Obama Wins Legislative Test as Senate Allows Use of TARP Funds
By Nicholas Johnston and Laura Litvan
President-elect Barack Obama won his first legislative test when the U.S. Senate voted to allow the use of $350 billion in financial-rescue funds.
Senators yesterday defeated, 52-42, a resolution that would have prevented the release of the second half of the $700 billion in the Troubled Asset Relief Program, enacted last fall to boost the sagging U.S. economy. President George W. Bush sought the release of the money at Obama’s request.
“I know this wasn’t an easy vote because of the frustration so many of us share about how the first half of this plan was implemented,” Obama said in a statement after the vote. He promised to set strict pay limits on executives at companies receiving funds, provide more loans to small businesses and ensure “taxpayers can see where their money is spent.”
Lawmakers have objected to the outgoing Bush administration’s use of the first $350 billion of the money, saying the government failed to set limits on banks that received payments, including Citigroup Inc. and JPMorgan Chase & Co.
Louisiana Republican David Vitter, who introduced the Senate resolution, criticized the “complete lack of accountability in the TARP program” in urging senators to block release of the remaining funds. “If we don’t pass this resolution of disapproval, nothing will change in the TARP program,” he said.
Democratic Dissent
Obama has faced some Democratic dissent this month over tax cuts he’s seeking and his nomination of Leon Panetta as his intelligence chief. Obama visited the Capitol and met with Senate Democrats behind closed doors this week to push for release of the additional rescue funds.
Eight Democrats and one independent joined most Republicans in voting to block the funds, while six Republicans joined Democrats in voting to allow release of the money. Arizona Republican John McCain, who as a presidential candidate backed creation of the TARP program, voted against the release.
The vote came after Obama’s economic adviser, Lawrence Summers, told Congress that up to $100 billion of the funds will be used to ease the housing crisis. Lawmakers in both parties have said they want more of the money used to help homeowners at risk of defaulting on their mortgages.
“This program must promote the stability of the financial system and increase lending, preserve home ownership, promote jobs and economic recovery” and be used in a manner accountable to the public, Summers wrote in a letter to Senate Majority Leader Harry Reid.
California Democrat Barbara Boxer said she was voting to allow use of the money because Obama will run the program differently. “If the Bush administration was going to continue to dole out this money, I wouldn’t give them three dollars, let alone $350 billion,” Boxer said.
Under the rescue legislation, the Treasury Department can use the money unless both the Senate and the House pass a resolution within 15 days that rejects Bush’s Jan. 12 request for the second $350 billion. If Congress voted to block use of the money, the president could veto the resolution.
source : Bloomberg
