United States Treasury Secretary Henry Paulson said that what remains of the 700 billion USD bail out plan authorized by Congress will be left for unforeseen emergencies and to help the incoming President elect Barack Obama administration.
In an interview Monday with The Wall Street Journal, Paulson said the financial system is stabilizing, and he is thinking about how the remaining 410 billion USD could be best utilized, but that he doesn't plan to tap it unless a further need arises. "I'm going to do what we need to do to keep the system strong and to react the ways we need to react during the nine weeks I'm here, but I'm not going to be looking to start up new things unless they're necessary or it's just clear that they need to be done or [that they] make great sense," Mr. Paulson said. "I want to preserve the firepower, the flexibility we have now and those that come after us will have." The US Congress approved a 700 billion USD bailout in October after Paulson and Federal Reserve Chairman Ben Bernanke insisted a broad response was needed to prevent an economic meltdown. Secretary Paulson was allowed immediate access to 350 billion, with a second tranche available upon issuing a written notice to Congress. Lawmakers would have 15 days to deny such a request. Mr. Paulson's decision is a signal that the Bush administration is unlikely to heed demands by some in Congress that the rescue funds be used to help mitigate mounting home foreclosures. That has been a thorny issue, prompting clashes within the administration over the intent of the fund and the best way to help homeowners. Paulson has already ruled out using the money to assist US auto makers. His decision hands the choice of how to spend the remaining 350 billion USD to President elect Obama administration. The Treasury Department announced on Monday that it has dispersed 33.56 billion USD to 21 banks in a second round of payments as part of the 700 billion bailout program designed to boost the nation's banking system. The new distribution brings the total to 158.56 billion so far. The government previously distributed 125 billion to nine banks in the form of stock purchase programs. In this second round, Minneapolis, Minn.-based U.S. Bancorp received the largest amount of 6.6 billion. Atlanta-based SunTrust Banks received 3.5 billion, as did Birmingham, Ala.-based Regions Financial Corp. Capital One Financial Corp. based in McLean, Va., received 3.56 billion. The smallest amount of 9 million USD went to Los Angeles-based Broadway Financial Corp. The first round included 25 billion injections to Wells Fargo; JPMorgan Chase, and Citigroup. Bank of America was granted 15 billion, while Goldman Sachs, Morgan Stanley and Merrill Lynch were given 10 billion USD each. Separately, the Treasury said the deadline for some 3,600 private banks to apply for a share of the 700 billion bailout plan i-s December 8. Private banks had been unable to apply for funds previously because the program involved stock purchases. The House Financial Services Committee is holding a hearing regarding oversight of the 700 billion USD plan on Tuesday. Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke and FDIC Chairman Sheila Bair are among the speakers.