US banks will be forced to tell the new President's administration how they are spend their bailout cash under plans outlined by Barack Obama's economic adviser.

The plans come as the President-elect asked President Bush to tell Congress that he would seek the release of the remaining half of the $700 billion troubled assets relief programme (Tarp).

Mr Bush's request to Congress, which has not yet been made, will trigger a 15-day period in which Congress can vote to refuse the release of the cash.

Larry Summers, Mr Obama's economic adviser, wrote a letter to the Democrat and Republican leaders in Congress detailing how the new administration would oversee use of the $350 billion emergency cash. It is an attempt to avert a denial from Congress by addressing earlier criticism that President Bush and his Treasury Secretary Henry Paulson failed to force the banks to use their money to help homeowners, or account for how it was spent.

US banks have refused to tell taxpayers how the money was used, while millions of homeowners continued to face foreclosure.

Mr Obama is keen to have the $350 billion ready when he takes office on January 20.

In an attempt to woo lawmakers, Mr Summers promised that the new administration would set strict conditions on executive pay until the bailout was repaid, and direct more of the $350 million to community banks and small businesses.

The repayment plans agreed by the banks and details of how they used the cash would be made public, Mr Summers wrote.

Chris Dodd, the Democrat chairman of the Senate banking committee, said yesterday that the Senate would not approve the release of more bailout money unless it was spelt out how the money would help struggling homeowners.

Democrat politicians are currently working on legislation that would allow bankruptcy judges to change mortgage repayment terms to prevent property owners from losing their homes.

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