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Obama: $350 billion bailout must help people

President-elect Barack Obama wants more transparency and strict guidelines for using the second $350 billion of the bailout fund Congress approved last fall to stabilize the nation's financial system.
President-elect Barack Obama talks with ABC’s George Stephanopoulos on Saturday. 
President-elect Barack Obama talks with ABC’s George Stephanopoulos on Saturday.  Lauren Victoria Burke / ABC News via AP
/ Source: The Associated Press

Barack Obama wants to make it easier to monitor how the second $350 billion installment of the financial bailout is spent and says homeowners and small businesses should get some help.

“We can regain the confidence of both Congress and the American people in that this is not just money that is being given to banks without any strings attached and nobody knows what happens, but rather that it is targeted very specifically at getting credit flowing again to businesses and families,” the president-elect said in an interview aired Sunday.

Obama’s economic team has been talking with the Bush administration about having Treasury Secretary Henry Paulson ask Congress as early as this week for access to the rest of the bailout fund. If Congress rejected such a request, a presidential veto could still free up the money, unless Congress overrode the veto.

Obama declined to say whether he wants President George W. Bush to request the rest of the money.

Senate Majority Leader Harry Reid indicated during a rare Senate session Sunday that Bush and Obama officials are near agreement on submitting notice to Congress about using the remaining $350 billion.

“We’re waiting to hear from President Bush and or President-elect Obama as to what, if anything, they’re going to do,” said Reid, D-Nev., “and that’s occurring as we speak.”

The Congressional Oversight Panel raised detailed questions last week about how banks are spending the first $350 billion, how the money will combat the rising tide of home foreclosures and Treasury’s overall strategy for the rescue. In instance after instance, the panel said, the Treasury Department did not offer adequate responses.

In an interview aired Sunday on ABC’s “This Week,” Obama said he has asked his economic team to develop a set of principles to ensure more openness about how the money is spent. Under consideration by Obama aides and congressional Democrats are proposals to limit executive pay at institutions that receive the money and to force such institutions to get rid of any private aircraft they may own or lease.

“I think that when you look at how we have handled the home foreclosure situation and whether we’ve done enough in terms of helping families on the ground who may have lost their homes because they lost their jobs or because they got sick, we haven’t done enough there,” he said.

Obama conceded it will be difficult to enforce his pledge to ban congressionally earmarked projects from the nearly $800 billion economic stimulus plan he’s negotiating with Congress.

“In a package of this magnitude, will there end up being certain projects that potentially don’t meet that criteria of helping on health care, energy or education? Certainly,” he told ABC in the interview taped Saturday.

But Obama said inaction carries too great a risk. “We can’t afford three, four, five, six more months where we’re losing half a million jobs per month. And the estimates are that if we don’t do anything, we could see 4 million jobs lost this year.”

House Speaker Nancy Pelosi, D-Calif., said Sunday that the economic package being negotiated might well end up costing more than $775 billion. Some lawmakers have put the price tag at nearly $1 trillion.

“I think we should do the package that is necessary to turn our economy around,” Pelosi said on CNN’s “Late Edition.” She also pledged that the House version would not contain any earmarks.

With the future of the current bailout fund under discussion, Vice President Dick Cheney said the Bush administration’s use of the money has had “significant positive impact” by guaranteeing liquidity in the financial system and adequate capital in the banking system.

“I would rather see a smaller government,” Cheney told CNN in an interview aired Sunday. “But we’ve always said, and I firmly believe, that you do make exceptions for budget restraint. And those exceptions are wars, for example, national crises.”

Obama, who has been receiving daily national security briefings since his election in November, acknowledged that his campaign pledge to close the prison at Guantanamo Bay will be more of a challenge than he anticipated. Many of those held at the military site are suspected terrorists or potential witnesses in cases against them.

The president-elect said that while some evidence against terrorism suspects may be tainted by the tactics used to obtain it, that doesn’t change the fact they are “people who are intent on blowing us up.”

Speaking in general terms, Obama said the country had made progress in becoming safer since the Sept. 11 attacks, but dangers persist.

In other matters:

  • Obama predicted his choice for attorney general, Eric Holder, would pass Senate confirmation despite worries about his ties to President Bill Clinton’s controversial pardon of Marc Rich.
  • Obama and wife Michelle are still visiting Washington-area churches looking for a new place to worship. The Obamas resigned from Chicago’s Trinity United Church of Christ after sermons from the Rev. Jeremiah Wright caused an uproar for blaming the United States for the Sept. 11 attacks.
  • The Obamas are deciding between a labradoodle or a Portuguese water hound puppy, in the search for an appropriate pet for their daughters, ages 7 and 10. Obama said they’re ready to start visiting shelters.