[7:15am ET] A better TARP? A CNNMoney article asks an important question, but the public is skeptical.
Treasury Secretary nominee Timothy Geithner is working on plans to revamp TARP to include programs to prevent foreclosures and help cash-strapped municipalities, small businesses and consumers, two transition aides told CNN.
Lawmakers on both sides of the aisle have expressed unhappiness with the way Treasury used the first $350 billion to capitalize banks. They object to how Treasury made investments with few strings attached and no process for tracking how the banks are using the money.
They also are unhappy that none of the $350 billion allocated so far has been used to prevent foreclosures. And while problems facing credit markets have eased since the passage of TARP, the program has hardly been a panacea.
Consequently, leading Democratic lawmakers told Treasury officials that Congress would only release the remaining $350 billion if Treasury guaranteed that some of the money would go toward helping those at risk of foreclosure and consumers in search of loans for cars and homes, among other things.
On Friday, House Financial Services Chairman Barney Frank, D-Mass., introduced a bill that would place several restrictions on how Treasury may use the remaining TARP funds.
Frank said in a statement that his legislation “will strengthen accountability, close loopholes, increase transparency and require Treasury to take significant steps on foreclosure mitigation.”
For starters, Geithner played a leading role in the decision to recapitalize banks, and which banks would be recipients of the taxpayers