"He said TARP is necessary," said Sen. Charles Schumer, D-N.Y., after emerging from the luncheon. "Nobody wants to do it, it's hardly a thing that anyone would pick as the first thing that we'd want to do. But you have to do TARP."
A week shy of taking office, Obama is putting his persuasion skills to a high-stakes test with Congress as he seeks to put his emerging administration in control of more than $1 trillion in economic stimulus and financial bailout money.
Obama's transition team is ready to dispatch top aides to meet with Senate Republicans this week in anticipation of a possible vote Thursday on whether to release $350 billion from the embattled rescue fund for the financial sector.
In the House, Financial Services Committee Chairman Barney Frank, D-Mass., said the speedy release of the next $350 billion was necessary to help stem the rising tide of foreclosures, which was one of the original purposes of the bailout legislation.
"If we do not get the second $350 billion, I do not see any way that we can get substantial foreclosure relief," Frank said.
But Rep. Spencer Bachus of Alabama, the committee's ranking Republican, questioned whether the money was necessary.
The fund is becoming "a grab-bag where people can just reach in and get taxpayer money," he said.
Frank was presiding over a hearing on the bailout program in advance of legislation that would place tough new restrictions on recipients of the money and require spending to reduce mortgage foreclosures.
Frank's bill is scheduled to reach the floor of the House on Wednesday, with a vote set for Thursday. At the Treasury Department, officials were putting in place tools to measure whether banks that receive funds from the financial rescue program are increasing lending.
On Monday, President George W. Bush, at Obama's request, asked Congress for access to the remaining billions in the bailout fund. The request reached Congress as lawmakers and Obama also were assembling a spending and tax-cutting stimulus package of $800 billion, or possibly more.
If he succeeds, Obama would have more than $1.1 trillion at his disposal to tackle sinking employment and clogged credit within weeks of assuming the presidency.
"It is clear that the financial system, although improved from where it was in September, is still fragile," Obama said Monday in making the case for the additional bailout funds.