Obama today sent a letter to House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, House Minority Leader John Boehner and Senate Minority Leader Mitch McConnell asking them to allocate the second half of the $700 billion TARP funds passed by Congress last year. House Banking Committee Chairman Barney Frank introduced a bill Friday that would restrict how the second half is spent, underlining Congress’ general unhappiness with both the process so far and the Treasury’s transparency. Frank’s bill – expected to come to the House floor on Thursday, would require that $100 billion of the next trench go to directly stemming foreclosures (Frank will hold a hearing on the TARP funds and his bill tomorrow at 2pm).
So far a whopping $279.23 billion has been pledged to 300 institutions including $45 billion for Citigroup, $23 billion for consumer lending, $23.4 billion for the auto industry and $40 billion for AIG.
In asking for Congress to pass the second half, Obama pledged that as president he would better oversee how the funds are invested, including directing funds to community banks, small business owners, students looking for college loans and consumers seeking car loans. Obama also pledged to do more to help those in foreclosure and to improve transparency on how the money is spent. The transition administration did not make it clear if they want to see Congress pass the money without strings or if they would be willing to submit to Frank’s conditions. “We’re in constant contact Congressman Frank and other leaders in Congress about how best to achieve these reforms,” an Obama transition official said in an e-mail.
But, either way, Congress has, of course, come up with the most convoluted way to deal with the issue: the Senate is expected to take up, also on Thursday, a Resolution of Disapproval. Yes, that is exactly what it sounds like: instead of approving the funds the Senate is planning on basically telling off President Bush and Hank Paulson for what they consider shoddy handling of the first $350 billion. The second trench would be allocated automatically if no resolution is passed. It’s unknown if this measure has the votes to pass the Senate and Dem leaders are hoping Obama’s letter today, along with a detailed letter from Larry Summers, will help assure enough outraged senators that change is coming to avoid passing the resolution. But, if it does pass it’ll likely also pass the House and be sent to Bush’s waiting veto-pen. Congress is then unlikely to have the votes to overturn the veto and, having gotten at least some of their anger out of their systems, will then go about passing the money for Obama to use or simply allow the money to be automatically aprroved. All of which makes for a lovely welcome gift for Obama who looks be sworn in sometime between the veto and the veto override votes if the resolution passes the Senate on Thursday.