Obama vows wise use of remaining bailout money

WASHINGTON -- In formally asking Monday for the release of the second half of the $700 billion financial bailout fund, President-elect Barack Obama is promising Congress he will do a better job than President George W. Bush in using the money to help average Americans.

"We're going to focus on housing and foreclosures. We're going to focus on small businesses," Obama told reporters Monday. "We're going to focus on what's required to make sure that credit is flowing to consumers and businesses to create jobs in the United States."

But first Obama must focus on smoothing over strong resentment on Capitol Hill about the Troubled Assets Relief Program, or TARP. Many Democrats and Republicans say they were misled by Treasury Secretary Henry Paulson about how the first $350 billion would be spent. Democrats are particularly angry that none of the money has gone to help homeowners facing foreclosure.

"People feel they got burned up here by the current administration," said Senate Budget Committee Chairman Kent Conrad, D-N.D. "I understand the need for the money to be released. I also feel very strongly it's got to be conditioned in a way to avoid what I see are the abuses by the administration in the handling of the first" half.

Obama called Bush on Monday and asked him to notify Congress to access the second half of the fund. Bush agreed, and a formal request was delivered to Congress on Monday night.

Lawmakers have 15 days to vote to reject the request, and the Democratic-controlled Congress is unlikely to block it. But Obama is seeking to avoid a confrontation over economic recovery spending that could spill into his push for an approximately $800 billion stimulus package.

Lawrence Summers, whom Obama has chosen to head his National Economic Council, promised in a three-page letter to congressional leaders Monday that the new administration would "act both quickly and wisely." He broadly outlined the changes that Obama is planning for the second part of the fund, including more transparency in how the money is spent and "a sweeping effort" to reduce foreclosures.

House Financial Services Committee Chairman Barney Frank, D-Mass., will hold a hearing today on legislation that would force major changes in the TARP program, including a requirement that $40 billion to $100 billion of the remaining money be used to revise existing mortgages to avoid foreclosures. In introducing the bill Friday, he said Democrats "intend to trust, but verify" Obama's use of the final $350 billion in the fund.

Increase likely for low-income elderly

More than 7 million poor people who are elderly, blind or disabled and receive cash benefits averaging $477 a month could get an extra monthly payment as part of Obama's $800 billion economic recovery plan.

Democratic congressional aides said Monday that the idea of an extra Supplemental Security Income payment is gaining traction on Capitol Hill as lawmakers and staff aides hold daily meetings to work out details of the upcoming stimulus bill.

The idea of a one-time, additional SSI payment this year would cost about $4 billion, which would go to more than 7 million poor people enrolled in the program. Most of them are disabled, though about 2 million poor seniors would also benefit.

Supplemental Security Income delivers payments of up to $637 per month to individuals and $956 to couples. About one-fourth of recipients are 65 or older.