U.S. senator sets bar for more bailout money

WASHINGTON (Reuters) - President Barack Obama must do more to win congressional approval for another $250 billion in emergency aid to struggling U.S. financial institutions, a key senator said in an interview aired on Thursday.

Obama has requested in his budget $250 billion to add to the $700 billion widely-criticized financial bailout fund. But the chairmen of both the House of Representatives and Senate Budget Committees refused to include it in their budget plans.

Senate Budget Committee Chairman Kent Conrad told National Public Radio that he would not include it "when there is no plan as to how to use the money and no assertion by the administration that they're even certain it would be needed."

The bailout fund was originally designed to prevent a complete meltdown of the financial system by taking bad real estate investments off institutions' balance sheets to get credit flowing again.

But lawmakers have panned it for not doing the job sufficiently.

Obama's request for more money came in his budget proposal for fiscal 2010, which begins on October 1.

But it was described as a "placeholder" and White House officials said that they may not seek the extra funds from Congress, where lawmakers are now drawing up their own budget plans.

Both congressional budget committees quickly jettisoned it, giving them an easy way to cut massive red ink from their budget plans for the few years.

The Congressional Budget Office last week forecast that Obama's budget would make the deficit balloon by $9.3 trillion through 2019, $2.3 trillion more than forecast by the White House.

"You know, when you lose $2.3 trillion in a revenue forecast, we simply can't budget money for things that are theoretical," Conrad told NPR.

(Reporting by Jeremy Pelofsky, editing by Vicki Allen)