Treasury pays $33.56B to 21 banks in 2nd round of bailout payments

WASHINGTON -- The government says it has supplied $33.56 billion to 21 banks in a second round of payments from the $700 billion rescue program.

The Treasury Department confirmed the second round of government stock purchases designed to bolster the balance sheets of the nation's banks to combat the worst financial crisis in more than seven decades.

The new payments follow an initial $125 billion designated for nine of the country's biggest banks. The rescue program has now disbursed $158.56 billion with officials working to get more payments out to banks in coming weeks.

Meanwhile, the outgoing Bush administration has told top lawmakers it does not plan to use at least half of the $700 billion bailout fund that Congress approved this fall to aid the financial industry, congressional officials said Monday.

The Treasury Department denied the claim, but stopped short of saying the funds would be tapped.

The congressional officials said Treasury Secretary Henry Paulson passed the word over the weekend that he intends to leave $350 billion untouched when the administration leaves office on Jan. 20. That would mean the incoming Obama administration would decide whether and how the funds should be spent.

Within a few hours, Michele Davis, assistant secretary for public affairs, said congressional leaders had been told the administration would not seek the additional funds over the next few days. She said no decision had been made for the balance of the Bush administration's term, which ends on Jan. 20.

The controversy flared at a delicate moment, with the economy likely in a recession, the credit markets not yet recovered from this fall's meltdown and the White House and Democratic-controlled Congress at odds over proposals to bail out the auto industry.

The White House appears reluctant to dip further into the $700 billion bailout fund that Congress approved, yet a public disclosure of its intent could further damage the credit markets and the broader economy. As a result, it was unclear whether the administration was deliberately trying to pull back on its weekend message — or whether congressional officials in both parties had misunderstood what they were told.