Politics

WASHINGTON (CBS) ― Seeking to reassure wary lawmakers, President-elect Barack Obama's top economic adviser told congressional leaders Monday that Mr. 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, Mr. 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 fun is "imminent and urgent."

The letter spells out how Mr. 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 Mr. Obama intends to launch a "sweeping effort" to mitigate foreclosures.

Mr. Obama on Monday asked Bush to seek the remaining bailout money so that Mr. 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."

Speaking on CBS' The Early Show, Sen. Chris Dodd set out the conditions necessary for Congress to approve spending the second half of the $700 billion federal rescue plan, saying that in order to win authorization of such additional spending, the government will have to do a much better job of accounting to the taxpayers for where money already spent has gone.

Dodd said that Mr. Obama had expressed to him his dissatisfaction with how TARP money has been administered so far and that he intends to "re-brand" the program.

"He's not happy with how mismanaged this program has been over the last several weeks," Dodd told CBS' The Early Show. "Money going to lenders without assurances [they] are actually going to lend, executive compensation not being limited, as it was promised it would be. So there need to be far more assurances about the accountability standards and how this is all going to work.

Dodd said he was encouraged by assurances during a two-hour meeting yesterday with Summers and feels "better this morning" about prospects for approval.

The White House said that Mr. Bush agreed to notify Congress after Mr. Obama requested the money. Congress has 15 days to reject the request, but efforts were afoot to have the money available for Mr. Obama much sooner.

The request would give Mr. 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.

Mr. 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, Mr. Bush told reporters that he would not request the money form Congress unless Mr. Obama "specifically asked me to make it." Mr. Obama called Mr. Bush at 10:25 a.m., EST, after the news conference ended, Obama transition officials said.

Mr. Bush's assertion that the decision to tap the money rests with Mr. 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, Mr. Bush in recent weeks has let Mr. 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 Mr. Obama's separate plan for roughly $800 billion in spending and tax breaks to spur the economy.

However, while passage on Capitol Hill is likely, CBS News White House correspondent Chip Reid reports that some economists question whether it will be enough.

"We should use this money as efficiently as possible to create jobs," Dr. Peter Morici, of the Robert H. Smith School of Business, told CBS News. "That's best accomplished by spending it on roads, bridges, schools, putting people directly back to work, than by rebating taxes to individuals and businesses who may spend the money or who just may put it under their mattresses and save it.

"Once the effects of the stimulus wear off, those jobs will disappear if he doesn't fix what's broken in the economy."

Meanwhile, at his news conference, Mr. 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 Mr. Bush and Mr. 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.

(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)