Bleeding banks prompt talk of new big U.S. bailoutSubmitted by Jim Brown on Wed, 01/28/2009 - 15:57
WASHINGTON (Reuters) - Major U.S. banks are still hemorrhaging red ink, despite massive taxpayer aid, and President Barack Obama is under pressure to take a high-stakes political gamble -- asking for another bailout.
Whether he would get one from a skeptical Congress is unclear, given the wide dissatisfaction with the first bailout, known as the Troubled Asset Relief Program, or TARP, a $700 billion fund to stabilize the banks and Wall Street.
The political danger of backing another aid package was vivid on Thursday when the House of Representatives voted 270-155 against releasing a second allotment of $350 billion to the TARP. The money will be released, nonetheless, because the Senate previously voted not to block the funds.
With the most recent TARP vote as a backdrop, analysts said that, if Obama sought more bailout money and Congress approved it, financial markets and bankers would certainly be pleased.
But lawmakers who voted in favor of such a program could pay a high price with voters in elections two years away.
And if the new president requested more money and Congress rejected him, the markets might plunge like they did last year when the Bush administration's initial TARP funding request was defeated, although it was later approved.
Neither outcome looks too rosy for Obama and congressional Democrats, leading some analysts to conclude that "TARP II" may not be on the cards.