There has been much anticipation as to whether the second half of the $700 billion bailout fund would be released or not. The Obama administration is looking forward to its first legislative triumph if ever the outcome on Thursday favours them. Part of the funds will be used for foreclosure prevention measures.
It is known to everyone that the $700 billion fund was initiated under the term of President George Bush. It was readily granted in hopes of relieving the bad economic condition of the country, particularly the foreclosure crisis. However, if the economic advisers of Bush were to lobby for the funds at present, things could turn out differently.
There have been a lot of allegations with regards to the fund administration during the term of Henry Paulson, treasury secretary under the Bush administration. There was allegedly no transparency and openness and foreclosure prevention efforts were not so much felt.
Congress has the power to decide on the release of the remaining $350 billion. If it chooses to approve the request, the money will be made accessible to the Obama administration. Otherwise, if either of or both the Senate and House vote to disapprove the request, Obama would need to use his veto power. Once he does so, he would gain full access to the funds.
However, rebuffing a Congress dominated by Democrats would not be a wise move for a newly elected Democratic President.
In order to prevent unnecessary conflicts, the Obama team has been trying to convince Congress that the funds would be handled differently from the previous administration. The funds would be managed with transparency so that people would know how the money would be utilized. Also, part of the funds would be dedicated to reducing foreclosures in the country.
In relation to the bailout fund, legislation by Barney Frank would impose certain conditions on the administration of the amount. If approved, the legislation would guarantee that $40-100 billion from the funds would be allotted to foreclosure prevention.
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