Bush admin split on housing, Congress eyes autos

WASHINGTON (Reuters) - Bush administration officials clashed over how to handle the U.S. housing crisis, while Congress readied for a lame-duck session next week where Democrats want to consider emergency aid for struggling automakers and another economic stimulus package.

With stocks U.S. down on mixed economic data on Friday, leaders from 20 nations gathered in Washington, D.C., for an economic summit expected to produce few results for its soon-to-depart host, President George W. Bush.

One of Bush's senior financial regulators, Federal Deposit Insurance Corp. Chairman Sheila Bair, unveiled on Friday a program to prevent about 1.5 million home foreclosures at an estimated cost to taxpayers of about $24.4 billion.

Bair's idea was embraced by Democrats who say the White House is not doing enough to help struggling homeowners even as it pumps billions of dollars into banks such as Goldman Sachs and Bank of America.

But a Treasury official said the FDIC program should not get money from a $700 billion government bailout fund because it was designed for investment, not for spending.

"The FDIC proposal... is a spending proposal," said Treasury Interim Assistant Secretary Neel Kashkari. He was grilled by lawmakers at a congressional committee hearing into Treasury's ever-shifting approaches to the fund known as the Troubled Asset Relief Program, or TARP.

Kashkari added that Treasury is "aggressively" looking at ways to reduce foreclosures. The White House said on Friday it was carefully reviewing the Bair plan.

Another Treasury official said he expected 20 more banks, large and small, to be approved for TARP capital injections on Friday, which was the deadline for publicly-traded banks to apply for the federal funds.

LAME-DUCK AHEAD

The U.S. Senate plans to take up a $25 billion bill on Monday that would bail out distressed U.S. auto companies, but it was unclear if it could get enough votes to pass.

Senate Democratic Leader Harry Reid of Nevada said on Friday he "plans to press forward" with emergency aid to automakers and with an economic stimulus plan to extend unemployment insurance, despite likely Republican opposition.

General Motors Corp, Ford Motor Co and Chrysler LLC are suffering from a steep downturn and furiously lobbying to win $25 billion in immediate bailout money.

On Thursday, Senate Banking Committee Chairman Christopher Dodd of Connecticut said he did not see enough support in the Senate to approve any auto bailout now.

The White House does not favor using the TARP to help industries outside the financial services sector.

In the House of Representatives, Speaker Nancy Pelosi has urged at least $61 billion in new economic stimulus money and called for cooperation from Republicans and the White House.

A stimulus of around $600 billion may be needed to make an impact, Princeton University economist Paul Krugman said in a column in the new York Times on Friday. Krugman won the Nobel prize for economics this year.

RECESSION IN EUROPE

Economic concerns rose on Friday as Europe officially fell into recession, although U.S. data was mixed. Retail sales fell at a record pace in October, as renewed worries in credit markets saw dollar interbank lending rates rise. But gasoline prices fell and consumer confidence rose.

Top U.S. financial regulators said on Friday they were working on developing a centralized clearinghouse for credit default swaps, the exotic instruments that have exacerbated the financial crisis of recent months.

With the crisis as a backdrop, global leaders headed to Washington for an economic summit. President-elect Barack Obama will not attend, but some of his advisors will consult with foreign leaders on the sidelines of the meeting.

Playing host to the summit, Bush said on Friday he was confident leaders could overcome the financial crisis "and return our economies to the path of growth and vitality."

(Reporting by Kevin Drawbaugh; additional reporting by Karey Wutkowski, Patrick Rucker, Glenn Somerville, Thomas Ferraro, John Crawley, Rachelle Younglai, David Lawder and Tabassum Zakaria; Editing by Tim Dobbyn)