Senate Endorses A $350 Billion Check For Obama
RENEE MONTAGNE, host:
It's Morning Edition from NPR News. I'm Renee Montagne. The Senate has voted for the release of the second half of the financial rescue package. That means that when President-elect Barack Obama takes office next Tuesday, he'll have an additional $350 billion to battle the financial crisis. In a moment, we'll talk about the Troubled Assets Relief Program, or TARP, with the Wall Street Journal's David Wessel. First, NPR's John Ydstie reports on the intense lobbying by Mr. Obama and his team to secure this early legislative victory.
JOHN YDSTIE: Both the president-elect and his top economic aides visited Capitol Hill this week to urge lawmakers to release the second $350 billion in TARP funding. The effort at persuasion continued even as the bill to block the second installment was being debated on the Senate floor. It came in the form of a letter sent to congressional leaders yesterday afternoon by one of Mr. Obama's top economic aides, Larry Summers. The letter described Mr. Obama's plans to use the funds. Connecticut Democrat Chris Dodd said it provided greater clarity on the incoming administration's intentions.
Senator CHRISTOPHER DODD (Democrat, Connecticut; Chair, Senate Committee on Banking, Housing and Urban Affairs): Detailing specifically how this will work, how it will be monitored, how important the intervention on foreclosures will be, and focusing on the flow of credit, which is obviously critical if we're going to get back on our feet again. And that letter, I think, ought to provide some confidence to members who are concerned about how this program will be managed and run.
YDSTIE: The letter from Summers committed the Obama administration to spending $50 to $100 billion to address the foreclosure crisis, something many Democrats and some Republicans had insisted on. It also said the president-elect had no intention of using any of the funds to implement an industrial policy, a pledge Republican leaders had wanted to hear. The letter promised to post, on the Treasury Web site, details of assistance provided to companies. In addition, limits on executive compensation were strengthened, and the letter said dividends paid by companies receiving aid would be restricted to a penny a share until the government is repaid. But Republican Jeff Sessions of Alabama was unconvinced. He said neither Congress nor the administration really knows how the money can be used effectively.
Senator JEFFERSON B. SESSIONS (Republican, Alabama): I have a vision in my mind of the guy that flew into the hurricane off the Golf Coast where I live, and he threw out dry ice, and he thought he could cool off the hurricane and stop the hurricane. So, now, we've got the secretary of Treasury and he thinks he can get in there and throw this money around and stop the financial hurricane.
YDSTIE: South Carolina Republican Jim DeMint agreed, saying that despite the argument back in the fall that TARP was necessary to head off an economic collapse, $350 billion has been spent and the economy hasn't improved.
Senator JAMES W. DEMINT (Republican, South Carolina): The stock market has fallen nearly 25 percent, and we're in the same credit problem, situation, that we had then. It's just too much money to be throwing at the wall in hopes that it might work.
YDSTIE: Congressman Dodd countered that without the $350 billion spent so far, things might have been much worse.
Sen. DODD: It is impossible to go back and say what would have happened with any great certainly had we not acted. I think much can be said here today. When you have an outgoing Republican president and administration, an incoming Democratic administration, with very different views about how our economy ought to be managed ask us jointly to step up and make this decision, I think it's important we listen and we act.
YDSTIE: When the votes were counted, Mr. Obama and the TARP had prevailed 52 to 42. There was little doubt that the incoming Obama administration was ultimately going to get the second $350 billion in TARP funds, but the victory in the Senate spared Mr. Obama the prospect of vetoing a congressional resolution as one of his first acts. And having the money available immediately may be critical. A new wave of losses among the nation's banks could destabilize the financial system once again. Now, the new administration will have money available to meet that challenge should it materialize. John Ydstie, NPR News, Washington.