Subcommittee Demands Testimony from Treasury Official on Use of Bailout Funds; “Serious Questions” for Mr. Kashkari

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    davidswanson
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Washington D.C. (November 11, 2008) – The leading Democrat and Republican of a House Oversight Subcommittee insisted on the testimony of a top Treasury official today. Congressman Dennis Kucinich (D-OH) and Congressman Darrell Issa (R-CA) sent a letter to Secretary Paulson insisting that Mr. Neel Kashkari, the Interim Assistant Secretary of the Treasury for Financial Stability, testify before a hearing of the Domestic Policy Subcommittee on Friday, November 14, 2008. Congressman Kucinich is the Chairman of the Domestic Policy Subcommittee and Congressman Issa is the Ranking Minority Member.

“There are serious questions about Treasury Department’s plans to realize the goals of the Emergency Economic Stabilization Act of 2008 that can only be addressed by the official in charge,” Kucinich and Issa wrote in the letter.

“The time has come for the Treasury Department to speak clearly and definitively to Congress and the American people about its plans for the extraordinary sums Congress has authorized,” they added.

The hearing, entitled “Is Treasury Using Bailout Funds to Increase Foreclosure Prevention, as Congress Intended,” will be the Subcommittee’s sixth hearing in the 110th Congress examining the foreclosure crisis and its solutions.

The purpose of this hearing is to assess Treasury’s use of and clarify their intentions for a $700 billion fund, known as the Troubled Assets Relief Program (TARP). Congress established the TARP on October 3, 2008, and provided it with two sequential tranches of $350 billion. One of TARP’s core functions is to prevent future foreclosures through the acquisition of mortgage-related assets, such as whole loans, mortgage-backed securities and other financial products, and the implementation of a plan to stem foreclosures on those loans. In creating TARP, Congress was aware of the efforts of the private mortgage servicing industry to prevent foreclosures, and committed an extraordinary sum of taxpayer funds to expand upon those efforts. In light of public statements by Treasury, and the department’s commitment of more than two-thirds of the first tranche to purposes other than foreclosure prevention, important oversight questions remain.

Mr. Kashkari’s presence at the hearing was originally requested by letter on October 31, 2008. The Subcommittee sent the below letter, after the initial request was denied by Treasury.

The full text of the letter follows:

November 11, 2008

The Honorable Henry M. Paulson, Jr.

Secretary

U. S. Department of Treasury

1500 Pennsylvania Avenue NW

Washington D.C. 20220

Dear Secretary Paulson:

We are writing to insist that Mr. Neel Kashkari, Interim Assistant Secretary of the Treasury for Financial Stability, testify at the Domestic Policy Subcommittee’s hearing on Friday, November 14, 2008. There are serious questions about Treasury Department’s plans to realize the goals of the Emergency Economic Stabilization Act of 2008 that can only be addressed by the official in charge.

As you know, on October 3, 2008, Congress passed the Emergency Economic Stabilization Act (EESA) and thereby created the Troubled Assets Relief Program (TARP) to further two Congressional objectives: the unfreezing of the credit markets and the prevention of foreclosures. Congress authorized two sequential tranches of $350 billion to achieve those goals.

TARP has already committed $250 billion to the purchase of preferred equity in a number of national and regional banks. There have been numerous news reports that the banks have used their TARP-provided equity stakes not for new lending, but for purposes contrary to the intent of Congress in passing EESA, such as the acquisition of other financial institutions, compensating employees and paying bonuses, and paying for the distribution of dividends for shareholders.

In his October 23 testimony before the Senate Banking Committee, Mr. Kashkari spoke only in broad generalizations, and did not provide the Committee with specifics about asset-acquisition or plans to promulgate new rules. As recently as last week, our staff interviewed high ranking TARP officials. Unfortunately, what they heard from Treasury consisted predominantly of generalities and aspirations.

The time has come for the Treasury Department to speak clearly and definitively to Congress and the American people about its plans for the extraordinary sums Congress has authorized. We do not believe that can occur in any other way than to have the testimony and answers of the person appointed by you to head the TARP. For that reason, Mr. Kashkari’s appearance is imperative.

We look forward to your response.

Sincerely,

Dennis J. Kucinich Darrell E. Issa

Chairman Ranking Minority Member

Domestic Policy Subcommittee Domestic Policy Subcommittee

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Comments

where is the oversight

  • shakerdog's picture
    shakerdog
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The most disturbing thing I see in our government handing out our money to these corporations and banks and whover else holds out their hand (except us of course) is that there seem to be no rules or regulations on the people getting this money.  We need to remember that there are underlying reasons why these companies are in trouble and it is not just a downturn in the economy or failed policies.  We need to question their management teams, their policies, and just the general way they do business.  Because if we do not, then they will surely comit the same mistakes again and then we will be in trouble with them. 

As we are all ready hearing stories of the same old trips and parachutes and all the other lavish things that help take a company down.  IF these people are unable to manage in these times of crisis without accountability then it is certainly easy to see where the faults lie.  In cases like that we or the government should have the right to require new people to manage these failing companies. 

What is happening here is they are basically using a form of blackmail to get us to bail them out.  It goes like this:  either you give us money to keep us afloat or we will go under and all these people will lose their jobs.  Well that is certainly true but we should at the very least demand accountability. 

Maybe it should be handled like a court ordered executor team comes in and takes over management and govers the company by a strict set of rules.  This would cut out the rediculous lavish wastes of resources and could find ways to be more efficient and prosperous for all parties (customers too).

Do we never ever learn anything from past mistakes.  And why in the world would we let insiders choose who those new people would be.  Let us please get a clue and take things in a better more productive direction lest we continue to make the same mistakes over and over again until none of us have anything.

Take for example the possibility of helping the carmakers, well what a good time to re-think what they are putting out for us to buy as well as market conditions and energy policies, and retool to make affordable vehicles that are fuel efficient or even alternative energies.  You know everyone cant afford 20 to 50 grand cars nor do they want to, and though the oil prices are down where they should have been all along we still have to come up with alternatives otherwise we will face the same things again.  These are not problems that will be fixed by drilling offshore or selling more suvs and pickup trucks.

Do you really believe that

  • Bill Harding's picture
    Bill Harding
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Do you really believe that the neoconservative administration that refused to allow Constitutionally-mandated Congressional oversight of their activities for eight long years, would actually allow ANY oversight of ANYTHING they do? Do you really think that these neocon facsists would do anything to deny their corporate masters additional obscene profits? Why do you suppose that Dubya and Company de-regulated the financial industry in the first place?

The lack of strict oversight and "conditions" were the crux of the original bipartisan Congressional opposition to the bailout, but they were threatened with a complete breakdown of our financial system, and the imposition of "possible martial law" by this band of criminals.

Why do you think the election went the way it did? Come on, guess...

Bush adminstration

  • pepawjoe0943's picture
    pepawjoe0943
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When will elected officials in Washington DC wake up, and pull their heads out of their behinds, long enough to realize that the Bush adminstration, and his incompetant cronies WILL NOT DO ANYTHING THAT DOES NOT BENEFIT THEM PERSONALLY.  This adminstration has NO business receiving any monies to distribute to their Corporate America buddies.

Both houses of Congress, ignored 84-92% of the RESPONSIBLE constitutents who said NO, LOUD and CLEAR, "Do not give the Bush adminstration $700 billion dollars to reward Corporate America and the financial system for their incompetant failures. But there were those elected officials who chose to ignore their constituents, and voted to give George W Bush $700 billion dollars, without any oversight, or accountability. Pardon my comment, Are these legislators really as STUPID as they act. We are in deep dodo with our present congressional leadership. "We the People" are being targeted by the criminals that are coming from the White House, now "We the People" are being bomb barded and ignored by our officials in Congress. [ please note that I did not call these leaders representatives, They have their agendas, and "We the People" are not a part of their plans.] They have been representing the Bush adminstration for the past 8 years. They too should be asked to resign for incompetant representation. It's time to hold them accountable for their inept record of ignoring "We the People".

Direct Loans from Fannie/Freddie at FED Rate +2% or 3%

  • PT6's picture
    PT6
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Because NO ONE CAN KEEP UP WITH THE MORTGAGE DEFAULTS USE AUTOMATION: 

Use Internet Technology to automate direct loans that bypass the Mortgage Broker/Bankers and offer 2% to 4% lower rates at lower principal.

98% of the loan processing would be automated using databases available NOW and avoid most of the fees in processing loans that mortgage brokers charge!  This includes automatic calculation of WRITE-DOWNS and the 31% of Income!

Since Fannie and Freddie are now government entities they could be use as the direct conduit for this on-line 98% automated loan processing.  2% is required for final MANUAL Check

This could save families from $300 to $1,500 per month and remove the constant flow of bad loans to Banks.