Just $15B left in first $350B of gov't bailout
Monday December 8, 2:12 pm ET
By Jeannine Aversa, AP Economics Writer
Just $15 billion left in first $350 billion of federal government's bailout pot
WASHINGTON (AP) -- The government has just $15 billion left to spend from the first $350 billion pot of financial bailout money, the Treasury Department announced Monday.
The department said $335 billion has been allocated from the first half of the $700 billion program, which was enacted on Oct. 3. The information was contained in a report to Congress.
Treasury Secretary Henry Paulson, who is overseeing the program, is weighing tapping the second $350 billion. The main goal of the program is aimed at getting financial institutions to lend money more freely again, which would help revive the economy.
Of the $335 billion spoken for, $250 billion has been pledged for capital infusions to banks. In return, the government receives partial ownership stakes in the financial institutions.
Another $40 billion was provided to help bail out insurance giant American International Group, and an additional $25 billion was part of a rescue package for Citigroup Inc. Of that piece, $20 billion was in the form of a fresh capital infusion to the New York City-based bank and $5 billion to absorb potential losses as part of the government's guarantee of certain risky assets held by Citigroup.
Separately, $20 billion was provided to the Federal Reserve for credit protection as part of a new program to boost the availability of consumer loans.
On Capitol Hill, lawmakers have blasted Paulson for his handling of the $700 billion package, complaining that his shifts in strategy sent confusing signals to the public and Wall Street, and hurt confidence in the government's ability to deal with the crisis.
Paulson has defended his management, including his decision to officially abandon the original rescue strategy: buying rotten mortgages and other bad debts from banks to free up their balance sheets and spur lending.
"Although financial conditions remain far from normal and many challenges remain, greater confidence in financial markets and financial institutions will contribute importantly to the recovery process," the report said.
