Paulson won't use rest of bailout cash yet

WASHINGTON -- Treasury Secretary Henry Paulson won't ask Congress, which meets in a rare lame duck session this week, for permission to tap into $350 billion in remaining funds under the sweeping $700 billion financial rescue law.

"The secretary has no timeline for accessing the second $350 billion," said Treasury spokeswoman Brookly McLaughlin.

The law, enacted in October, gave the Treasury Department wide discretion to allocate the first $350 billion under the measure but provided Congress with authority to vote on whether to release the remaining funds.

The decision doesn't necessarily mean Paulson won't seek the funds in coming months, if it becomes necessary to stabilize the markets. The secretary has repeatedly said that if and when it makes sense to go to Congress, he will do so. Still, the decision could give President-elect Barack Obama's administration more flexibility over the money.

Paulson, Federal Reserve Chairman Ben Bernanke and other top economic officials are set to testify today before the House Financial Services Committee on their use of the financial rescue law. The hearing could be spirited, given growing unease about recent Treasury decisions.

Paulson announced last week that he was abandoning the centerpiece of the rescue program, the purchase of troubled mortgage-backed securities from banks in an effort to bolster their balance sheets. Instead, the government is buying up bank stock to inject fresh capital into the institutions.

The Treasury Department on Monday said that it had provided $33.56 billion to 21 banks in a second round of payments under the financial rescue law. The payments follow an initial $125 billion in stock purchases, targeted at nine of the country's biggest banks. So far, the Treasury Department has earmarked $158.6 billion in payments to banks, with officials working to get more out in coming weeks.