By Karen Miller
A new dilemma has emerged for the officials in the largest government rescue in U.S. history. Everyone right from insurers, automakers to financial institutions want to have the cake and eat it too.

New doubts have emerged, especially with financial institutions, as to whether they will use the money to expand their personal portfolio than loosen their credits

A Senate panel quizzed the Indian born American, Neel Kashkari - the Treasury official in charge of spending 700 billion taxpayers' dollars on Wall Street, on implementing the bail out. Lawmakers want assurance that the banks will use the money to loosen credit, not to expand the banks personal portfolio.

At the hearing, Kashkari talked about the government's new capital purchase program. In the program, the Treasury will purchase up to 250 billion dollars in preferred stock from qualifying banks. According to the treasury, the money is supposed to provide capital for banks to lend out and not horde. But some on the committee question if that will be case.

“What can you tell us? What guarantees? What assurances? What commitments is the treasury going to extract from these lending institutions that they are not going to do this? I think we need more than begging at this point,” Questioned Chairman Chris Dodd, Democrat from Connecticut

Kashkari said the terms surrounding the preferred stock agreements would give provisions on how banks can and cannot use the capital. First, there would not be an increase in dividends on the stocks purchased

“Because we don't think it's appropriate to take government capital; the tax payer money and then increase dividends. That does not increase capital in the financial system so that is prohibited,” Second, Kashkari said that share buy backs would not be allowed.

He added “ We don't want to put government capital in and then boost the stock price by buying back a bunch of shares. That is contractually prohibited.”

But Kashkari was vague on what the treasury was going to do to make sure banks actually use the money for lending.

“In addition, we have other language in there, focusing on commitments around increasing lending, working hard to work help homeowners. Some of them are contractual provisions, others are more guidance in nature, but we share your view 100 percent. We want these institutions in our community lending.”

Kashkari said the Treasury did not put out guidelines because they would not be legally binding and they didn't want to micromanage how banks used their money. However, not many committee members were satisfied. Charles Schumer, Democrat of New York is one of them. “What are you going to do with banks that don't increase their lending at all that take this capital?” he asked

Currently, 9 major banks are on board to receive 125 billion with the rest of the funds going to smaller banks that qualify.

In arrangement with Free Speech Radio News