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Paulson says Obama will decide on rescue spending
Source: Agencies |
January 8, 2009, Thursday
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US President-elect Barack Obama will decide how to spend the remaining half of a US$700 billion economic rescue program, a top Bush administration official said yesterday, while a key Democratic lawmaker outlined his vision of how new rescue funds should be spent.
"The only decision-maker as to how that money is going to be used, how those funds are going to be used is going to be the Obama administration," Henry Paulson said in a speech that will be one of his last as Treasury Secretary.
While Paulson has won broad praise for his handling of the worst financial crisis since the Great Depression, Democrats have faulted him for doling out money to banks while refusing to give direct aid to troubled homeowners.
In a memo to his Congressional colleagues, one of the top rule-writers for the finance industry outlined his plan to use federal dollars to save homeowners from foreclosure.
Democratic leaders said they are preparing legislation that would set conditions on the release of the remaining share of the Troubled Asset Relief Program, or TARP.
Barney Frank, chairman of the House of Representatives Financial Services Committee said that he expected Obama would be an ally in writing new rescue terms.
"I do personally have confidence that President Obama (will) spend the money more wisely and in line with Congressional wishes (more) than has previously been the case," wrote the Massachusetts Democrat.
Frank wrote that he plans to breathe life into a foreclosure-prevention plan conceived by Federal Deposit Insurance Corp Chairman Sheila Bair and that he might also jump-start a separate plan conceived by Paulson's team that would fund below-market-rate home loans.
Bank executives could see their bonus pay curtailed and cities issuing municipal debt could also get aid, Frank wrote in the six-point outline.
RESCUE FUNDS SCATTER
The TARP is the centerpiece of a huge government effort to moderate a fast-moving economic crisis that is darkening both the Bush administration's final days and the start of the Obama administration on Jan. 20.
Begun in October, the program has so far committed US$354 billion to bailing out troubled large banks, automakers and insurance group American International Group Inc.
The Treasury Department -- whether it is headed by Paulson or his successor -- must formally request that Congress release the second US$350 billion portion of the TARP.
Paulson said he would only request the second installment of TARP money if Obama asked him to do so.
Paulson has said that he was duty-bound to help troubled borrowers avoid foreclosure as part of TARP, but Treasury never conceived a program to give homeowners direct aid.
Obama said on Wednesday that his administration would have a plan to help turn back a tide of foreclosures within two months of taking office.
"I expect to unveil plans to prevent foreclosures in consultation with (Rep.) Barney Frank and (Sen.) Chris Dodd, who've done some very good work on this, sometime in the next month or two," he said in an interview with CNBC.
Dodd is the chairman of the Senate Banking Committee and his blessing would be needed on any effort to expand homeowner aid.
"The only decision-maker as to how that money is going to be used, how those funds are going to be used is going to be the Obama administration," Henry Paulson said in a speech that will be one of his last as Treasury Secretary.
While Paulson has won broad praise for his handling of the worst financial crisis since the Great Depression, Democrats have faulted him for doling out money to banks while refusing to give direct aid to troubled homeowners.
In a memo to his Congressional colleagues, one of the top rule-writers for the finance industry outlined his plan to use federal dollars to save homeowners from foreclosure.
Democratic leaders said they are preparing legislation that would set conditions on the release of the remaining share of the Troubled Asset Relief Program, or TARP.
Barney Frank, chairman of the House of Representatives Financial Services Committee said that he expected Obama would be an ally in writing new rescue terms.
"I do personally have confidence that President Obama (will) spend the money more wisely and in line with Congressional wishes (more) than has previously been the case," wrote the Massachusetts Democrat.
Frank wrote that he plans to breathe life into a foreclosure-prevention plan conceived by Federal Deposit Insurance Corp Chairman Sheila Bair and that he might also jump-start a separate plan conceived by Paulson's team that would fund below-market-rate home loans.
Bank executives could see their bonus pay curtailed and cities issuing municipal debt could also get aid, Frank wrote in the six-point outline.
RESCUE FUNDS SCATTER
The TARP is the centerpiece of a huge government effort to moderate a fast-moving economic crisis that is darkening both the Bush administration's final days and the start of the Obama administration on Jan. 20.
Begun in October, the program has so far committed US$354 billion to bailing out troubled large banks, automakers and insurance group American International Group Inc.
The Treasury Department -- whether it is headed by Paulson or his successor -- must formally request that Congress release the second US$350 billion portion of the TARP.
Paulson said he would only request the second installment of TARP money if Obama asked him to do so.
Paulson has said that he was duty-bound to help troubled borrowers avoid foreclosure as part of TARP, but Treasury never conceived a program to give homeowners direct aid.
Obama said on Wednesday that his administration would have a plan to help turn back a tide of foreclosures within two months of taking office.
"I expect to unveil plans to prevent foreclosures in consultation with (Rep.) Barney Frank and (Sen.) Chris Dodd, who've done some very good work on this, sometime in the next month or two," he said in an interview with CNBC.
Dodd is the chairman of the Senate Banking Committee and his blessing would be needed on any effort to expand homeowner aid.
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