When the government said it would spend $700 billion to rescue the nation’s financial industry, it seemed to be an ocean of money. But after one of the biggest lobbying free-for-alls in memory, it suddenly looks like a dwindling pool.Edward Yingling, president of the American Bankers Association, is concerned that there won’t be enough money left to help community banks once the lobbyists get their cut. Many new supplicants are lining up for an infusion of capital as billions of dollars are channeled to other beneficiaries like the American International Group, and possibly soon American Express. Of the initial $350 billion that Congress freed up, out of the $700 billion in bailout money contained in the law that passed last month, the Treasury Department has committed all but $60 billion. The shrinking pie — and the growing uncertainty over who qualifies — has thrown Washington’s legal and lobbying establishment into a mad scramble.The Treasury Department is under siege by an army of hired guns for banks, savings and loan associations and insurers — as well as for improbable candidates like a Hispanic business group representing plumbing and home-heating specialists. That last group wants the Treasury to hire its members as contractors to take care of houses that the government may end up owning through buying distressed mortgages.The lobbying frenzy worries many traditional bankers — the original targets of the rescue program — who fear that it could blur, or even undermine, the government’s effort to stabilize the financial system after its worst crisis since the 1930s.Among the most rattled are community bankers. “By the time they get to the community banks, there may not be enough money left,” said Edward L. Yingling, the president of the American Bankers Association. “The marketplace is looking at this so rapidly that those who have the money first may have some advantage.”Adding to the frenzy is the possibility that the next Congress and White House could change the rules further. President-elect Barack Obama has added his voice by proposing that the struggling automakers get federal aid, which could mean giving them access to the fund — something the Treasury secretary, Henry M. Paulson Jr., has resisted.Despite the line outside its door, the Treasury is not worried about running out of money, according to a senior official. It has no plans to ask lawmakers to free the second $350 billion of the rescue package during the special session of Congress that could begin next week.That could limit the pot of money available, at least until the next Congress is sworn in next January. Meanwhile, the list of candidates for a piece of the bailout keeps growing.On Monday, the Treasury announced it would inject an additional $40 billion into AIG, amid signs that the government’s original bailout plan was putting too much strain on the company. American Express won approval Monday to transform itself into a bank holding company, making the giant marketer of credit cards eligible for an infusion.
