WASHINGTON - THE US government has tens of billions of dollars left in the eye-popping US$700 billion (S$1.02 trillion) bank bailout fund created last fall, which has prompted a debate in Congress over what to do with it.

The Treasury Department wants to keep the money at its disposal in case the economy gets worse. Such fiscal conservatives as Senator Judd Gregg and Representative Spencer Bachus, both Republicans, want the money kept to pay down the national debt.

Meanwhile, a group of liberal Democrats led by Massachusetts Representative Barney Frank, chairman of the House Financial Services Committee, say at least a portion of it should be spent to help cash-strapped homeowners.

'We clearly face a new wave of foreclosures' because of rising unemployment, Frank said at a hearing on Thursday. The question of what to do with the money will grow more pressing in coming months as Congress takes a step back to consider the fate of the Troubled Asset Relief Program, or TARP.

Lawmakers had rushed to approve the money last October as the US stock markets sat on the brink of collapse. Since then, even as the economy continues to wobble and high unemployment threatens the prospects for a speedy recovery, major banks have repaid US$70 billion and expressed growing optimism about their ability to function without further government assistance.

TARP is set to end at the end of the year unless Treasury Secretary Timothy Geithner extends it through late 2010.

The Government Accountability Office, the nonpartisan investigative arm of Congress, estimated on Thursday that the government has about US$328 billion left in the fund that has not been spent or legally committed.

According to the GAO, the government has disbursed approximately US$339 billion and promised US$102 billion more. That leaves some US$259 billion in the fund plus the US$70 billion banks have repaid.

The Treasury Department says it already has plans for some of the remaining money and predicts the available funding in TARP will be much lower, about US$127 billion.

Mr Geithner also has indicated he wants any extra money in the program left to his disposal if it is needed. In a letter to Mr Gregg, the secretary said any additional 'headroom' under the program's US$700 billion cap provides 'additional flexibility to Treasury in its efforts to stabilize the economy and build the foundation for long-term economic growth.' - AP