President-elect Barack Obama has just sent congressional leaders the letter they wanted, explaining how he’d spend the bailout money more wisely if Congress gives him the second $350 billion. It’s his effort, as Sen. Christopher J. Dodd told reporters yesterday, to “rebrand” the Troubled Asset Relief Program (TARP), since lawmakers are feeling burned about how the first $350 billion has been spent.
The letter, written by Lawrence Summers, who’s in line to become the director of the National Economic Council, says Obama would direct more help to homeowners and small business owners, provide better oversight of the money, work with Congress to fix the broken financial regulatory system, and limit executive pay for financial firms that get the bailout funds.
The message: Obama doesn’t like the way the Bush administration has spent the bailout funds, either. “President-elect Obama believes there was been too little transparency and accountability; too much upside for financial institutions and executives who acted irresponsibly without providing enough help for small business owners, families who are struggling to keep their jobs and make ends meet, and innocent homeowners,” the letter stated.
The problem is, Obama also played a big role in convincing lawmakers to vote for the bailout in the first place.
Remember that last fall, when he was the Democratic presidential nominee and still a senator, Obama returned to the Senate to vote for the bailout and urge his colleagues to set their skepticism aside. He also had a series of phone conversations with House Democrats, assuring them he’d manage the money wisely if he won the White House.
In his Oct. 1 floor speech, Obama did much the same thing he’s doing now as president-elect. He walked through all of the safeguards he’d asked for, insisted he wants more help for homeowners too, and assured the other senators he didn’t want the bailout to turn into “a welfare program for Wall Street executives, whose greed and irresponsibility got us into this mess.”
But given that the House had just voted down the bailout — and the stock markets tanked in response — Obama said it was too late to hold out for the perfect plan.
“There’s no doubt that there may be other plans out there that, had we had two or three or six months to develop, might be even more refined and might serve our purposes better. But we don’t have that kind of time,” Obama said. “And we can’t afford to take a risk that the economy of the United States of America and, as a consequence, the worldwide economy could be plunged into a very, very deep hole.”
This time, Obama has more power to act on his assurances, and that could be enough to convince Congress to go along one more time. But he must be getting very tired of being the advocate for a program that, so far, strikes many of his former colleagues as a big waste of taxpayers’ money.
— David Nather
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