Senate vote fails, Obama gets $350B
Measure to block release of second half of bailout fails in Senate, giving Treasury and Obama the final $350 billion of TARP funds.
NEW YORK (CNNMoney.com) -- President-elect Barack Obama secured access to the second half of the $700 billion financial rescue package Thursday, after the Senate voted 52-42 to kill a measure that would have blocked the funds' release.
It is unlikely that Obama's request for the money will face any additional roadblocks, since the law says both houses of Congress must pass disapproval measures to stop the bailout funds from being released.
"I'm gratified that a majority of the U.S. Senate, both Democrats and Republicans, voted today to give me the authority to implement the rest of the financial rescue plan in a new and responsible way," Obama said in a statement. "My pledge is to change the way this plan is implemented and keep faith with the American tax payer."
President Bush, acting on behalf of Obama, had sent Congress a formal request on Monday to release the second $350 billion of the Troubled Asset Relief Program funds to the Treasury Department.
Under the bailout legislation approved by Congress in October, unless Congress passes a joint resolution rejecting the request within 15 days, Treasury can begin tapping the funds. Obama had vowed to veto any resolution denying him the funds.
The campaign to block the funds was spearheaded by a group of Republican senators, led by Sen. David Vitter of Louisiana, who introduced the resolution on Tuesday.
On Thursday, top Obama economic adviser Larry Summers made the case for the funds in a letter to congressional leaders. Summers offered reassurances that the incoming administration will be responsible with its spending of TARP funds and pledged to commit $50 billion to $100 billion to address foreclosures.
Several key Democrats who had earlier stated their displeasure with the handling of the first $350 billion changed their tune.
"President-elect Obama has made clear he understands the mistakes of the previous administration, and he will try to correct them," said Senate Majority Leader Harry Reid, D-Nev. "Inaction now would punish the American public that is already suffering."
Still, many Republicans argued that the first $350 billion was largely wasted, and no clear measures have suggested the funding has worked.
"There's been mistake after mistake, embarrassment after embarrassment, and a complete lack of accountability in the TARP program," said Vitter. "The American people are not going to be fooled twice ... I urge all of my colleagues not to be fooled again, to say no to an open checkbook."
Nine Democrats voted to block more TARP rescue money, but six Republicans broke with the majority of their party and voted to release the funds.
House Speaker Nancy Pelosi, D-Calif., said Thursday that the House will vote next week on a TARP reform bill put forth by Rep. Barney Frank, D-Mass., House Financial Services Committee chairman. Frank authored a bill that sets conditions for the use of the funds, including foreclosure mitigation and improved oversight. Obama has said is in favor of Frank's bill.