Senate GOP Worries About More TARP Cash For Automakers

In a meeting Wednesday with Senate Republicans, incoming White House economic adviser Lawrence Summers and Chief of Staff Rahm Emanuel did not rule out using some of the second $350 billion in Troubled Asset Relief Program funds to aid the automobile industry.

That stance did little to shore up GOP backing to release the money.

According to senators exiting the meeting, Summers and Emanuel told the lawmakers they will use the money primarily to aid financial institutions and swore off "industrial funding" for other nonfinancial industries. But they excluded the auto industry, leading senators to speculate that another installment to the Big Three automakers is forthcoming. General Motors Corp. has received $10.4 billion from the program, while GMAC LLC has received $5 billion.

"My guess is there is a reason for that," said Sen. Bob Corker, R-Tenn., who was a key negotiator in auto industry aid talks last year.

Summers told senators the incoming administration will issue what senators called a "public document" laying out restrictions on how TARP money will be used. It was unclear when the document will be released, but it will have to be soon. The Senate is expected to vote Friday on a resolution rejecting release of the money.

Summers has released an outline of plans for this money, including unspecified funds for foreclosure relief; a stronger reporting requirement for banks that receive funds; a restriction on dividend payments and limits on stock buybacks.

While a group of conservative Senate Republicans strongly oppose releasing the funds, the bulk of 41 GOP senators have said they are waiting to hear what restrictions the incoming administration puts on the money. But it was unclear how much headway Summers and Emanuel made.

Summers was "fairly vague," Corker said. Minority Leader McConnell is also unconvinced. He said Republicans are still seeking assurances on how spending will be used. "I don't know how many Republican votes" there are to release the money, he said.

Sens. John Cornyn, R-Texas, and John Ensign, R-Nev., said they plan to oppose funding by voting for the resolution of disapproval.

Sen. George Voinovich, R-Ohio, will vote to release the money. "I don't think we have any choice," he said.

Under TARP, Treasury must notify Congress of its intent to spend the money and lawmakers then have 15 days to pass a resolution killing the request.

The request was made Monday. The resolution to kill TARP spending is subject to presidential veto, a high threshold that means President-elect Obama will probably get the money.

The House is trying a different tack by offering up its own bill. The House will vote today on related legislation instructing Treasury on how to spend the remaining funds, including a provision that at least $40 billion go to foreclosure relief.

Although it is not expected to be enacted, the bill's sponsor, Financial Services Chairman Barney Frank, said the House bill will allow members to express their unhappiness with the Bush administration's TARP record without jeopardizing Obama's request when the disapproval resolution comes to the House floor next week.

The Frank bill is expected to pass after the chamber voted 235-191 on Wednesday on a rule for debate, allowing for 11 amendments. Fifteen Democrats voted against it.

During debate over the bill, Frank engaged in numerous colloquies with members to assuage their concerns that TARP funds under the bill should be used to help, among other industries: state housing finance agencies; automobile fleets; the municipal bond market; recreational vehicles and mutual banks.

A manager's amendment would make changes that include establishing an online database to track expenditures; allowing firms to repay TARP money without any regard to replacement funds, and providing $20 billion for lenders and servicers to cover costs for modifying loans.

Rep. Michele Bachmann, R-Minn., will have two amendments.

The first would eliminate additional funding for the HOPE for Homeowners under the bill, which was designed to attract at-risk borrowers to refinance their mortgages, and the second would remove the Treasury secretary's authority to assist the Big Three.

Amendments from Reps. Tim Walz, D-Minn., and Maurice Hinchey, D-N.Y., will require assisted companies to report on the specific use of funds, and an amendment from Rep. Patrick Murphy, D-Pa., would require the Federal Reserve to disclose information regarding the Fed's mortgage-backed securities purchase program.