Pressure Grows for More Rescue Funds

By JONATHAN WEISMAN and DEBORAH SOLOMON

WASHINGTON -- The White House's economic team is under pressure from Congress to finalize its financial rescue plan within a week amid a growing realization among lawmakers that they will have to find extra money to fund the new administration's program.

The team is hammering out a three-pronged approach that focuses on stemming foreclosures, revamping the government's bailout program and purchasing toxic assets weighing down bank balance sheets and pressuring stock prices. White House spokesman Robert Gibbs said Thursday the plan will be completed "shortly."

The scale of the effort is almost certain to be larger than the $350 billion secured last week through the Troubled Asset Relief Program. Lawmakers say that means they need a proposal from the White House within days so they can appropriate more money. Congress could do that by either attaching the funds to the economic-stimulus plan already totaling $825 billion, or by approving legislation that expands TARP and includes new restrictions on banks that receive money.

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Kent Conrad (D., N.D.), chairman of the Senate Budget Committee, has told senior aides to President Barack Obama that $350 billion won't be enough.

Some members of Congress said they were worried the White House isn't moving fast enough. "I didn't feel I got the sense of immediacy, the sense of urgency that these questions warrant," said Senate Finance Committee member Ron Wyden (D., Ore.), who has pressed the administration to force financial institutions to disclose the toxic assets on their balance sheets. "I'm just going to ride this every day."

The White House on Thursday sought to project that sense of urgency.

Mr. Gibbs said the president began what will be daily economic briefings from National Economic Council director Lawrence Summers and other senior staff, along the lines of the president's traditional daily intelligence briefing. Work on the next phase of the Wall Street rescue is happening "as we speak," Mr. Gibbs said.

Lawrence Summers

"The president will make a decision as soon as the financial team gives him those recommendations," he added. "He believes, obviously, that we have to act expeditiously to get this economy moving again."

Timothy Geithner, Mr. Obama's nominee for Treasury secretary, told Congress Wednesday that the administration has no "current plans" to request more money, but might seek additional resources if financial conditions worsen. Mr. Geithner received the approval of the Senate Finance Committee by an 18 to 5 vote, paving the way for a full Senate vote in coming days.

"We have to be prepared to act flexibly and with speed if conditions worsen appreciably, to devote more resources if that is necessary to secure our objectives," Mr. Geithner wrote in response to questions from lawmakers considering his nomination.

The administration has said it plans to devote between $50 billion and $100 billion in a "sweeping" effort to help homeowners. It also is considering a potentially expensive plan to remove the toxic assets clogging bank's balance sheets, including possibly by having the government purchase those assets. Some economists estimate that could cost trillions of dollars. One reason former Treasury Secretary Henry Paulson abandoned his plan to buy the assets was because of the high cost.

"It's an incredibly difficult thing to do and to get right," Mr. Geithner told lawmakers at his confirmation hearing. "And getting it right will be central to the basic credibility of the program."

If the government pays too low a price, banks may have to take deeper write-downs than they have already, exacerbating their financial woes. But if the prices are too high, then banks are benefiting at taxpayer expense.

Mr. Geithner said there are several ways to deal with the asset prices, including looking at how the market is pricing the assets, using a third-party to evaluate their value or getting a financial institution's supervisors to assess what the assets are worth.

"All of them have risks. All of them are imperfect. They all have limitations," Mr. Geithner said.

Write to Jonathan Weisman at jonathan.weisman@wsj.com and Deborah Solomon at deborah.solomon@wsj.com