Jan. 12 (Bloomberg) -- President-elect Barack Obama sought to assure lawmakers he wouldn’t squander $350 billion in financial-rescue funds he and President George W. Bush may seek as early as today.

Senators said Larry Summers, Obama’s top economic adviser, signaled the incoming administration will back new restrictions on use of the remaining funds.

Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said Summers assured senators yesterday that the administration will insist on tougher “accountability standards.” Lawmakers have accused banks that received the first half of the $700 billion program of spending the money on acquisitions and employee bonuses without lending the money to consumers.

“The Obama administration wants to re-brand this process,” Dodd told reporters on Capitol Hill. “They realize it has been terribly mismanaged.”

Dodd said a request for the funds may come from the outgoing Bush administration as early as today to leave time for a vote this week before Obama’s Jan. 20 inauguration. “It has to be within a day or so,” he said.

Under the rescue law, the Treasury Department will be able to use the money unless Congress passes a resolution turning down the request within 15 days. The reassurances from the incoming administration may head off such a resolution, Dodd said.

Foreclosure Relief

House Financial Services Chairman Barney Frank, a Massachusetts Democrat, said Jan. 9 he is working with Obama’s team on changes House Democrats are seeking in exchange for agreeing to release the money, including allocating as much as $100 billion to stem foreclosures.

Lawmakers from both parties have criticized the Treasury for its shifting strategies for the rescue fund, called the Troubled Asset Relief Program, which Congress passed in October.

While Treasury Secretary Henry Paulson first billed the bailout as a means of taking toxic assets off financial companies’ balance sheets, he ultimately decided to use most of the first half of the funds for injecting capital into banks.

North Dakota Senator Kent Conrad said his fellow Democrats told Summers they were frustrated about the use of TARP funds to push bank mergers and pay bonuses to executives without extending credit, among other things.

“It was very, very troubling what happened in the first tranche of TARP,” Conrad said. The Obama administration may send a letter to Congress outlining how new funds will be used differently, he said.

Dodd said the concerns about mismanagement of the first batch of funds aren’t enough reason to reject a second disbursement.

“My hope is the Obama administration will put some strong conditionalities on it, and I think they will,” he said.

Yesterday, House Minority Leader John Boehner said he opposes releasing the remaining half of the TARP money before there is a proven need for the money.

“I think until there is a demonstrated need in our economy and a plan to address that need, I think it would be irresponsible for Congress to release the additional money,” Boehner, an Ohio Republican, said on CBS’s “Face the Nation.”

To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net.

Last Updated: January 12, 2009 00:01 EST