Obama Pushes For Remaining Bailout Money
ALEX COHEN, host:
From the studios of NPR West, this is Day to Day. I'm Alex Cohen. Coming up, a ride in the F3DM, China's first mass-produced plug-in hybrid car. But first, President-elect Barack Obama headed to Capitol Hill today to lobby for his stimulus package and more funding for the TARP financial rescue program. The Bush administration has already spent the first $350 billion of TARP funds, most of it given out to banks.
Lawmakers aren't happy with how that money's been distributed. They want more going to consumers. They're threatening to withhold the second half. For more, we're joined now by NPR's John Ydstie. John, what is Mr. Obama doing to convince lawmakers to give him the second half of those TARP funds?
JOHN YDSTIE: Well, essentially he's promising to use the money more in line with what Congress wants. Many Democrats and some Republicans, as well, want TARP funds used to help struggling homeowners. Mr. Obama has pledged to do that, including reducing foreclosures and also getting credit to businesses and municipalities, among a number of other things.
COHEN: That seems to be a far cry from the original intent of the TARP funds. After all, Secretary Paulson originally said these moneys were going to be used to buy up so-called toxic assets, the bundles of bad mortgages banks have on their books, right?
YDSTIE: You know that's right. And interestingly, the chairman of the Federal Reserve, Ben Bernanke, today suggested the government might want to go back to that strategy. In a speech in London today, he suggested several ways of doing it. But most importantly, he suggested that without dealing with these toxic assets, we might not get the economy back on track. Bernanke did say that Mr. Obama's stimulus package, which looks now like it's going to be about $800 billion, would boost the economy. But he said that unless these toxic assets are dealt with, the economy won't fully recover as soon as we'd like.
COHEN: So does it seem like lawmakers are going to be convinced to release the second $350 billion?
YDSTIE: Well, given the continued fragile state of the economy and the desires of an incoming president, you'd think Congress would go along. But members really feel burned by the way the Bush administration has used the TARP funds, and they're also nervous about predictions of trillion dollar deficits. So it is not a done deal. Congressman Barney Frank, who's chairman of the House Financial Services Committee, is trying to pave the way for getting more funding by passing some legislation to amend the original TARP bill to make clear how the majority in Congress want the money used. His bill is getting a hearing on Capitol Hill today and should get a vote on the floor tomorrow.
COHEN: So, John, how is this likely to play out on Capitol Hill?
YDSTIE: Well, it's likely both the House and Senate will vote on this during the next 10 days or so. If a majority in Congress vote against releasing the TARP funds, actually by then President Obama would face the prospect of having to veto the bill to keep the possibility of funding alive. That would mean one of his first acts as president would be overturning the will of Congress, and I don't think he wants that to happen.
COHEN: NPR's John Ydstie, thanks.
YDSTIE: You're very welcome.