Senate votes to allow release of TARP funds

The Senate voted Thursday to release the second $350 billion in Troubled Asset Relief Program funding after receiving further assurances from President-elect Obama that his administration would devote at least $50 billion for foreclosure relief, provide greater transparency for the program, and restrain executive pay and dividends for firms participating in the program.

"Let's trust Barack Obama," Majority Leader Harry Reid, D-Nev., implored his colleagues prior to the vote.

The chamber voted 52-42 against a resolution that would have blocked the release of the funds. With the vote, the Obama team is assured of getting the funds regardless how the House votes next week on its disapproval resolution.

The key factor was that Obama personally lobbied fellow Democrats. He argued the funds would be needed to help stabilize the economy and give his administration a fresh start after the Bush Treasury Department received low marks from both sides of the aisle for its handling of the first $350 billion.

"You aren't going to get a plaque or a medal for doing this," said Senate Banking Committee Chairman Christopher Dodd, D-Conn., noting how politically unpopular the program has become for lawmakers who have bailout fatigue.

With wariness still lingering in the chamber, Obama economic adviser Lawrence Summers sent another letter to Reid Thursday further detailing how the Obama administration will spend the funds, including a $50 billion to $100 billion program for anti-foreclosure programs.

"We will implement smart, aggressive policies to reduce the number of preventable foreclosures by helping to reduce mortgage payments for economically stressed but responsible homeowners, while also reforming our bankruptcy laws and strengthening existing housing initiatives," Summers wrote.

Under the new terms, banks currently receiving TARP funds will have to implement mortgage foreclosure programs.

Other conditions include better reporting and a requirement that information is quickly posted on the Treasury's Web site, including the quantity and strike price of stock warrants received by firms participating in the program and the schedule of required payments to the government.

Other major conditions stipulate that banks may not use the funds to purchase other banks and that firms get approval of their regulator before paying out any dividends.

Senate Republicans were concerned over further loans to domestic automakers and their lending units, which have received $15.4 billion so far through TARP. Summers wrote that automakers would receive additional funding "in the context of a comprehensive restructuring designed to achieve long-term viability."

Even with the letter, it took a personal touch to sway Democrats.

Sen. Tom Harkin, D-Iowa, noted he had three phone calls with Vice President-elect Biden late Wednesday trying to get assurances the funds would not just sit in the coffers of big banks. "We know where the buck stops," Harkin said.

Sen. Jim Webb, D-Va., said it took a personal call from Obama to convince him. "I have received concrete guarantees from president-elect," Webb said.

The outreach worked with Senate Minority Whip Jon Kyl, who said he would vote against the resolution with reservations.

Still, many Republicans said they could not go along with continuing the program, arguing that the economy has stabilized since last fall and that spending more money would be fiscally irresponsible.

"The fact is it didn't work... we have not seen a loosening of the credit market," said Sen. Saxby Chambliss, R-Ga.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.