Lawmakers Reluctant to Release $350 Billion Foreclosure Bailout
Senate Banking Committee Chairman Christopher Dodd recently said that lawmakers were demanding to see more concrete action from government before it approves the release of the remaining $350 billion bailout funds for foreclosure prevention allotted by the Bush administration.
Lawmakers are expecting the Treasury Department to show more transparency in the handling of the bailout money. They also want to limit executive compensation and make fund recipients more accountable.
Last year, the Congressional Oversight Committee questioned the Treasury Department regarding banks’ use of the first half of the $700 billion Troubled Asset Relief Program (TARP) and the Department’s strategy for rescuing homeowners from foreclosures. However, the Department failed to impress lawmakers with their foreclosure plan, resulting in their present reluctance.
Senators were briefed last Sunday by top economic adviser to president-elect Barrack Obama, Larry Summers on the next administration’s outline for the $350 billion bailout, and Obama’s separate $800 billion economic stimulus plan. Summer’s arguments were an effort to persuade lawmakers to make the funds available when Obama assumes office on January 20.
A tag-team effort from the Bush and Obama administration is now in the works in order to release the funds. Under existing regulations, Bush is supposed to request the remaining money for the TARP, and Obama is supposed to draw up the outline for the plan. Dodd says that much of the money will go towards helping homeowners with foreclosure problems.
The request by Bush would then go into a vote, and Congress could pass a resolution to disapprove the request. However, the White House still has the power to veto the Congress resolution. In case of a veto, only one-third of either chamber would be necessary for the funds to be released.
The challenge for Obama’s administration is how to sway lawmakers who feel that the use of TARP funds during Bush administration did very little to ease the foreclosure crisis.
By Cassiano Travareli