Sen. Dodd: Bailout Money Must Go To Specifics
RENEE MONTAGNE, host:
Senate Democrat Christopher Dodd has been trying to change how the rest of the recovery package is spent and managed. He's the chairman of the Senate Banking Committee, and we reached him yesterday in his office on Capitol Hill.
Welcome to the program.
Senator CHRISTOPHER DODD (Democrat, Connecticut; Chairman, Senate Committee on Banking, Housing and Urban Affairs): Thank you, Renee, very much. Delighted to be with you.
MONTAGNE: Now, President-elect Barack Obama wants the remaining 350 billion on hand when he takes office next week. He's, I gather, been lobbying very hard there on Capitol Hill. Will Congress go along with that request? And the Democrats in Congress?
Sen. DODD: Well, I believe they will. It'll be close, I think. It's not going to be an overwhelming vote because people are, rightfully, angry and frustrated over how they perceived the first 350 billion was managed by the Bush administration. But clearly, there will be no support for this, or very limited support, if there's not clarity on the specifics: foreclosure mitigation, greater accountability, much more transparency. And we've received a pretty strong letter from Larry Summers, but candidly, more specificity I think needs to be explained if you're going to win these votes to secure the passage of this bill.
MONTAGNE: And Larry Summers, of course, Lawrence Summers, a close financial advisor to the President-elect Obama. Senator, you were one of the people who was most disappointed and even angry, as you described yourself back in an interview we had with you in November, about how the banks were using the bailout money. If you don't mind, we'll just listen to a short clip of your interview.
(Soundbite of NPR's Morning Edition, November 21, 2008)
Sen. DODD: I didn't expect lenders to immediately start pouring money out the door. But when you get reports of hording, of paying dividends, of still having - fighting executive compensation, excessive executive compensation, that certainly was never the intent of the use of taxpayer money.
MONTAGNE: Now, looking ahead to the next 350 billion, is the legislation that's been written - do you believe that will fix it, and how?
Sen. DODD: Well, clearly we need - and I think we've received this, by the way. President-elect Obama appeared before the Democratic caucus the other day and clearly expressed determination that this program will be fundamentally managed differently. What we don't want to find out is, after giving these resources to the administration, we'll have a repetition of what occurred after the resources were provided to the Bush administration, in which we were promised, for instance, and the law certainly talked about this, that there would be efforts to mitigate foreclosure problems. None of that happened over this period of time. So, greater specificity is being given, more needs to be provided. But any repetition of what we've seen over the last few weeks will be met with very severe hostility.
MONTAGNE: With this, as you say, greater specificity, some of these are what you might call strings as well. I mean, some of these are directions on how to use this money and how not to use this money. Would that be problem for President Obama?
Sen. DODD: Well, it's a great question, Renee, and a legitimate one. And again, what we're talking about here is just understanding in broad terms, but with some further assurances, foreclosure mitigation is essential. We may have as many as eight million homes going to foreclosure. That's one out of six homes in the country. And the idea that we can just jawbone on this and beg or ask banks to do something - we're way beyond that point. That has been an abysmal failure. The institutions have not stepped up. Sheila Bair at the FDIC, the Federal Deposit Insurance Corporation, has had the best ideas in this area; she's finally being listened to. So, again, I don't want to say to the administration, you must specifically have this plan or that plan. What I want them to do is to listen to people with good ideas and do something to put a tourniquet on the hemorrhaging that's occurring with homeownership in the country.
MONTAGNE: On this whole subject of foreclosure mitigation, Senator Dodd, given that a significant percentage of loans modified in 2008 went back into foreclosure, isn't it possible that there are a lot of people out there who simply cannot afford these mortgages, and mitigating them or rewriting them in some way will be throwing good money after bad? And the good money in this case is taxpayer money.
Sen. DODD: Yeah, it can be. I think anyone who says to you, Renee, or anyone else, that we're going to take care of everybody here is wrong. There are people we will not be able to help, that never should have gotten into homeownership in the first place. But it is important to note as well that over 80 percent of people whose homes are underwater - that is, the value of their homes is worth less than the mortgage they have today - don't want to move. They're not interested in selling. And we ought to be able to figure out a way to get the costs down so that people can do just that, stay in their homes. And I believe that can happen.
MONTAGNE: Christopher Dodd, Democrat from Connecticut, is the chairman of the Senate Committee on Banking, Housing and Urban Affairs. Thanks very much for talking with us.
Sen. DODD: Thank you very much.
(Soundbite of music)
MONTAGNE: It's Morning Edition from NPR News.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.