Here's the talking points I've been waiting for!

January 7, 2009, 5:31 pm
Barney Frank Lays Out Plan on TARP Limits
House Financial Services Committee Chairman Barney Frank (D., Mass.) sent a memo to other lawmakers Wednesday laying out his plan to place limits any future use of money from the Treasury Department’s Trouble Asset Relief Program, known as TARP.

Rep. Frank acknowledged in the memo that many members were frustrated at the way the Bush administration handled the program and promised major changes if the second half of the $700 billion is requested. (he said he thinks it would be useful for the Obama administration to have access to the money). He also said there must be new limits on the money even though he “personally” has “confidence that President Obama would spend the money more wisely and in line with Congressional wishes than it has previously been the case.”

Mr. Frank said he has – with the blessing of Speaker of the House Nancy Pelosi – proposed to the Obama administration that a new set of “conditions” be placed on the remaining $350 billion. He said the “following elements” were necessary for any future spending:

1) Substantial efforts to reduce foreclosures, including a version of a proposal pushed by Federal Deposit Insurance Corp. Chairman Sheila Bair to give incentives to lenders to make loans more affordable.

2) Require banks to tell Congress how money received from the government is being used.

3) Strict requirements that any money given to banks would have to be used to “promote systemic stability and increased lending,” including limits on executive bonuses. Also, there would be limits on how the money is used for acquisitions.

4) Use funds to offer mortgages at low and affordable rates.

5) Assist cities and other tax-exempt issuers who are having a hard time finding investors for their general obligation bonds.

6) Explicit authority to make sure funding is available for automobiles.

The House could vote on a version of the plan as soon as next week. – Damian Paletta

Permalink | Trackback URL: http://blogs.wsj.com/economics/2009/01/07/barney-frank-lays-out-plan-on-tarp-limits/trackback/

I'm a bit disappointed, but perhaps the details will be juicier. What's the teeth in th first item above?