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Obama awaits Senate vote on $350B bailout

 Former President Bill Clinton, second right, talks with Nigerian Vice President Goodluck Jonathan, center;,This Day newspaper chairman Nduka Obaigben...
 This undated handout photo provided by President-elect Barack Obama's transition office shows the new office portrait of President-elect Barack Obama...

NIGERIA CLINTON

Former President Bill Clinton, second right, talks with Nigerian Vice President Goodluck Jonathan, center;,This Day newspaper chairman Nduka Obaigben...

CORRECTION Obama Portrait

This undated handout photo provided by President-elect Barack Obama's transition office shows the new office portrait of President-elect Barack Obama...

President-elect Barack Obama retreats to the sanctuary of his transition office Thursday to await a Senate vote on his request for $350 billion in financial bailout money, a rare test wills between the nation's legislative branch and a president-in-waiting.
Obama doesn't take office until noon Tuesday and has broken with historic protocol by intensely lobbying for Congressional support of the second half of the massive $700 billion pot of financial rescue funds. The effort has coincided with long hours spent by him and advisers trying to forge plans for a further $800 billion to use over three years to stop the country's precipitous economic slide.
Obama said he would veto legislation that blocks access to the $350 billion from the Troubled Asset Relief Program, or TARP, while at the same time agreeing to put in writing _ as a good-faith measure_ his plans for using the second half of the money.
Critics of how the first portion of the fund was spent, charge the money went disproportionately under the Bush administration to big financial institutions to the detriment of small banks and homeowners facing foreclosure on their home mortgages. The TARP was passed last fall as the nation stood at the brink of a possible financial collapse.
A wary Senate scheduled a vote Thursday on Obama's request for the TARP money, testing the president-elect's powers of persuasion. His lobbying effort culminated in a closed-door meeting Wednesday between Senate Republicans, top Obama economic adviser Larry Summers and incoming White House chief of staff Rahm Emanuel.
"These folks have much more credibility already than Secretary Paulson," Republican Sen. Jim DeMint said, referring to the Bush administration's treasury secretary, Henry Paulson.
Obama's demand for an economic stimulus package, meanwhile, has grown to an estimated $850 billion. A vote on that measure has been promised by mid-February. Altogether, if both measures are approved, Congress will have given the new president a whopping $1.2 trillion war chest to use against the failing economy by three weeks into his presidency.
Under safeguards adopted by Congress when it passed the bailout bill late last year, the House and Senate can reject a request to spend the second $350 billion in the fund. The Senate will vote on a motion to disapprove the request. If a majority votes no, Obama will win access to the money.
If a majority votes 'yes,' Obama will have to await a vote in the House next week. If the House also votes to not release the money, his only option is to issue a veto. While Obama has warned that he is prepared to do that, it would be a remarkably awkward first act for a Democratic president to rebuff a Democratically controlled Congress.
Eager to avoid that, Obama's emissaries have told lawmakers that he intends a sharp change in course from Bush's bailout maneuvers. Lawmakers said Summers and others have told them he intends to expand lending, reduce foreclosures and eschew helping nonfinancial industries.
"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 Democrat Sen. John Thune, explaining requests for Obama to outline his plans in writing.
The House on Thursday was scheduled to vote on legislation that would place broad restrictions on the bailout program. One major provision would require that the new administration spend between $40 billion and $100 billion on reducing the number of foreclosures.
In the Senate, meanwhile, Obama's pick for attorney general was expected to face aggressive questioning Thursday, as it became increasingly apparent that not all Cabinet choices would earn quick approval from Congress.
Obama had been hoping to have all his Cabinet members confirmed by Inauguration Day to begin tackling the economic crisis and managing the country's two wars.
Thursday's Senate Judiciary Committee hearing for Eric Holder, Obama's choice for attorney general, promised to be the most contentious so far among the Cabinet choices amid questions over some of his past decisions. They include roles in awarding clemency to Puerto Rican separatist bombers and in Bill Clinton's controversial pardon of fugitive financier Marc Rich.
Several nominees have been well received, including former Obama rival Hillary Rodham Clinton, who could be confirmed as secretary of state within hours of Obama's taking the oath of office Tuesday. The Senate Foreign Relations Committee planned to vote on her selection Thursday.
But the transition toward Obama becoming the 44th U.S. president hit an embarrassing bump this week when Treasury Secretary-designate Timothy Geithner owned up in a closed-door session with senators to failing to pay $34,000 in taxes from 2001 to 2004.
The oversight has been corrected, but senators pushed back his confirmation hearings by at least a week.
However, lawmakers have indicated they expect both Holder and Geithner to be confirmed in the end.


Updated : 2020-12-05 11:12 GMT+08:00