updated 12/22/2008 6:50:29 PM ET 2008-12-22T23:50:29

A key House Democrat is pushing to get the second half of the $700 billion rescue fund released next month, before President-elect Barack Obama is inaugurated, in part to help stimulate the economy.

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Barney Frank, chairman of the House Financial Services Committee, said Monday he is preparing legislation to require that some of the money be spent for specific purposes, such as stemming foreclosures and reducing mortgage rates.

At the same time, commercial real estate developers and other companies are seeking their own share of the bailout pot.

Frank's bill would impose tighter restrictions on the second $350 billion of the bailout funds, such as requiring banks to report on their new lending every quarter and toughening limits on executive compensation. Many U.S. banks have received federal capital in an effort to stimulate lending.

"I don't want to wait until Obama," he said in a phone interview. "I think we can do it now."

The bailout funds, along with a stimulus package the Obama administration is expected to push early next year, would have "the impact that you need to get this economy back out of the dumps," Frank said.

A spokeswoman for Obama did not return a call for comment Monday.

Last week, President George W. Bush's administration used the final piece of the initial $350 billion to provide loans to automakers General Motors Corp. and Chrysler LLC. The Treasury Department has earmarked $250 billion to buy stock in banks, including Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., and provided $40 billion in capital to insurance giant American International Group Inc.

Lawmakers have criticized Treasury for not using any of the initial $350 billion to prevent additional home foreclosures. Up to 2.25 million Americans could lose their homes to foreclosure this year, Federal Reserve chairman Ben Bernanke has warned.

Frank said his legislation would include a version of a plan, supported by Federal Deposit Insurance Corp. Chairman Sheila Bair, to spend $24 billion to give lenders financial incentives to modify more loans and help more borrowers keep their homes. Bair has estimated it could prevent 1.5 million foreclosures.

His proposal also would include a measure, under consideration by Treasury, to use government-controlled mortgage companies Fannie Mae and Freddie Mac to reduce mortgage rates to 4.5 percent or lower to stimulate more home buying.

Frank also wants to revamp the Hope for Homeowners program, which was launched Oct. 1. It was intended to let 400,000 troubled homeowners swap risky loans for conventional 30-year fixed-rate loans with lower rates. The early results have been disappointing, with only 312 applications so far, and officials are looking at ways to expand the program's use.

Frank is "committed to fixing" low participation but blames the Bush administration for resisting the program when it was debated in Congress last summer and being slow to fix problems in its design, said his spokesman Steve Adamske.

Meanwhile, financial industry groups are pushing to use the bailout fund to help a wider array of companies, including automotive financing companies such as GMAC Financial Services. GMAC is 51 percent owned by Cerberus Capital Management LP, a private equity firm; General Motors owns the rest.

GMAC, which provides financing for GM vehicle and dealer loans along with home mortgages, is having trouble finding adequate support from its bondholders for a debt transaction that would allow it to become a bank holding company and gain eligibility for bailout money.

"What good does it do to bail out the automakers if you can't get a loan to buy a car?" said Scott Talbott, chief lobbyist for the Financial Services Roundtable, which represents more than 100 large banks, brokerage firms and insurance companies.

Meanwhile, the Federal Reserve on Monday said it has approved CIT Group Inc. as a bank holding company, clearing a key hurdle for the firm to bolster its resources with loans and support from the government's financial rescue fund. The decision means the New York-based commercial financial services firm will have permanent access to the Fed's emergency loan window and will be eligible for loans from the $700 billion rescue fund created by Congress on Oct. 3.

Commercial real estate developers said Monday they also are petitioning the government for support from the $700 billion rescue fund. The Real Estate Roundtable said an estimated $400 billion of commercial real estate mortgages will come due by the end of 2009 without adequate refinancing options.

Industry officials said thousands of office buildings, hotels, shopping centers and other commercial buildings could be headed into foreclosure or bankruptcy unless the government provides support.

Jeffrey D. DeBoer, president of the Real Estate Roundtable, said the industry has written to federal officials asking to be included in a new $200 billion loan program being run by the Federal Reserve, with support from the financial bailout program, to bolster the market for credit card debt, auto loans and student loans.

DeBoer said the commercial real estate industry would like to see that program expanded to cover their properties or have a similar program begun to help their industry.

"We think it is critical that as soon as possible that policymakers announce their intentions to make sure that the credit markets function so this huge wave of debt coming due will be able to be refinanced in an orderly process," he told reporters Monday.

Treasury spokeswoman Brookly McLaughlin said no final decisions had been made yet on the request from commercial developers. But she noted that Treasury Secretary Henry Paulson, when he announced the effort to help the credit card, auto and student-loan markets, said the new lending facility could be expanded and specifically mentioned providing assistance for "commercial mortgage-backed securities."

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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