Obama Courts Democrats For $350B Bailout

President-Elect Asks Senators Not To Stand In Way Of Additional Rescue Funds

(CBS/AP)  President-elect Obama practiced his powers of persuasion in meetings on Capitol Hill on Tuesday and pushed congressional Democrats for the quick release of $350 billion - the second half of bailout funds to prop up the economy's still stuggling financial sector.

It's not an easy sales job after the first half went to banks instead of mortgage relief, reports CBS News correspondent Sharyl Attkisson.

As it held hearings on adding restrictions to the disbursement of the remaining funds, members of Congress grumbled about how poorly the massive bank bailout has been handled so far.

"As a result we have a problem that has infuriated Americans from coast to coast," said Rep. Ron Wyden, (D-Ore.)

Added to the mix this afternoon, a major deal between two financial giants which have already taken billions in bailout money, Attkisson reports.

Citigroup, which got $25 billion in in October and $20 billion more last month is still in trouble, and is selling a big chunk - part of its Smith Barney brokerage - to Morgan Stanley, which also got $10 billion in taxpayer bailout money.

Obama economic advisor Robert Rubin stepped down as Citigroup Director last week amid questions about the company losing $20 billion dollars over the past year.

"They are not a healthy bank, they are a troubled bank," says equity strategist Peter Boockvar. "But with the $45 billion that's been pumped into Citgroup, (it) is in essence an arm of the the U.S. government and the government is not going to let Citigroup fail."

All of which seems at odds with the Treasury Department's insistence that bailout funds are not being spent on weak banks, Attkisson reports.

Obama made his pitch at the Capitol, where he attended the Democratic senators' closed-door luncheon as part of his stepped up campaign to have economic tools at the ready shortly after he assumes office next week.

Lawmakers who emerged from the session said the president-elect pledged to correct what they believe were shortcomings in the way the Bush administration handled the first $350 billion of the Troubled Asset Relief Program, also known as TARP. They said he would veto any attempt to block his own administration's use of the funds.

"He said TARP is necessary," said Sen. Charles Schumer, D-N.Y., after emerging from the luncheon. "Nobody wants to do it, it's hardly a thing that anyone would pick as the first thing that we'd want to do. But you have to do TARP."

A week shy of taking office, Mr. Obama is putting his persuasion skills to a high-stakes test with Congress as he seeks to put his emerging administration in control of more than $1 trillion in economic stimulus and financial bailout money.

Mr. Obama's transition team is ready to dispatch top aides to meet with Senate Republicans this week in anticipation of a possible vote Thursday on whether to release $350 billion from the embattled rescue fund for the financial sector.

In the House, Financial Services Committee Chairman Barney Frank, D-Mass., said the speedy release of the next $350 billion was necessary to help stem the rising tide of foreclosures, which was one of the original purposes of the bailout legislation.

"If we do not get the second $350 billion, I do not see any way that we can get substantial foreclosure relief," Frank said.

But Rep. Spencer Bachus of Alabama, the committee's ranking Republican, questioned whether the money was necessary.

The fund is becoming "a grab-bag where people can just reach in and get taxpayer money," he said.

Frank was presiding over a hearing on the bailout program in advance of legislation that would place tough new restrictions on recipients of the money and require spending to reduce mortgage foreclosures.

Frank's bill is scheduled to reach the floor of the House on Wednesday, with a vote set for Thursday. At the Treasury Department, officials were putting in place tools to measure whether banks that receive funds from the financial rescue program are increasing lending.

On Monday, President George W. Bush, at Mr. Obama's request, asked Congress for access to the remaining billions in the bailout fund. The request reached Congress as lawmakers and Obama also were assembling a spending and tax-cutting stimulus package of $800 billion, or possibly more.

If he succeeds, Mr. Obama would have more than $1.1 trillion at his disposal to tackle sinking employment and clogged credit within weeks of assuming the presidency.

"It is clear that the financial system, although improved from where it was in September, is still fragile," Mr. Obama said Monday in making the case for the additional bailout funds.

In London, Federal Reserve Chairman Ben Bernanke said Tuesday that Obama's stimulus package could provide a "significant boost" to the sinking economy. But he warned in a speech prepared for the London School of Economics that such a recovery won't last unless other steps are taken to stabilize the shaky financial system.

Although Bernanke has previously endorsed the notion for a fresh round of government stimulus to lift the country out of recession, it marked the first time the Fed chief has referenced the roughly $800 billion recovery plan now being worked on by Mr. Obama.

In Congress, key tax provisions in the stimulus package remained in flux, with Mr. Obama's call for a break for companies that create new jobs described by Democratic officials as all but dead. Several Democrats prefer to use the funds to make sure upper middle class families are not ensnared by the alternative minimum tax.

Democrats are more favorably inclined toward Mr. Obama's proposal for a tax break for lower-paid individuals and couples, of up to $500 and $1,000. Democratic congressional aides also said the idea of an extra Supplemental Security Income payment was gaining traction on Capitol Hill.

Democratic lawmakers hope to have an economic stimulus bill ready for Mr. Obama's signature by mid-February, although officials indicated that numerous provisions are unsettled.

On the bailout fund, Bush's notification set a 15-day deadline for Congress to disapprove of the request or it will be released to the Obama administration. Lawmakers have complained that the Treasury Department's use of the original $350 billion has been muddled and misleading, that recipients of the funds have faced little accountability and that the program has done nothing to reduce home foreclosures.

If both chambers refuse to release the money, it would be up to Mr. Obama to issue a veto - a dramatic first act by a new president - in hopes that Congress would not override him.

Larry Summers, Mr. Obama's top economic adviser, delivered a three-page letter to congressional leaders Monday outlining the transition team's goals for the bailout fund. But several lawmakers from both parties said the Obama team would have to provide more information.

"That's a broad-scope type of letter," said Sen. Ben Nelson, a moderate Democrat from Nebraska. "What we really need is something with more details so we can truly make those decisions about how the money is going to be spent."

[blakdmnd]

Barney Frank and Christopher Dodd, Finance Committee Chariman and member, are directly responsible for the credit crisis at Fannie Mae and Freddie Mac. They were driving the bus the whole time. I love the fact that they are trying to blame the Bush Administration for their extrememly poor management of these two entities. And now we see that CitiGroup''s Director and President-Elect Obama''s Serior Finance Director has no idea where the 25 Billion TARP funds went. Somehow this is going to be tough for Nancy Pelosi to blame of the Bush Administration. When we begin to peel back the layers of this onion it will be our Senate leaders who will be discovered as inept. I am feeling sorry for the liberals who have blamed every shortcoming in our Legislative Branch (Law Makers)on the Bush Administration (Executive Branch). You have less than a week left to blame others, then you will be responsible for your actions. And held accountable.

[obam-baboon]

When the inept d-crat congress releases more TARP taxpayer money to be flushed, they MUST impose the condition that hussein cannot use ANY of these funds to buy drugs. He''ll just have to use his own money to further his addiction, just like his supporters do.

[blakdmnd]

Nancy Pelosi lied to Americans today on Good Morning America when she blamed the Bush Administration for the mishandling of the TARP initial funding. The democrats are in charge of legislation that handles this disbursement. It is so obvious that they want the second funding to pass before next Tuesday so they cam continue to blame the exiting administration for their own shortcomings. She has no honor or integrity. She and Barney Frank need to take responsibility for the inept job they are doing. Chris Cuomo had her stuttering when he asked her why she was blaming others while she sits in the highest seat in the country. America is watching her very closely and will hold her completely responsible for this mess as she is the ring master in this finger pointing senate. The time for blaming Bush for the decisions made by the Legislative Branch of this country will soon end and responsibility will fall where it should. Providing that the main stream media is interested in pursuing objective interest in the poor leadership of our liberal government.

[johndevinejr]

makes sense now...one of obama''''s economic advisors is former director for citigroup. former because he stepped down when he could not find the $20 billion he missplaced. he will work out just fine in gov''''t they cant find the $350 billion they gave to citigroup and others like them, lol


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Posted by clowry1611 at 11:12 AM : Jan 14, 2009

Yeah, lets just pretend that Bush didn''t disappear $9 Billion dollars to the Faith Based Initiative, and somehow another $12 Billion was disappeard by Halliburton in Iraq.
We are currently experiencing the result of the wonderful republican social and economic theories. Pretty good isn''t it?

[johndevinejr]

Seig heil, gerbbils.



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Posted by repo_man_08 at 10:27 AM : Jan 14, 2009

Here''s another republican who supports torture, supports illegal wiretapping of Americans, supports imprisonment of Americans without charges. Supports denial of habeus corpus.
Then implies that others are Nazis.

These people are truly delusional.

Who is the leader of the republican party? Rush Limbaugh, Sean Hannity! Sarah "the moron" Palin.

[johndevinejr]

Where I might agree with you with this in mind:

1: Obama will increase taxes
2: Obama will hurt the US Economy more.

Remember the Congressional Democrats (an some sell-out Republicans) had control of the budget for over 2 years.

3. Obama is in it for Obama and his hench men and not the US citizen.





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Posted by PapaBC at 11:40 AM : Jan 14, 2009

Horsesh!t.

The problems with the economy are the direct result of the republican economic philosophy. The republicans have presided over the largest expansion of government, the largest deficits in history and the largest transfer of wealth from the middle class to the top 10%...the group Bush calls "my base", and have accomplished NOTHING.

[papabc]

If you want to let Obama try to get things done than get rid of these morons in congress and start with Pelosi.
----------------------

Would like to dump Pelosi, Boxer, Farr and so on but with the radical Liberals of SF and Santa Cruz that will be difficult to do.

[papabc]

Enough with the bailouts already!!!! Let''''s make our own bailouts by supporting local business in your community.
www.talesofcourage.com

Posted by tonyinmil
----------------------------------

Where I might agree with you with this in mind:

1: Obama will increase taxes
2: Obama will hurt the US Economy more.

Remember the Congressional Democrats (an some sell-out Republicans) had control of the budget for over 2 years.

3. Obama is in it for Obama and his hench men and not the US citizen.

[tonyinmil]

Enough with the bailouts already!!!! Let''s make our own bailouts by supporting local business in your community.
www.talesofcourage.com

[papabc]

No bama will strong arm Senators into voting for this. His organization is already behind a move to cause trouble for those Senators that are questioning this bailout. He will strong arm them like he and his ACORN buddies helped to strong arm banks to give money to people who couldnt afford or deserve mortgages. Face the wrath of Obama if you dont agree with all his proposals. The koolaid must keep flowing and you must continue to follow our dear leader or else.

Posted by junglejimy12
----------------------------

Voters wanted Change but they really do not know what kind of thug Obama really is.

[papabc]

Bend over and Kiss your Wallet and Butt ring as the Obama-nation is coming. We are about to get the biggest *** this nation has ever been threw. Even K-Y will not cure the damage done by this guy and his Green Gang.

If you thought that DC never listened to you before then you better yell louder. Those guys in DC only hear each other and not the Citizens.

[clowry1611]

makes sense now...one of obama''s economic advisors is former director for citigroup. former because he stepped down when he could not find the $20 billion he missplaced. he will work out just fine in gov''t they cant find the $350 billion they gave to citigroup and others like them, lol

[niceface19]

Tax dollars is like shark baits, our government is all sharks and they are very hungry.

[walt1944-2009]

This is HIGHLY DISGUSTING!

No one knows what happened to $350 BILLION of our taxpayer money that was handed out by "Old Baldy" Paulson to banks with absolutely no oversight, as usual. Supposedly, the money was supposed to free up credit and attempt to rescue homeowners caught up in the real estate scam of the century!

To date, no homeowner has been "rescued" that I know of and credit is tighter than ever. It is assumed that banks are either "sitting" on the money they got or used it to buy up other banks, or more likely, GAVE IT AWAY in the form of bigger bonuses and more perks to their corporate executives!

Now BOTH Bush AND Obama want to get the rest of the supposed "TARP" money and give that away too!

You can bet the banks are going to be as "fiscally responsible" with more cash as they were with the last $350 BILLION!

Why not just GIVE THE PEOPLE who are the REAL MOVERS of the economy, the $350 BILLION and have them pay down their debt, catch up on their mortgages, and go out and buy that new car or freezer?

How about that Obama????

SIG HEIL, THE AVERAGE PERSON DOSEN''T COUNT; HE NEVER DID!!!, BUSH!!!

[brannigon]

Yeah, that it Obama! Keep spending more money to get out of the debt that we''re in already! Where is the money going to go? Who are you bailing out now? How about bailing out the American citizen who can''t even get a loan from the banks because we don''t know what they''re doing with the money! God help us all! Its time to back up all the BS!!!

[wardoglrs]

Why do conservatives hate America so much?

Posted by neocons_suck
-----------------------------------------
Cause there not conservatives so stop asking like a troll. Conservatives are under attack people who drink from the MSM koolaid are to drunk to see truth.

So if your concerned about the conservatives you should be cause there your only hope

[wardoglrs]

My view on Obama is that this man is a disaster right off the get go.

If you want to save money stop spending it, Shut down government dept like the FCC FAA and such. At 40 billion per dedt its time to say bye bye.

Bring all the troops home shut down the IRS and the Federal Reserve which is unconstitutional any way.

Oh yea rid the country of the Neo Cons who rob you and send your kids to wars.
GOOGLE Peter Schiff & Ron Paul Library

[wardoglrs]

Posted by demswin08
===================

You lost all credibility when you mentioned you follow that whack job Ron Paul.
Have we not seen enough of what Texas has had to offer these United States.

Posted by demswin08.
I tell you what if you can find a better man that understands Mises economic Philosophy & Free markets
Government & corruption like Dr Paul does then show me him.

There is no one in congress that protects your rights & Liberties like Dr Paul no one not one.

Important facts.
He has never voted to raise taxes.
He has never voted for an unbalanced budget.
He has never voted for a federal restriction on gun ownership.
He has never voted to raise congressional pay.
He has never taken a government-paid junket.
He has never voted to increase the power of the executive branch.
He does not participate in the lucrative congressional pension program.
He returns a portion of his annual congressional office budget to the U.S. treasury every year.
He voted against the Patriot Act.
He voted against the Iraq war.
Ron Paul''s record:

[wardoglrs]

This is not the governments role and as long as you all let them control your wealth your distend to lose it like it already has and now you all want more?

Any one thats supports this poor excuse to devalue the dollar even more is going to find that it will cost just that much more time and pain to go through.

Dont any of you know Euro Pacific with Peter Schiff
How about the Ron Paul Library these are a good source.

We live under a Fractured banking system that creates one thing for all "DEBT that cant be paid back"

[enviro_wacko]

If Obama wants the $350B, then all he has to do is have his old campaign team flood the senators'''' inboxes with donation requests.

Just like old times . . .

Posted by GreatDriveW at 02:34 AM : Jan 14, 2009

Keep your day job (sucking_farts out of cushions or whatever it is that you do) because you''re not funny.