RISMEDIA, February 9, 2009-(MCT)-Treasury Secretary Timothy Geithner is expected to issue a report this week describing plans to spend the remaining $350 billion of a federal rescue program aiming to stabilize the economy and aid troubled financial institutions. But before any new funds can be spent, the administration will have to overcome obstacles from a key congressional panel concerned with the program so far.
Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee who has criticized the $700-billion Troubled Asset Relief Program approved by Congress in the fall, will raise tough questions about spending the second half of the program’s funds, which may hold up the process, according to an aide.
Committee spokesman Steve Adamske said Frank is concerned about three issues: the lack of money to help homeowners facing foreclosure, the lack of complete information as to where the TARP money has gone and the need for tougher restrictions on compensating executives working at companies that have accepted financial help.
“Obama took a very good step, but we want greater restrictions,” said Adamske, referring to a plan President Barack Obama unveiled Wednesday that would impose a $500,000 cap on the pay of top executives of companies that receive significant aid in the future.
A Treasury official said yesterday Geithner’s report will make clear how TARP money will be spent. “Will it say where every penny is going to be spent? Maybe not, but you’ll see a clear set of priorities where funds will go to stabilize the economy, get credit going again, and increased measures for accountability and transparency,” said the official, who did not want to be identified because the report has not yet been delivered to Congress.
Whether that will be enough to satisfy Frank, members of his committee and its Senate counterpart is unclear. But, Adamske said, Frank’s panel will question chief executives of some of the nation’s largest banks next week to ask how, or whether, they have spent TARP money.
The first $350 billion of the TARP fund has either been spent or been committed to projects, Adamske said. The funds went largely to financial institutions. Banks and auto companies are likely to come back for more TARP money, said congressional aides and experts.
The program has come under sharp criticism, primarily from conservative Republicans, who disliked government intervention in the affairs of companies, but from some Democrats as well.
Douglas Elliott, a fellow in economic studies at the Brookings Institution in Washington, D.C., said the program helped keep things from becoming even more disastrous than they have been. “A lot of mistakes were made” in putting the program together, he said. “But it was done under a lot of time pressure. But I’m glad they did something.”
Issues facing TARP
Three main issues still to be discussed before the other $350 billion is spent:
– Money needed to help homeowners facing foreclosure
– Degree of transparency needed on how TARP money is spent
– Toughness of restrictions on pay for executives working for companies that get TARP money
Copyright © 2009, Newsday, Melville, N.Y.
Distributed by McClatchy-Tribune Information Services.