In a much welcome change of pace, I have good news to report. Unfortunately it is likely to be fleeting, so please enjoy it while it lasts.
Congressional bickering is back in vogue as Dodd, Frank Warn Paulson May Not Get TARP’s Next $350 Billion.
Two top U.S. lawmakers warned Treasury Secretary Henry Paulson that he may not get the second half of the $700 billion financial rescue fund, joining Republicans upset with how the program is being managed.
“I would be a very hard person to convince that this crowd deserves to have their hands on the next $350 billion,” Senate Banking Committee Chairman Christopher Dodd told reporters yesterday in Washington, referring to the Bush administration. “I am through with giving this crowd money to play with.”
“It looks like the only way Paulson could get the TARP money is to make a deal on foreclosure relief,” said Tom Gallagher, head of policy research at International Strategy and Investment Group in Washington.
Paulson, who has committed all but $20 billion of the first half of the funds, is also under fire for abandoning the original TARP plan to buy toxic mortgage assets. Under the terms of the law, lawmakers have 15 days to reject a request for the second half of the TARP funds.
House Financial Services Committee Chairman Barney Frank yesterday warned that Paulson may be blocked from accessing the money.
The Treasury has ignored the “clear congressional intent” of the TARP to reduce home foreclosures, Frank, a Massachusetts Democrat, told reporters yesterday after a speech at a Consumer Federation of America conference in Washington. “At the very least, he’d have to agree that some of that money was going to be used for foreclosure relief.”
Paulson and his deputies say they are considering additional avenues for TARP funding. Neel Kashkari, the interim assistant secretary in charge of the program, yesterday told a Senate hearing that the Treasury is looking at ways to boost banks’ capital.
“Little is understood about how these investments are contributing to the nation’s economic recovery,” House Minority Leader John Boehner and 11 other Republicans wrote in their Dec. 3 letter.
Little Is Understood
“Little is understood about how these investments are contributing to the nation’s economic recovery” for the simple reason we have wasted $350 billion dollars, contributing a net total of zero to the recovery. Actually, every dollar wasted contributes to a net decline in recovery and rest assured most of that $350 billion was wasted.
Let’s now hope that Paulson gets fed up with this bickering and the blame he is getting and does not ask for the second installment of $350 billion dollars.
As a practical matter the best we can hope for is to avoid wasting this $350 billion because once the Obama Congress is session, some $500 billion worth of waste will be coming our way whether this $350 billion is wasted or not.
Meanwhile I still have hopes that Congress wastes as little as possible on the automakers and decides to let GM, Ford, and Chrysler go under. Please see GM Bankruptcy Option Under Discussion for more details.
If you have not yet notified your Congressional Representative on GM and the automakers, please read the above link and do so now.
One Final Point
If Paulson does decline to ask for the second installment of $350 billion, and if you participated in the campaign to stop the bailout, this is what I want you to do: Go stand in front of a mirror and give yourself a bow. You helped prevent the waste of 350 billion taxpayer dollars.
The provision to split the $700 billion in two installments was added after the bailout bill failed to pass the first time. Had we not protested, $700 billion would already have been wasted.
Mike “Mish” Shedlock
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