by Deb Cupples | The the Bush Administration is preparing to ask Congress for the other $350 billion in Wall Street bailout funds, the first $350 billion having already been mostly spent. The program is known as TARP (Troubled Asset Relief Program).
Yes, the program does seem troubled, intensely so. Many people feel that TARP lacks sensible accountability provisions and has amounted to a massive transfer of cash to some of the same corporate executives who drove their companies into a ditch.
Yesterday, House Financial Services Chairman Barney Frank proposed legislation that might partly clean up TARP. Reuters reports:
"Under his [Frank's] bill, Treasury would have to devote at least $40 billion to reducing home foreclosures via a plan that it must develop by March 15 and start funding by April 1.
"Treasury would also have to give small banks more access to the TARP and require quarterly disclosure by TARP participants about their use of TARP funding.
Good idea, Rep. Frank! It's just common sense that bailout-fund recipients be required to account for how they use our tax dollars -- otherwise, company execs could line their own pockets and we taxpayers would have no recourse. Reuters continues:
"Other provisions of the draft bill would constrain the use of TARP funds in bank buyouts. TARP fund recipients could not buy other depository institutions without a Treasury finding that a deal 'reduces the risk to taxpayers or ... could have been accomplished without funds provided under the TARP.'"
Thank you, Mr. Frank! I'm no expert, but I've been nervous about banks' buying up other banks, because one inevitable result seems to be the creation of even more financial institutions that become too big to be allowed to fail. Do we taxpayers really want to get stuck doing another massive round of bailouts in another 20 years? Reuters continues:
"The [Frank's] bill would standardize limits on the pay of executives employed by TARP recipients, regardless of what sort of aid received under the program. It would also make wider pay provisions retroactive to existing program participants.
"'If they don't like it, they can give the money back,' Frank said, referring to the retroactive limits on pay." (Reuters)
Still more kudos to Rep. Frank! If Congress can give retroactive immunity to telecom companies for breaking the law (as Congress did in July 2008), why not retroactively establish sensible restrictions and accountability measures on companies that have already taken billions in tax dollars?
While Rep. Frank seems to be on the right track, his bill likely will not look the same after other congressional representatives apply their marking pens to it.
Even if the bill remains reasonably intact and the House passes it, the bill would have to pass the Senate -- where certain corporate lapdogs are sure to hiss and holler and pound their fists against any attempt to make America's executives accountable [e.g., Minority leader Mitch McConnell (KY) and Bob Corker (TN)].
As usual, time'll tell. Memeorandum has commentary.
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* What Does Obama Have in Mind for Social Security?
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