US Senate Defeats Measure to Block Remainder of Financial Rescue Package

Senate Majority Leader Harry Reid, center, Christopher Dodd , Max Baucus , Judd Gregg and Senate Minority Leader Mitch McConnell (file photo)

Senate Majority Leader, Democrat Harry Reid urged lawmakers not to vote for the Republican-sponsored measure to block the remaining $350 billion in the financial rescue package, saying the funds will be critical to President-elect Obama's efforts to address the dire economic situation in the United States.

"I believe this is the road to recovery for our country," said Harry Reid.

Congress voted to approve a $700-billion rescue package in response to the financial crisis late last year, agreeing to the immediate release of half of the money, but requiring the president to request the remainder of the funds.  Under the bill, lawmakers have 15 days to block the remaining money from the time of the president's request, if they so choose.

President Bush, acting on a request from President-elect Obama - who takes office on Tuesday - called on Congress this week to release the rest of the bailout funds.

But many lawmakers, both Republicans and Democrats, believe the first $350 billion did little to solve the country's economic problems, and are angered that much of the money went to help failing U.S. automakers and banks. 

Senator Christopher Bond is a Missouri Republican.

"Taxpayers have bailout fatigue and I am troubled by government intervention in the private market," said Senator Bond.

Mr. Obama's economic adviser Larry Summers sought to reassure lawmakers that the Obama administration would use the funds wisely, including using some of it to address home mortgage foreclosures.

Those assurances helped win over skeptical Democrats, including Senator Christopher Dodd of Connecticut.

"I know as well there is going to be far better accountability, far more transparency," said Senator Dodd. "Foreclosure mitigation is going to be a part of this effort."

In a written statement welcoming the Senate action, President-elect Obama said he realized it was not an easy vote because of the frustration that he said many people share about how the first half of the plan was implemented.  He vowed to change the way the plan is executed by placing strict conditions on pay for chief executives, providing more loans to small businesses and more transparency so taxpayers can see how the money is spent.