I am listening to the Congressional hearings with Sheila Bair, Hank Paulson and Ben Bernanke recounting what they have done to restore the economy with the $700 billion that Congress gave the Bush Administration. The hearing is pretty interesting because Chairman Barney Frank is absolutely hammering Paulson for sidestepping the specific language in the TARP inserted indicating that the TARP must be used to aid in reducing foreclosures.
In essence, Frank is saying that Congress specifically inserted language into the TARP bill in order to make sure home foreclosures could be reduced. The bill would not have passed otherwise. Yet, from his perspective nothing has been done on that lines with the TARP funds. Paulson has not disbursed the funds as he indicated he would. Barney Frank is accusing Paulson of a bait and switch. Other Democrats like Maxine Waters are now piling on as well – she said she advocated for this bill in the Congressional Black Caucus, further suggesting she has lost face due to Paulson’s actions.
UPDATE 930 AM ET: Another Congressman said he was irate that PNC, which did receive bailout funds under the TARP, was allowed to takeover National City, which he indicated was a well-capitalized institution. The Congressman said that he did not want government to pick “winners and losers.” This is similar to Citigroup planning a takeover of Chevy Chase Bank, about which I wrote.
I agree that Paulson has been very slippery. But, on some level, Congress did give him a blank check to use the funds at his discretion. Congress should have made their own bailout bill if they wanted to get a workable solution. I warned it would come to this back in September and I blame Congress.
At the risk of sounding partisan, I would add that this is exactly what the Bush Administration did when Congress gave them authorization to invade Iraq. I see a pattern here.
When I get a news story on these events I will post the link as a source.
Here is one:
Frank Irritation Over Paulson Stance on Foreclosures – WSJ
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