Just minutes after President Bush said at a news conference that President-elect Barrack Obama just had to “ask” if he needed the remaining $350 Billion bailout funds allocated for foreclosure prevention, Obama did just that. Now Congress has to vote within a 15-day period whether to approve the request.
However, Democrats are asking for $100 B of the $350 B for a more aggressive foreclosure plan among other stipulations, while Republicans say that the money is not going anywhere.
Rep. Barney Frank, House Financial Services Chairman and Democrat, says that he is negotiating with Obama’s team regarding the changes Democrats want to see before releasing the money. Legislation regarding the matter was set to be brought to the House floor last January 15.
Meanwhile, House Republican leader Rep. John Boehner and Rep. Spencer Bachus, another Republican from the House Financial Services Committee, have already expressed strong opposition to releasing more of the foreclosure aid. In a January 9 interview, Bachus said that the financial situation was no longer shaky and that to release any additional funds would be irresponsible.
To help soothe worries, Obama’s top economic adviser Larry Summers sent a letter to both parties assuring a more controlled use of the remaining $350 billion Troubled Asset Relief Program (TARP). According to Summers, the Treasury Department will be asked to be stricter and more sensible regarding executive compensation. He also assured that more money will go to small businesses and community banks, and that there would be more transparency in the use of the remaining funds. It could be remembered that Treasury Department Secretary Henry Paulson was severely criticized last year for his foreclosure program which used the first $350 billion to inject capital into troubled banks and automakers.
If the legislation that Frank proposed pushes through, lenders will be required to submit a quarterly accounting of the use of the TARP money, while Obama would be required to enact a plan to limit foreclosures of mortgages by April 1.
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