Financial Institutions May Need Additional Funds, Biden Says
Monday, January 26, 2009
Banks and other financial institutions may need more than the $700 billion in public money that has already been approved to repair the nation's feeble credit system, Vice President Biden and congressional Democrats said yesterday.
In his first appearance as vice president on CBS's "Face the Nation," Biden said that Timothy F. Geithner will report quickly about the use of the second half of the financial bailout funds soon after the Senate confirms him as Treasury secretary, possibly today.
"He will then report back to the president and to me as to whether or not he thinks that 350 is enough," Biden said. "But the first things first. We've got to spend more rationally, reasonably and transparently, to move the financial institutions, to loosen up credit. . . . And we'll go from there."
House Speaker Nancy Pelosi (D-Calif.) said she is open to "some increased investment" by the federal government to keep banks stable. But like Biden, she stressed that banks must show they are using the current funds effectively and responsibly before they get more.
"Change has to happen in terms of what is done, what the transparency of it is, what the accountability of it is," Pelosi said on ABC's "This Week." "Only then would we be able to pass any additional funding."
Pelosi rejected a description of additional bailout money as "nationalization" of the banking system, saying that she is "not talking about total ownership" and would not use that "terminology." But she said additional investment would come with a price.
"Well, whatever you want to call it, there has to be -- if we are going to put money into the banks, we certainly want equity for the American people," she told host George Stephanopoulos. "In other words, if we are strengthening them, then the American people should get some of the upside of that strengthening."
The Democratic comments about the financial bailout came as Republican opposition mounted to the Obama administration's more than $850 billion economic stimulus package working its way through Congress.
Sen. John McCain (R-Ariz.), who lost the presidency to Obama last fall, declared that he opposes the bill in its current form, though he declined to say that he would try to filibuster its passage.
"I am opposed to most of the provisions in the bill. As it stands now, I would not support it," McCain said on "Fox News Sunday." "I mean, I want us all to sit down and negotiate. The Republicans have not been brought in to the degree that we should be into these negotiations and discussions."
The president and his Democratic allies on Capitol Hill have said they are eager to pass the stimulus plan with significant bipartisan support in the hopes of demonstrating to the public and to the markets that the country is behind the recovery effort.
But the GOP appears to be increasingly negative in its assessment of the Democratic bill.
The House Republican leader, John A. Boehner (Ohio), predicted that members of his party will vote against the package because it includes too much spending that does not create jobs, and too few tax cuts.
"Right now, given the concerns that we have over the size of the package, I think a lot of Republicans will vote no, because they see this as a lot of wasteful Washington spending," he said on NBC's "Meet the Press."
President Obama has stepped up his lobbying for the plan in recent days. On Friday, he held his first meeting with the congressional leadership at the White House. And on Tuesday, he is expected to attend the Republican caucus meetings on Capitol Hill.
Meanwhile, Obama's top economic adviser, Lawrence H. Summers, took to the airwaves to defend the legislation, calling it an appropriate balance of tax cuts and spending measures.
Summers called the plan "properly sized" on "Meet the Press." But he said the American people will need to have patience while the effects of the spending and the tax cuts ripple through the economy.
"These problems weren't made in a day or a week or a month or even a year, and they're not going to get solved that fast," Summers said.
Last week, Republicans seized on a report from the Congressional Budget Office that said the majority of money in the Democratic plan would not get spent within the first year and a half.
Pelosi pushed back against the report yesterday, saying that the CBO analyzed only 40 percent of the bill. And she pointed to a letter from Obama's budget director that promised that at least 75 percent of the money would be injected into the economy in the first 18 months.
"We're committed to that," she said.
Biden predicted that the stimulus package would emerge from the Senate with a "truly bipartisan" vote, and said that there have been efforts to include GOP ideas about tax breaks in the legislation.
"What we're trying to do is get money out the door as rapidly as you can," the vice president said. "And I think everyone in both parties is seized with the notion we must act quickly. This has to happen before we go off -- they go off on the Presidents' Day recess."