Obama to broaden bailout spending

WASHINGTON (AP) — President-elect Barack Obama’s top economic adviser told congressional leaders Monday that the incoming president would broaden goals for using the remaining $350 billion financial bailout and insure transparency and oversight.

And as the incoming president began moving on a campaign pledge, two transition advisers said Obama was preparing to issue an executive order his first week in office - and perhaps his first day - to close the US military prison at Guantanamo Bay, according to two presidential transition team advisers.

On the bailout, Larry Summers, Obama’s designated National Economic Council chief, wrote House and Senate leaders that the need for the second half of the $700 billion fund was “imminent and urgent.”

Summers’ letter lays out how Obama intends to use the remainder of the Troubled Asset Relief Program to help community banks, small businesses, consumers and homeowners in addition to the massive sums that have already gone to threatened large financial organizations. He also specified that Obama wants to launch a “sweeping effort” to mitigate home mortgage foreclosures.

“I think many of us have been disappointed with the absence of clarity, the absence of transparency,” Obama told reporters after a meeting with Mexico’s president, Felipe Calderon. He said some of the money should have been spent on helping people avoid foreclosure.

“It is clear that the financial system, although improved from where it was in September, is still fragile,” Obama said.

Obama on Monday asked President George W. Bush to seek the remaining bailout money so the new administration would have it available soon after inauguration of Jan. 20.

Summers’ letter included tacit acknowledgment of bipartisan congressional dissatisfaction with the manner in which the Bush administration has administered the first half of the funds.

“The president-elect also shares the frustration of the American people that we have seen too little effect from this rescue plan on jobs, incomes, and the ability of responsible homeowners to stay in their homes,” Summers wrote. “He believes the American people are right to be angry with the way this plan has been implemented.”

Senate Banking Committee Chairman Christopher Dodd, a Democrat said the Obama team said a fuller accounting of the money already spent was needed as well, said Senate Banking Committee Chairman Christopher Dodd, a Democrat.

Summers sought to win over Senate Democrats even as the Republican leader of the House, John Boehner, warned that any effort to release the additional money would be a tough sell.

The request was likely to force a vote within days on whether to block the funding, but the deck is stacked in favor of Bush and Obama winning release of the remaining $350 billion. Congress can pass a resolution disapproving the request, but the White House could veto the resolution; then, just one-third of either chamber would be needed to uphold the veto and win release of the money. Senate leaders would prefer to win a majority vote, Dodd said.

The unpopular bailout has featured unconditional infusions of money into financial institutions that have done little to account for it.

Treasury Secretary Henry Paulson originally promised the money would be used to buy up toxic mortgage-related securities whose falling values have clogged credit markets and brought many financial institutions to the brink of failure.

Work continued through the weekend on Obama’s economic recovery plan, which features aid to cash-strapped state governments, tax cuts for most workers and working couples, a huge spending package blending old-fashioned public works projects with aid to the poor and unemployed, and a variety of other initiatives.

The closing of Guantanamo at the US Navy base in Cuba was not expected to happen immediately or even soon after the Obama order. In an interview last weekend, Obama said it would be “a challenge” to close it even within the first 100 days of his administration.

But the presidential directive, which one adviser said could be issued as early as Jan. 20, would start the process of deciding what to do with the estimated 250 al-Qaida and Taliban suspects and potential witnesses who are being held there. Most have not been charged with a crime.

The Guantanamo order would be one of a series that Obama is planning to issue shortly after he takes office next Tuesday, according to the two advisers. Also expected is an executive order about certain interrogation methods, but details were not immediately available Monday.

The advisers spoke on condition of anonymity because they were not authorized to speak publicly about the orders that have not yet been finalized.

Obama transition team spokeswoman Brooke Anderson declined comment Monday.

The two advisers said the executive order will direct the new administration to look at each of the cases of the Guantanamo detainees to see whether they can be released or if they should still be held - and if so, where.

During his meeting with Calderon, Obama said his administration would begin work immediately to build upon the relationship between the US and Mexico. The incoming American president traditionally meets with his Mexican counterpart before taking office.

Over a lunch of tortilla soup, the two leaders discussed such topics as the North American Free Trade Agreement, border security, immigration and crime.

Obama said the message he brought to the meeting is that his administration will be ready on day one to build a stronger relationship with Mexico. He said existing relations have been strong, but he believes they can be stronger.