Senior officials for President-elect Barack Obama told Senate Republicans Wednesday that the second tranche of $350 billion in Troubled Asset Relief Program funds would only be used to stabilize the financial markets, not to bail out specific industries like the auto sector, said several GOP lawmakers.

"I think I'm safe in saying they certainly did not represent that they are in favor of industrial policy," said Senate Minority Leader Mitch McConnell, R-Ky., after a meeting with the Obama officials.

By industrial policy, McConnell said he meant a situation where the federal government chooses winners and losers in the economy.

But despite the assurances, after the meeting with Rahm Emanuel, who will be Obama's chief of staff, and Lawrence Summers, Obama's choice to head the White House Budget Office, most Senate Republicans still sounded skeptical they would vote for the release of the funds to the Treasury.

"I'd have to make a more detailed presentation to borrow $10,000 from my local bank," said Sen. Jim DeMint, R-S.C.

One of the most oft repeated complaints by Republican senators has been that some of the money in the first tranche of the TARP was used to rescue car makers General Motors Corp. (GM) and Chrsyler LLC, after the Senate voted down a separate rescue package tailored specifically for them.

GOP lawmakers argued that the original purpose of TARP was to help loosen up the seized credit markets, and increase lending levels to both individuals and businesses.

Several have said this week that for that very reason, they would not support the release of the second half of the money.

"The current Administration used some of the TARP funds to provide assistance to a specific industry, in this case the automobile industry," said McConnell. "That created a dramatic reduction of support in my conference."

Sen. Bob Corker, R-Tenn., said there were no guarantees that the incoming Obama administration would use the money solely in the financial sector.

"They're not closing the door," Corker said. "I think there may be a reason for the vagueness."

After the meeting, McConnell and others urged the Obama camp to make further public pronunciations about how they would use the funds.

Monday, a letter sent to congressional leaders by Summers detailing how the TARP program would change under an Obama-led Treasury was aimed at alleviating lawmakers' concerns, but it clearly didn't do the job.

There is little support in the House to release the funds, which means the Senate is where the Obama will have to turn to in order for the funds to be available for his Treasury.

At least two GOP senators are on record saying they will vote for the release of the funds: Sens. Judd Gregg, R-N.H. and Olympia Snowe, R-Me.

With their support, and the bulk of the Senate Democratic caucus likely to vote for the funds to be made available to the Treasury, there is probably enough votes to do so.

But what Obama and his senior advisers are hoping is for strong bi-partisan support from the Senate when it meets to vote possibly as soon as Thursday.

The controversial program will see another $350 billion spent on providing relief to the financial markets at a time when many Americans have lost their own jobs, and there is little understanding of how the first half of the money was spent.

-By Corey Boles and Patrick Yoest, Dow Jones Newswires; 202-862-6601; corey.boles@dowjones.com

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