Obama aides press Senate to allow bailout money

President-elect Barack Obama makes a speech on the economy at George Mason University in Fairfax, Virginia, January 8, 2009.

WASHINGTON (Reuters) - Aides to President-elect Barack Obama tried to shore up support among Senate Republicans on Wednesday for releasing $350 billion in Wall Street bailout funds, as a leading Democrat in the House of Representatives predicted Congress was unlikely to stand in the way.

Senate Democratic leaders were working to defeat a Republican measure to block release of the money amid deep public distrust over how the first $350 billion of a $700 billion bailout was handled by the Treasury Department.

Meanwhile, House Speaker Nancy Pelosi said there was progress toward finalizing a massive economic stimulus bill.

"We are zeroing in on a final number," Pelosi told reporters. "We are containing it, recognizing that what we have in the package must create jobs immediately."

She added that details could become available by Thursday.

The bill could cost around $775 billion over two years with a combination of tax cuts and government public works projects aimed at creating or maintaining 3 million jobs.

Obama will be sworn in as president on Tuesday and if the second batch of bailout money is released by Congress, his administration would oversee how it would be spent.

As lawmakers face intense lobbying by Obama's team, the Senate is expected to vote by the weekend on a resolution that would block the release of the money, while the House will wait to see what the Senate decides before scheduling its own vote.

Top aides to Obama were on Capitol Hill briefing Senate Republicans. Their leader, Sen. Mitch McConnell of Kentucky, said he was skeptical about it and wanted assurances that taxpayers would be protected if the money is released.

"While I feel strongly that we must continue to stabilize the economy, I would find it exceedingly difficult to support additional taxpayer funds without serious assurances from the incoming administration that the taxpayers will be protected," McConnell said on the Senate floor.

Meanwhile, House Democratic Leader Steny Hoyer said chances were "very small" that Congress would stand in the way of spending the money. He noted that both Obama and Republican President George W. Bush backed the idea, making it difficult for Congress to block it.

TIGHTER RULES

In a related issue, the House could vote as soon as Thursday on legislation tightening the rules on the Wall Street bailout, known as the Troubled Asset Relief Program, or TARP.

While making the program more transparent, the legislation also would refocus where the next batch of money is spent -- away from government investments in troubled banks and toward reductions in home foreclosures and aid for cash-strapped towns and cities suffering during the economic recession.

The fate of the bill was less certain in the Senate.

Hoyer said that even if the bill, written by House Financial Services Committee Chairman Barney Frank of Massachusetts, is not enacted into law, its provisions likely would be enforced by the Obama administration.

"In the event it doesn't pass, the (Obama) administration is very likely to indicate it intends to follow the provisions relatively closely," said Hoyer, of Maryland.

Sen. James Inhofe, an Oklahoma Republican who opposes releasing the next $350 billion, noted the difficulty he and his colleagues face because of the large majorities that would be needed in the House and Senate to challenge Obama.

"I do think in that respect, it's a 'fait accompli,'" Inhofe said. But he said lawmakers should ensure there is better oversight of the use of the money.

(Additional reporting by Thomas Ferraro, Patrick Rucker and Kevin Drawbaugh; Editing by David Wiessler)