Jan. 15 (Bloomberg) -- The U.S. Senate plans to vote today on whether to block the release of the second half of the $700 billion financial-bailout plan sought by President-elect Barack Obama’s administration.

Majority Leader Harry Reid late yesterday announced the chamber will vote on a resolution to bar use of the funds. Reid, a Nevada Democrat, said Jan. 13 he was “confident” the Senate wouldn’t stand in the way of using the $350 billion from the Troubled Asset Relief Program.

Lawmakers in both parties want more of the funds to be used to help homeowners at risk of defaulting on their mortgages. The House will vote today on legislation that would require Obama’s Treasury Department to set up a foreclosure-relief program and require participating banks to report how they use the money.

That measure is sponsored by House Financial Services Chairman Barney Frank, who along with other lawmakers faults President George W. Bush’s administration for failing to set limits on banks including Citigroup Inc. and JPMorgan Chase & Co. that got cash from the initial $350 billion last year.

Frank has said Jan. 13 he doesn’t expect his proposal to pass the Senate.

Under the rescue legislation, unless Congress passes a resolution within 15 days turning down Bush’s Jan. 12 request for the second $350 billion made on Obama’s behalf, the Treasury Department could use the money. The president then could veto the resolution.

Earlier yesterday, Senate Republicans demanded assurances from Obama that the second half of the bank-bailout fund will be used for financial institutions and not for aid to automakers or other industries. Republicans criticized the Bush administration for using $13.4 billion of the funds to aid Detroit automakers General Motors Corp. and Chrysler LLC.

Private Meeting

Louisiana Republican David Vitter, who introduced the Senate resolution, said officials from Obama’s incoming administration told Republicans in a private meeting yesterday the government will use the money for the banks.

Senate Republican Leader Mitch McConnell, a Kentucky Republican, also suggested that those assurances were made during a meeting at the Capitol with Rahm Emanuel, Obama’s appointed chief of staff, and Larry Summers, the president- elect’s top economic adviser.

“They certainly did not represent that they are in favor of industrial policy,” McConnell said. Even so, he said senators want a strong, public statement.

McConnell said he wasn’t prepared to say how he will vote on the resolution disapproving release of the funds, and Vitter said he would vote for the resolution. He and other senators said it isn’t clear that the meeting with Obama officials changed any minds.

“They weren’t successful; they weren’t unsuccessful,” said Senator John Cornyn, a Texas Republican.

Senator Olympia Snowe, a Maine Republican, said she was leaning toward supporting the use of TARP funds after talking with Emanuel.

To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net; Laura Litvan in Washington at llitvan@bloomberg.net

Last Updated: January 15, 2009 00:01 EST