Barack Obama’s economic team is broadening the mission of the $700 billion bailout for the financial sector, aiming to unfreeze credit for homeowners, consumers, small businesses and local governments.
From the Associated Press:
The overhaul is aimed at the $350 billion remaining in the Troubled Asset Relief Program and comes amid mounting criticism from lawmakers and watchdogs that the Bush administration has administered the money in an inconsistent way and has not made banks accountable for the money.
The head of a congressional panel overseeing the $700 billion bailout program said Friday that lawmakers need to “take a very hard look” at how banks have used the money and she welcomed Obama’s attempts to better define the program’s mission.
Obama’s selection for Treasury secretary, Timothy Geithner, is developing a “comprehensive set of investment principles,” an Obama transition official said Friday. The official, speaking on the condition of anonymity because the plan has not yet been fleshed out, said the economic team will include measures to mitigate rising foreclosures and will place tougher conditions on financial institutions that receive the money, including limits on executive compensation.
With 11 days left before Obama is sworn in as the nation’s 44th president, the task of requesting Congress for access to the remaining funds will now likely fall on the new Obama administration.
Geithner is expected to face a confirmation hearing before the Senate next Thursday and he can count on being quizzed vigorously on his TARP proposals.
Though the Obama team is not offering any specifics, the mere fact that it is setting goals for the money won support from the head of a congressional panel that is charged with overseeing how the money is being spent.
“These are powerfully important initiatives,” said Harvard law professor Elizabeth Warren. “I’m very pleased that the incoming administration is focused on these issues.”
She offered no specific advice on how to free up more credit. “It’s going to take a variety of tools,” she said. “They may have to move through multiple approaches.”