By Michael R. Crittenden Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- The top negotiator on financial matters for Democrats in the U.S. House of Representatives said Wednesday that Congress is unlikely to release the second $350-billion installment of the financial-rescue package unless the incoming administration of President-elect Barack Obama agrees to major changes in the way the program has thus far been implemented.
In a memo to the entire House of Representatives, Rep. Barney Frank, D-Mass., laid out a series of proposals he said should be added to the $700-billion Troubled Asset Relief Program, or TARP, before Congress grants access to the money. These proposals include requirements that banks account for the money they receive from the government; use of TARP funds to help struggling homeowners; and help for municipal bond issuers.
Frank, who chairs the House financial-services committee, said he has proposed to the Obama administration to work on drafting the conditions.
"I have told both the Bush and Obama administrations, after consultation with Speaker [of the House Nancy] Pelosi, that in my judgment any standalone effort to secure the release of the second $350 billion would be defeated by Congress in the current situation," Frank said in the memo.
Currently, the Treasury Department has committed nearly $10 billion more than the $350 billion it was authorized to use by the financial-rescue legislation passed in October, though the actual money spent is unlikely to top the limit before the second half of the money is approved.
Policymakers in the Obama camp, the Treasury Department and on Capitol Hill roundly share the belief that the second installment of $350 billion should be released by Congress. Still, there has been widespread criticism of the Treasury Department's use of the first half of the funds, which Frank cited in his memo.
"The optimism many of us had about how the money would be spent by this [Bush] administration...turned out to be unjustified," Frank said.
Among the elements Frank would like to see tacked on to the TARP program: new requirements that banks use money for lending; "severe restrictions" on bonuses for top executives; and conditions if companies use TARP funds for acquisitions.
Additionally, he said he wants to mandate some version of a Federal Deposit Insurance Corp. plan to streamline foreclosure-prevention efforts; require banks to report regularly on how they have used TARP funds; and "explicit authority to make sure that funds flow for the purchase of automobiles."
The memo, Frank concluded, is meant to "assure members that no further expenditure of TARP funds beyond the initial $350 billion will go forward until we believe that legitimate Congressional concerns have been satisfied, and the Obama administration understands and will be complying with this."
The financial-services committee announced Wednesday it will meet on Jan. 13 to discuss how the second $350-billion installment should be spent.
-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273; michael.crittenden@dowjones.com
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Publié le 07 janvier 2009 Copyright © 2009 Dowjones