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Bush Prepares Request for Rest Of Bailout Funds
Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, unveiled a bill that would mandate that the Treasury allocate at least $40 billion for foreclosure relief.
(By Mannie Garcia -- Bloomberg News)
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Frank's bill would mandate that the Treasury allocate at least $40 billion for foreclosure prevention. Banks and other institutions that receive funds from the Troubled Asset Relief Program, or TARP, would be required to account for the use of the money. Clear limits on executive compensation would be imposed on all firms that take federal aid, including those that already received money.
The House is expected to vote on Frank's measure on Wednesday, congressional sources said. If the measure is approved, Frank has said that some lawmakers who would otherwise vote against releasing the next round of TARP funds might be persuaded to reconsider. Without Frank's bill, House leaders are convinced that lawmakers would block release of additional funds to the Treasury, which is widely viewed by lawmakers as having rushed the bailout through Congress and then badly mismanaged the program.
For Obama, using a veto runs the risk of souring his relationship with rank-and-file lawmakers, especially if it is one of his first official acts in the White House. It carries less risk for Bush, who is leaving office in a matter of days.
But the threat of a veto could assure distressed financial markets that more help is on the way.
In September, when Treasury secretary Henry M. Paulson Jr. proposed the rescue to Congress, the House at first voted down the plan. Global stock markets plummeted immediately. The initiative eventually passed both chambers and was signed into law in October.
Bush officials committed nearly all of the first half of the rescue funds on aiding the financial system and bailing out individual firms. But their programs angered lawmakers on both sides of the aisle. Some were steamed that no help was forthcoming for struggling homeowners. Others said the effort failed to stimulate lending.
A majority of lawmakers in both parties are strongly resistant to giving more money to continue the program, Democratic leaders say, adding that a request from either administration is likely to be rejected, making a veto almost unavoidable.
