also shares the frustration of the American people that we have seen too little effect from this rescue plan on jobs, incomes, and the ability of responsible homeowners to stay in their homes," Summers wrote. "He believes the American people are right to be angry with the way this plan has been implemented."
The White House said that Bush agreed to notify Congress after Obama requested the money. Congress has 15 days to reject the request, but efforts were afoot to have the money available for Obama much sooner.
The request would give Obama, who takes office Jan. 20, not only the opportunity to get quick access to the money, but also to change the program's goals and conditions.
Obama's request comes as Democrats in the House of Representatives prepared to act on legislation that has some of the same aims laid out in Summers’ letter.
Earlier Monday, Bush told reporters that he would not request the money form Congress unless Obama "specifically asked me to make it." Obama called Bush at 10:25 a.m., EST, after the news conference ended, Obama transition officials said.
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 Summers Sunday 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.
At his news conference, Bush said, "I readily concede I chucked 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."
But he credited the program for improving the lending environment, saying that "lending is just beginning to pick up."
Congress approved the program in October, authorizing $700 billion to assist the financial industry.
The current administration has already committed the first $350 billion, using it to inject capital into banks and to bail out ailing major companies considered too big to fail without further damage to the economy. Money from the program has gone to insurance giant American International Group Inc. and automakers General Motors Corp. and Chrysler LLC.
Lawmakers from both parties have criticized the administration's handling of the fund, in part because the financial institutions that have received the unconditional sums of money 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.
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.
Obama Team Promises Changes in Use of Bailout