Big spending to revive economy is still planned

The Obama administration still plans to spend tens of billions of dollars reviving the nation’s financial system, even after the government’s unexpected finding that major banks need only a little bit more direct government aid.

Despite signs that the worst of the recession may be over, senior officials say they think big actions are necessary to spark an economic revival.

Some government officials say they now expect healthy banks to return more than $35 billion in the near future. That would give the Treasury Department at least $145 billion for other initiatives.

To use that money, officials are pondering programs to help businesses and governments far afield from Wall Street -- actions that may win political support from lawmakers as well as earn economic dividends.

Options include the creation of a federal agency that could back municipal bonds, aiding bond insurers that backstop them or simply providing subsidies that could lower the interest rate for municipalities.

Separately, the government has begun serious discussions to provide federal aid to the nation’s largest life insurers, such as Hartford or Lincoln Financial, sources said.

Officials consider helping the life insurance industry to be a crucial piece of the financial rescue because the companies provide insurance to millions of ordinary families and invest their premiums in the markets.