Extra cash may create more jobs

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WASHINGTON --- Under heavy pressure to get Americans back to work, President Obama on Monday suggested using a suddenly available pot of money left over from the government's bank bailout to help create more jobs.

Mr. Obama, who will address the subject in a speech today, has been struggling to trim the nation's painfully high unemployment rate, now at 10 percent, just below a quarter-century high.

He said there may be "selective approaches" for tapping into the money that was to go for propping up seriously ailing financial institutions. The administration and its allies on Capitol Hill would have to get around a provision of the 2008 bailout legislation that requires money that is paid back by banks or left over to be used exclusively for reducing the federal deficit.

With a tough election year coming up, Mr. Obama and congressional Democrats want badly to do something about jobs.

Turning a highly unpopular financial rescue program, known as the Troubled Asset Relief Program, into a potentially popular one with new jobs attached has strong political appeal -- although Republican critics have depicted such an approach as a backdoor way of putting a second economic stimulus package into force.

The administration now estimates the TARP will cost about $200 billion less than the $341 billion the White House estimated in August.

The lower estimate reflects faster repayments by big banks and less spending on some of the rescue programs as the financial sector recovered from its freefall more quickly than anticipated.

"TARP has turned out to be much cheaper than we had expected, although not cheap," Mr. Obama told reporters at the White House. "It means that some of that money can be devoted to deficit reduction.

"And the question is: Are there selective approaches that are consistent with the original goals of TARP -- for example, making sure that small businesses are still getting lending -- that would be appropriate in accelerating job growth?"

It was the clearest signal yet that the White House might be planning to argue that helping unlock credit for small businesses is in line with the original goals of the bank bailout bill and thus a valid expenditure of federal money -- with more job creation a byproduct.

The bailout program, which had an initial price tag of $700 billion, was passed by Congress in October 2008 as the nation's financial system teetered on the brink of collapse.

It was followed this year by a less narrowly focused $787 billion stimulus package sponsored by Mr. Obama and passed by Congress that includes funds for a wide variety of projects.

Many of the nation's largest Wall Street institutions have roared back to health with the government's helping hand, even as the rest of the economy continues to suffer and shed jobs.

Some congressional Democrats are looking at redirecting up to $70 billion from the bailout windfall for job-related and other purposes.

House Speaker Nancy Pelosi said last week that the House is considering a bill to use unallocated bailout funds to pay for construction jobs, aid to strapped state and local governments, and help for small businesses.

She said any jobs bill would be in addition to separate "safety net" legislation that would again extend unemployment benefits for the long-term jobless and renew health insurance subsidies for them.

Only the safety net measure is likely to make it through Congress this year, senators say.

Republicans say using the TARP to pay for any jobs bill is simply a shell game to lend the impression that the action wouldn't add to the deficit.

New Hampshire Sen. Judd Gregg, the top Republican on the Senate Budget Committee, said Monday that the law explicitly blocks using the TARP for infrastructure or other nonfinancial industry projects.

The new TARP estimates could reduce the administration's deficit forecast for the current budget year from $1.5 trillion to $1.3 trillion -- assuming that all of the $200 billion windfall went exclusively toward deficit reduction and was all targeted for a single fiscal year.

The deficit for the fiscal year that ended Sept. 30 was a record $1.42 trillion.

BANKS TO REPAY

NEW YORK --- Citigroup Inc. and Wells Fargo & Co. are seeking to repay billions in federal bailout aid but so far haven't received permission from the government, people familiar with the talks told The Associated Press.

The main sticking point is how much capital the banks would need to raise to repay taxpayers the money they received at the height of the financial crisis, according to two people with direct knowledge of the talks who requested anonymity because the discussions are ongoing.

Citigroup received $45 billion in bailout money and is now 34 percent owned by the government. Wells Fargo received $25 billion.

The government has told Citigroup that it would need to raise at least $20 billion in common equity to be able to quit the Troubled Asset Relief Program, according to one of the sources. It was unclear how much Wells Fargo needed to raise.

-- Associated Press

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Ole School
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Ole School 12/08/09 - 04:58 am
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there is not such thing as a

there is not such thing as a pot of money , someone will pay for these funds ! hello ! use your head !!!!

nofanofobama
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nofanofobama 12/08/09 - 06:24 am
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there is no free money the

there is no free money the govt only wealth is borrowed or confiscated by taxation. both are a detriment to the real creation of jobs in the private sector. and whatever happened to that stimulus bill, it was to create 3-4 million jobs and keep unemployment at below 8 percent. NO HELL NO the obamamites do not need any more play money. they need to be booted out of office as they have prolonged this recession and made it worse in the long run with the coming of inflation.what we need is friendly policies to business and a the return to captilism. also we need to drill our own oil and gas build nuclear power plants. this will create real jobs and real wealth without the govt playing in the market place as a diety dispensing favours to the special interests.

Dora.Ito
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Dora.Ito 12/08/09 - 06:38 am
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"The administration and its

"The administration and its allies on Capitol Hill would have to get around a provision of the 2008 bailout legislation that requires money that is paid back by banks or left over to be used exclusively for reducing the federal deficit." Details, details, meaningless little details. Just like that silly document written over 200 years ago. "We can do it! CHANGE!"

nofanofobama
6993
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nofanofobama 12/08/09 - 06:54 am
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since when does this group of

since when does this group of socialist let little details like the constituition and law get in their way. after all they are liberals they know better than the rest of us....

airbud7
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airbud7 12/08/09 - 08:06 am
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come on you guys its only

come on you guys its only $200 billion, whats all the fuss.

airbud7
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airbud7 12/08/09 - 08:32 am
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Just send the 30million

Just send the 30million people unemployed a check for 8500.00 dollars,they will have a nice christmas and you will solve the problem. need to do it fast before the money is gone.

airbud7
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airbud7 12/08/09 - 08:59 am
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Or you could send the 6

Or you could send the 6 billion people on earth a check for 33.00 dollars and wish the planet a merry christmas.

ron_rlw
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ron_rlw 12/08/09 - 01:43 pm
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Great idea Obama ... ignore

Great idea Obama ... ignore what the money was specified for and spend it however you like.

rukidding1
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rukidding1 12/08/09 - 08:31 pm
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This man is an idiot. Found

This man is an idiot. Found pot of money, seriously, I think he needs to put it toward the mountain of debt that this country is in. As an employer myself, the only real solution to creating more jobs in this country is to reduce taxes which will spur more spending which will create the need to hire more employees.

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