U.S. House Panel Postpones Hearing into Use of Bailout Funds

By | January 6, 2009

A U.S. congressional panel postponed a Wednesday hearing on the Treasury Department’s use of a $700 billion financial bailout fund and priorities of president-elect Obama’s administration, the House Financial Services Committee said Monday.

A reason for the postponement was not given, but an aide said the committee is working on legislation on how to use the rest of the bailout money.

The committee did not set a new date.

Committee Chairman Barney Frank, a Massachusetts Democrat, and other lawmakers have criticized the Treasury Department’s oversight of the Troubled Asset Relief Program (TARP), which has committed most of the first half of the $700 billion program.

The Bush administration has not yet formally submitted a request for the remaining money, after which Congress has 15 days to decide. A formal request is expected to be made to Congress within the coming weeks.

Many key government appointments in Washington and newly elected lawmakers have not settled into their positions yet. The new Congress will be sworn in Tuesday, and President-elect Barack Obama takes office on Jan. 20.

Some committees have not yet established their members either. Committees in the Senate will have to hold confirmation hearings on Obama’s nominations, including Timothy Geithner, tapped to head the Treasury.

Even without a formal request from Treasury for the second tranche, Frank and his staff are working on legislation outlining how the next bucket of money can be doled out.

Frank’s spokesman, Steven Adamske, said the legislation will have tougher conditions aimed at making sure the Treasury uses a greater amount of the money toward mitigating home foreclosures.

Frank also was critical of participating banks for providing big compensation packages for its top executives and using money to acquire other institutions instead of lending to consumers.

“Very soon, the Obama appointees will be in office and we will have in the next short bit of time a piece of legislation that we will have ready to go,” Adamske said.

Adamske said congressional action to dole out the rest of the money will not be determined by people’s schedules but rather based on Treasury’s need for the U.S. financial markets.

“It’s not going to be determined based on the committee’s schedule. It’s going to be determined by when they (Treasury) need the money and what they plan to do with it,” Adamske said.

In an effort to contain a widening financial crisis, the bailout program has been used to help prop up Citigroup Inc. and insurer American International Group. It also has been used to invest in automakers General Motors Corp. and Chrysler LLC.

The head of the Federal Deposit Insurance Corporation has urged the Treasury to use about $24 billion in incentives to get lenders to adopt loan modification plans but has met resistance from the Bush administration.

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