Obama Would Spend Bailout Funds on Housing Crisis

President-elect Barack Obama speaks to reporters during his meeting with Mexico's President Felipe Calderon, not pictured, in Washington, Monday, Jan. 12, 2009. (AP Photo/Charles Dharapak)

(AP)

President-elect Barack Obama would spend the remaining $350 billion of a financial bailout fund on expanded lending and reduced foreclosures and would not use the money to help other industries, lawmakers said Wednesday after discussions with Obama emissaries.

The Senate was set to vote Thursday on whether to release the money. Lawmakers insisted that Obama advisers put their assurances in writing before the vote.

Seeking to secure votes from wary members of both parties, Obama aides fanned out across the Capitol on Wednesday. Their lobbying effort culminated in a closed door meeting between Senate Republicans and top Obama economic adviser Larry Summers and incoming White House chief of staff, Rahm Emanuel.

The private guarantees went further than what Obama's team has been willing to discuss publicly about his plans for the second half of the $700 billion Troubled Asset Relief Program.

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Obama has asked Congress for the money and has been trying to overcome misgivings from lawmakers over how the Bush administration spent the first half of the fund.

Democrats were growing increasingly optimistic that the Senate would agree to release the money to the new administration. And even reluctant Republicans praised Obama's outreach.

"These folks have much more credibility already than Secretary Paulson," Sen. Jim DeMint, R-S.C., said, referring to the Bush administration's treasury secretary, Henry Paulson.

Still, Republicans demanded that the incoming Obama administration put in writing details of the conditions and goals for the money.

"There is a real concern that it's one thing to say it in the privacy of that room; it's another thing entirely to put something on the record," said Sen. John Thune, R-S.D.

While the criticism of the Bush administration's handling of the bailout has been bipartisan, Republicans were especially opposed to using the bailout funds to help out nonfinancial sector industries. Money from the fund has been used to assist insurance giant American International Group Inc. and automakers General Motors Corp. and Chrysler LLC.