Rep. Frank wants new TARP restrictions
Rep. Barney Frank (D-MA) listen to questions from reporters after a meeting on Capitol Hill in Washington, DC.
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Bob Moon: We've now run through the initial course of treatment for what ails the rest of us. And the Treasury Department, having prescribed the first half of the $700 billion Troubled Assets Relief Program, is preparing to go back to Congress for a refill. TARP, you'll recall, was passed last fall to give banks the economic health and confidence to provide loans and credit to borrowers. The first dose hasn't exactly worked as advertised, and Congress wants Treasury to know there will be some new restrictions on the next half. Here's our Washington Bureau Chief John Dimsdale.
John Dimsdale: Plenty of members of Congress are upset that neither the banks, nor the Treasury Department have disclosed what happened to the first $350 billion in TARP money. Today, the chairman of the House Financial Services Committee, Barney Frank, introduced new conditions for the second half.
Barney Frank: There is such unhappiness in the country and in Congress with the way in which the Bush administration administered the first $350 billion, that we have to be very specific about what we expect in the second 350.
Frank's new rules require banks to report quarterly on how they're using taxpayer money. The top 25 executives at companies that get funds can receive no bonuses or incentive pay, and the companies can't use TARP money to acquire other banks. Some of the next installment would have to go to domestic car companies and to help homeowners avoid foreclosure.
Frank: And I believe there will be some language that will ultimately say if they choose not use any of the authority in those categories, they're going to have to explain why. They're going to have to tell us there was no chance.
It will be the Obama Treasury Department that will ask for and spend the second $350 billion of TARP money. Representative Frank says the president-elect's economic team is thinking along the same lines, although the transition team wouldn't confirm that today. The banking industry is also talking to Congress. And Treasury Secretary-nominee, Timothy Geithner, will be pressed at next week's Senate confirmation hearing about his plans for TARP. He'll have to explain just how he'll track TARP spending.
In Washington I'm John Dimsdale for Marketplace.