Obama to refocus $350b of bailout

Obama asked President Bush to submit a request to Congress so that the remaining $350 billion would be available quickly after the inauguration next week. Bush agreed to do so.

"I think many of us have been disappointed with the absence of clarity, the lack 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.

Separately, Larry Summers, Obama's choice for National Economic Council director, said the new president intends to broaden the goals of the remaining bailout package and impose tougher restrictions and oversight on how the money is spent.

Summers told House and Senate leaders in a letter from the transition team that the need to tap the second half of the $700 billion fund is "imminent and urgent."

The letter says Obama intends to use the Troubled Asset Relief Program to help community banks, small businesses, consumers, and homeowners as well as large financial institutions. It says Obama intends to launch a "sweeping effort" to mitigate foreclosures.

"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."

Obama's request came as the House prepared to act on legislation that has some of the same aims laid out in Summers' letter.

Among other measures, the Federal Deposit Insurance Corp. would get more authority to protect consumers against bank failures under legislation Congress plans to take up this week. The measure would make permanent an increase in the FDIC's deposit-insurance limit to $250,000 per consumer per bank.

House Financial Services Committee chairman Barney Frank, Democrat of Massachusetts, said he has "some doubt" Congress will approve his legislation setting conditions for releasing the remaining $350 billion.