Rebecca Christie and Robert Schmidt
Thursday, Dec 18, 2008
Treasury Secretary Henry Paulson may ask Congress for the second half of the $700 billion bank rescue program, concerned that the deepening recession may spark further financial turmoil.
Paulson could soon exhaust the first $350 billion with the bailout that President George W. Bush’s administration has pledged for General Motors Corp. and Chrysler LLC. The Treasury chief is discussing with aides strategies to seek congressional approval for the rest of the Troubled Asset Relief Program, people familiar with the deliberations said.
“We’re far from out of this” financial crisis, said Joseph Mason, a Louisiana State University professor in Baton Rouge who previously worked at the Treasury’s Office of the Comptroller of the Currency. “It’s actually not hard to imagine a transition of power where Obama walks in on the tail end of a crisis” with no funds left in the rescue package.
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Securing the extra money would give the Treasury a cushion in case another bank or insurer neared collapse. The obstacle: Democratic lawmakers have warned the Bush administration it must come up with a new effort to aid homeowners in danger of losing their properties.
Paulson hasn’t made a final decision. He continues to look at ways to use the money as well as when to move ahead, the people familiar with his plans said.
In a meeting with Bush last week, Paulson asked the president to publicly support a request for the $350 billion, a person familiar with the meeting said.
This article was posted: Thursday, December 18, 2008 at 5:33 am