If you think change -- and big change -- in Washington won't start until the gentleman from Illinois is inaugurated on January 20, think again.
U.S. Rep. Barney Frank, D-Mass. and chairman of the House Financial Services committee, late Friday announced the new, proposed restrictions for the release of the second $350 billion in TARP funds, and some are stunners.
Under Frank's bill:
- The pay of executives employed by TARP would be capped in a standardized manner, regardless of what type of aid they received under the program. It would also make the pay limit provision retroactive to existing program participants.
"If they don't like it, they can give the money back," Frank said, referring to the retroactive limits on pay, Reuters reported Friday.
- The U.S. Treasury would have to dedicate at least $40 billion to reduce home foreclosures, with a plan developed by March 15.
- Small banks would be given more access to TARP funds.
- Private aircraft or aircraft leases would have to be divested.
- No golden parachute payments as long as the bank has government capital.
- Require Treasury to develop a program to stimulate home sales by ensuring affordable mortgage rates.
The bill is still being finalized, but Frank's draft was released after consultation with Bush Administration and incoming Obama Administration officials, Reuters reported.
Fiscal Policy/Economic Analysis: Rep. Frank's bill may not pass the U.S. Senate with the filibuster-free 60 votes needed to send the legislation to incoming President Obama's desk, but by drafting this legislation, Frank his making a clear statement what form he wants the remaining TARP allotment to take: greater help for homeowners, lower compensation for bank executives, more help for smaller banks, and more accountability.
Further, the retroactive pay limit is certain to displease selected Republicans and a few Democrats, as well, so it will be interesting to see if Frank is willing to compromise this part of the bill in order to get the legislation passed.