President Bush will ask Congress to release the second $350 billion of the bailout at the request of President-elect Obama as the Obama team tells restive lawmakers it will impose tighter controls on recipients and help homeowners and small businesses.
The moves reflect Mr. Obama’s desire to have the money available shortly after he takes office Jan. 20, Tommy Vietor, spokesman for the office of the President-elect, said in an interview yesterday.
“President-elect Obama believes the need is imminent and urgent,” Lawrence Summers, tapped to be Mr. Obama’s chief economic adviser, said in a letter to congressional leaders.
“We will continue our consultations with the president-elect’s transition team, and with Congress, on how best to proceed in accordance with the requirements of the statute,” White House spokeswoman Dana Perino said yesterday.
The request will start a 15-day period in which Congress can block the release of the Troubled Asset Relief Program funds.
Congressional Democrats have sharply and persistently criticized Treasury secretary Henry Paulson the program, which began in October, saying that it has failed to monitor banks’ use of money, assist struggling homeowners or offer a clear strategy.
House Financial Services Committee Chairman Barney Frank, a leading critic of the Bush administration’s handling of the bailout, said yesterday that Congress should not stand in the way of the funds because Mr. Obama seems to agree with changes sought by lawmakers.
“It seems clear the Obama administration agrees with what we are setting forward, and I believe this creates a framework so that the release of these funds can go forward,” the Massachusetts Democrat said in a statement.
Mr. Frank introduced legislation Friday to impose controls on use of the next $350 billion of the bailout, including a provision requiring that between $40 billion and $100 billion go to reducing housing foreclosures.
In Mr. Summers’s letter, he wrote the Obama administration would track banks’ use of federal aid to assure it is being used for lending, as intended. It also will ask banks to account for how they have used the funds.
The new administration also would impose “strict and sensible conditions on CEO compensation and
dividend payments,” while trying to expand assistance beyond just large financial institutions, the letter said. New recipients would include struggling homeowners, small businesses, community banks, and municipalities.
Mr. Obama “shares the frustration of the American people that we have seen too little effect from this rescue plan on jobs, incomes and the ability of responsible homeowners to stay in their homes,” Mr. Summers wrote.
“He believes the American people are right to be angry with the way this plan has been implemented.”
Lawmakers’ complaints have been echoed by a congressional oversight panel headed by Harvard law professor Elizabeth Warren and by Congress’ non-partisan Government Accountability Office.
