Bush Said to Tell Aides He Won’t Seek Bailout Funds (Update2)
Bush Said to Tell Aides He Won't Seek Bailout Funds (Update2)
By Alison Vekshin and Alison Fitzgerald
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
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 Bernake.
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.
Last Updated: November 17, 2008 17:15 EST