Dodd to Treasury: Constituents Are Frustrated
Photos by Caroline Bridges
BANKING
Norwalk Hour
Tait Militana
Boston University Washington News Service
Feb. 10, 2009
WASHINGTON—Sen. Chris Dodd, D-Conn., urged the Treasury Department Tuesday to act swiftly to distribute the remaining Troubled Assets Relief Program funds, saying Americans are frustrated with the results so far.
“They are frustrated that even as we spent billions of their money, they have yet to see the results,” Dodd said. “They reminded me that we cannot restore the credibility of our financial institutions and put our economy back on track, until we restore the credibility of the government’s response.”
The Senate Committee on Banking, Housing and Urban Affairs, of which Dodd is the chairman, questioned Treasury Secretary Timothy Geithner following his announcement of a new plan for the remaining financial system rescue funds earlier in the day. In a speech at the Treasury building, Geithner outlined a four-part program to restart frozen credit markets and alleviate the problems of the devastated housing industry. Congress passed the original plan last October.
Though Geithner did not produce specific details about the plan, he said the key components would create a public-private investment fund, a consumer and business lending initiative, an evaluation of the banking industry and a foreclosure prevention plan. He said the $350 billion in remaining funds need to be used in a comprehensive plan in a variety of areas because the problems are all interconnected.
“We believe that action has to be sustained until the recovery is firmly established,” Geithner said.
Dodd, who said he would need to see more specifics and called for further hearings in the future, applauded the new direction for the bailout bill. He said the first use of funds, dictated by the Bush administration, did not work.
“Rather than increasing confidence in the banking system, the piecemeal, lurching intervention of the previous administration scared away private sources of capital needed to plug the growing hole on the balance sheets,” Dodd said. He estimated that the credit loss in the banking system has doubled since September.
According to Dodd, housing foreclosure is the most critical issue facing Connecticut. He called on Treasury to make it the number one priority, saying that nationwide, nearly 10,000 families are losing their homes each day.
Dodd also pressed Geithner to make the future use of the money transparent so that he and his constituents could see how the money was being spent.
But not every senator at the committee hearing was as optimistic about the potential for the rest of the funds. Sen. Richard Shelby, R-Ala., the committee’s senior minority member, said the first half of the program was a failure that was hastily pushed through Congress.
“The economy worsened as Congress panicked,” he said.
Geithner said moving forward will not be easy. He said that the bailout plan alone would not solve the economic crisis but that paired with the stimulus bill could create significant strides forward.
“This strategy will cost money,” he said. “It will involve risk and take time. As costly as this effort may be, we know that the cost of a complete collapse of our financial system would be incalculable for families, for businesses and for our nation.”
The stimulus bill passed the Senate Tuesday afternoon and now is in conference to work out differences with the House version.
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