Frank: Bailout Money Should Go To Mortgages
Rep. Barney Frank's (D-Mass.) Financial Services committee hearing is underway, with Treasury Secretary Hank Paulson, Fed Chairman Ben Bernanke and FDIC chairwoman Sheila Bair empaneled before it.
In Frank's opening statement, he said he wants to get at two points in the hearing today:
A) Concerns that banks are not using the money given to them by the $700 billion rescue/bailout plan (called the Troubled Asset Relief Program, or TARP) to lend out to consumers, keeping credit tight.
B) That steps to prevent mortgage foreclosures are not being taken aggressively enough.
Bair and Paulson have been at odds on this issue. She promotes using the TARP money to renegotiate troubled mortgages while he does not.
Maybe it's not coincidence that Bernanke is sitting between Paulson and Bair.
Frank is on Bair's side on this one.
"I believe some of the TARP money must be used for mortgage foreclosures," Frank said. "Public confidence in what we have done so far is lower than what anyone wanted it to be and it could be an obstacle to further steps."
In their testimony, Paulson plans to say that the Obama administration will inherit a significantly sounder banking system.
Bernanke plans to say that the credit markets are still strained by show signs of improvement.
Check back in frequently; we'll be covering this hearing live.
-- Frank Ahrens
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