Bush Said to Tell Aides He Won't Seek Bailout Funds (Update2)
By Alison Vekshin and Alison Fitzgerald
November 17, 2008
Nov. 17 (Bloomberg) -- The Bush administration told congressional aides it won't ask lawmakers to release $350 billion remaining as part of the $700 billion U.S. financial- rescue package, people familiar with the matter said.
The administration of President George W. Bush ends in less than 10 weeks, and a delay in submitting a request to lawmakers would leave it to President-elect Barack Obama to tap remaining funds in the bailout fund.
"I think it is the right thing to do,'' Senator Richard Shelby, top Republican on the Senate Banking Committee, said today in a Bloomberg Television interview. "I think we need to debate this. I think the American people need to know where the first $350 billion went, who benefited from it.''
The Treasury Department has committed $290 billion, or about 83 percent of the total allocated so far in a program Congress enacted last month to inject capital into a wide spectrum of banks and American International Group Inc. The U.S. invested $125 billion in nine major banks, including Citigroup Inc. and Wells Fargo & Co. and plans to buy an additional $125 billion in preferred shares of smaller lenders.
Treasury Secretary Henry Paulson has been criticized by lawmakers for shifting the focus of the program to inject capital directly into financial institutions. His initial proposal presented to Congress called for buying troubled assets from the firms.
`Preserve the Firepower'
Paulson told the Wall Street Journal today he is unlikely to use what remains of the package, estimated at $410 billion, unless a need arises.
"I'm not going to be looking to start up new things unless they're necessary, unless they make great sense,'' Paulson said. "I want to preserve the firepower, the flexibility we have now and those that come after us will have.''
The Treasury Department informed Congress that there would be no notification seeking the funds this week, and didn't go beyond that, a department spokesman said today. The secretary has no timeline for accessing the second $350 billion, the spokesman said.
Paulson and Federal Reserve Chairman Ben S. Bernanke will meet today with House Speaker Nancy Pelosi and other Democratic leaders to discuss how the funds are being used and a proposal to rescue the auto industry.
"We have some questions about the significant alterations that have been made in the implementation'' of the bailout program, Pelosi said before meeting with Paulson and Bernanke.
Paulson last week repeatedly declined to answer when and whether he would go to Capitol Hill for the rest of the funding.
"Right now, I have no timeline for drawing down the next $350 billion,'' he said in a Nov. 13 interview with Bloomberg Television. The legislation setting up the program gives Congress the ability to block the final installment.
The shift in using the funds came under fire last week from legislators in a committee hearing with Neel Kashkari, Treasury's interim head of the Troubled Asset Relief Program.
"This looks like classic bait-and-switch,'' said Representative Dennis Kucinich, an Ohio Democrat.
Paulson and Bernanke are scheduled to testify tomorrow on the program before the House Financial Services Committee.
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