UPDATE 1-U.S. House panel postpones financial bailout hearing

(Updates with committee announcement, background)

By John Poirier

WASHINGTON, Jan 5 (Reuters) - A U.S. congressional panel
postponed a Wednesday hearing on the Treasury Department's use
of a $700 billion financial bailout fund and priorities of
president-elect Obama's administration, the House Financial
Services Committee said on Monday.

A reason for the postponement was not given, but an aide
said the committee is working on legislation on how to use the
rest of the bailout money.

The committee did not set a new date.

Committee Chairman Barney Frank, a Massachusetts Democrat,
and other lawmakers have criticized the Treasury Department's
oversight of the Troubled Asset Relief Program (TARP), which
has committed most of the first half of the $700 billion
program.

The Bush administration has not yet formally submitted a
request for the remaining money, after which Congress has 15
days to decide. A formal request is expected to be made to
Congress within the coming weeks.

Many key government appointments in Washington and newly
elected lawmakers have not settled into their positions yet.
The new Congress will be sworn in on Tuesday, and
President-elect Barack Obama takes office on Jan. 20.

Some committees have not yet established their members
either. Committees in the Senate will have to hold confirmation
hearings on Obama's nominations, including Timothy Geithner,
tapped to head the Treasury.

Even without a formal request from Treasury for the second
tranche, Frank and his staff are working on legislation
outlining how the next bucket of money can be doled out.

Frank's spokesman, Steven Adamske, said the legislation
will have tougher conditions aimed at making sure the Treasury
uses a greater amount of the money toward mitigating home
foreclosures.

Frank also was critical of participating banks for
providing big compensation packages for its top executives and
using money to acquire other institutions instead of lending to
consumers.

"Very soon, the Obama appointees will be in office and we
will have in the next short bit of time a piece of legislation
that we will have ready to go," Adamske said.

Adamske said congressional action to dole out the rest of
the money will not be determined by people's schedules but
rather based on Treasury's need for the U.S. financial
markets.

"It's not going to be determined based on the committee's
schedule. It's going to be determined by when they (Treasury)
need the money and what they plan to do with it," Adamske
said.

In an effort to contain a widening financial crisis, the
bailout program has been used to help prop up Citigroup Inc
(C.N: Quote, Profile, Research) and insurer American International Group (AIG.N: Quote, Profile, Research). It also
has been used to invest in automakers General Motors Corp
(GM.N: Quote, Profile, Research) and Chrysler LLC [CBS.UL].

The head of the Federal Deposit Insurance Corporation has
urged the Treasury to use about $24 billion in incentives to
get lenders to adopt loan modification plans but has met
resistance from the Bush administration.
(Reporting by John Poirier; editing by Carol Bishopric)