WASHINGTON (AP) — A key lawmaker said Friday he expects the House to act soon to impose conditions on any new release of the second $350 billion in federal bailout funds, with a mandate that at least $50 billion go to help struggling borrowers avoid foreclosure.
Rep. Barney Frank, who heads the House Financial Services Committee, issued an outline of his proposal to attach strings to spending of the money by either the Bush administration or the incoming Obama government.
The new conditions would include substantial efforts to reduce mortgage foreclosures, limits on compensation for executives at companies receiving federal money and a better method for the government to track whether banks are using it to boost lending.
For months, Democrats in Congress have lashed out at the Bush administration's mortgage aid programs, saying the government needs to do more to help tens of thousands of home borrowers avert foreclosure. Rather than just spending more billions to inject capital into banks, they have argued, the federal rescue dollars also should be channeled into programs for modifying mortgages into more affordable loans.
The Massachusetts Democrat said his bill could be voted on by the House as soon as next week.
"We will trust but verify," Frank said at a hearing of the committee on an unrelated issue.
In a memo to House members this week, Frank said conditions on the money were needed "because there has been widespread unhappiness with the failure of this administration to use any of the first $350 billion for mitigation of foreclosures and because money given to banks under this program flowed with virtually no strings attached."
Earlier Friday, the head of a congressional panel overseeing the Treasury Department's $700 billion bailout program said lawmakers need to "take a very hard look" at how banks have used the money.
"I'm shocked that we have to ask these questions," said Harvard law professor Elizabeth Warren, "but what I will say is that I'm not giving up on this. The best news is that these questions have gotten a lot of attention and a lot of people are demanding answers and when a lot of people demand answers, things start to change."
Warren appeared on a nationally broadcast television show as the Congressional Oversight Panel she heads released a report featuring questions about how banks are spending taxpayer money, how the money will combat the rising tide of home foreclosures and Treasury's overall strategy for the rescue.
A Dec. 30 response by Treasury "did not provide complete answers to several of the questions and failed to address a number of the questions at all," said the panel's second report.
This program aired on January 9, 2009. The audio for this program is not available.