Posted on 11/21/2008 3:18:42 PM PST by flattorney
U.S. Treasury Secretary Henry Paulson, amid fire from lawmakers and other critics, continued Thursday to defend the Troubled Asset Relief Program and its new focus of injecting capital into banks and insurers as “necessary steps to prevent a financial collapse.” “Although we are not proceeding with direct asset purchase programs, we plan on using our resources aggressively to support the normalization of credit markets and the expansion of credit to support economic recovery,” Paulson said Thursday.
Paulson’s dramatic shift from his original strategy of buying up toxic loans and other troubled assets from financial institutions with the allocated TARP funds has left many Congressional members uneasy, to say the least. While Paulson suggested before the House Committee on Financial Services Tuesday morning that the remaining $350 billion in TARP funds wasn’t likely to be allocated during the remaining few weeks of his tenure at the Treasury, Senator Jim Inhofe (R-Okla.) isn’t buying it, and said Thursday that he’s concerned that Paulson could again change TARP’s course after the current lame-duck session of Congress is complete — without Congressional approval, under the terms of the original act.
“Congress completely abdicated its responsibility by signing a truly blank check over to the Treasury Secretary,” said Inhofe, in a speech on the Senate floor Monday. “However, the lame duck session of Congress offers us a tremendous opportunity to change course. We should take it.” Inhofe introduced legislation earlier this week to amend Section 115 of the Emergency Economic Stabilization Act (EESA) to require an affirmative vote on the part of Congress to approve any future plans by the Treasury to utilize the remaining $350 billion of TARP’s $700 billion in authorized funding, and to require a freeze on any remaining funds on the first $350 billion that have yet to be dispersed. “It is imperative that we not allow that amount of money to be added to a deficit approaching $1 trillion this year without any input from the legislative branch,” he said. It was unclear whether the proposed legislation is likely to pass, at the time this story was written.
Nonetheless, there is growing discontent among more than a few on Capitol Hill who now feel they were hoodwinked into handing over the $700 billion. “It’s not the way our government is supposed to work,” Imhof said. In a radio interview with KFAQ in Tulsa earlier this week, he claimed that Paulson “painted a picture” of a far worse scenario than the Great Depression, if Congress didn’t vote to buy up toxic assets. “I’ve never seen in my entire career of public service anything like the spectacle we are now witnessing,” he said.
For his part, Paulson continues to praise the extensive power granted to his team, stating that “our clear objective when we went to Congress was to stabilize it (the financial system) through measures that would increase capital strength. Since we were careful to get broad authorities from Congress, we were able to change our strategy in order to best achieve our objective.” And while Congressional officials feel as if they’ve been victims of a bait-and-switch, more than a few of HousingWire’s key sources on Wall Street have said that Treasury’s decision to focus on capital purchases, rather than asset management, was absolutely the right decision to make. At a recent TARP summit in New York hosted by SIFMA, numerous participants and panelists suggested that pursuing asset sales presented stark challenges relative to mark-to-market accounting policies for some of the most critical financial institutions that would otherwise want to sell their bad assets to the government. See earlier story.
TAB
Fire Paulson!
Thief!!!
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