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