House Speaker Nancy Pelosi, D-California, indicated to ABCNews that Congress would approve President-elect Barack Obama's request for another $350 billion in bailout / rescue funds because this time it will be spent by "a president who will enforce the law." The House vote is expected to be close, however.
To block Obama's request, both the House and Senate must vote to withhold the money, assuming each chamber has the two-thirds vote to override a potential Obama veto.
On Wednesday, Senate Republicans won assurances from Obama administration officials that the administration would use the money for financial institutions, not for aid to auto manufacturers and other industries, Bloomberg News reported. Republicans have criticized the Bush administration's decision to lend $13.4 billion to assist the recovery of General Motors (NYSE: GM) and Chrysler.
Is tracking TARP money feasible?
Both Senate and House lawmakers have called on greater accountability and transparency to 'verify and track' where the money is going, but economist David H. Wang said that isn't feasible.
"Frequently, banks get their loans from a variety of sources, including deposits, private investments, and via borrowing from other banks, so it just isn't practical to track this money," Wang said. "Congress should focus on the TARP's intended goal, which was recapitalization of the banks, not a sudden increase in lending."
Further, Wang said a contraction in lending was already well underway when the TARP was first passed, and a more-realistic objective is "the prevention of an additional contraction in lending, not an outright increase in lending."
Fiscal Policy/Economic Analysis: U.S. Rep. Barney Frank's axiom fits in this case: it's hard to measure and get credit for something you've avoided. The TARP undoubtedly has prevented a further contraction in lending - - and more financial system stress that would deepen the recession - - but its avoidance won't generate applause from the public because it's 'unseen.'
Second, the charge that the TARP 'isn't resulting in increased lending' by banks may be one of program size, not program content. The banking system has witnessed a multi-trillion dollar decrease in assets on balance sheets. Did anyone expect just the first $350 billion to right the ship of state? Hence, the main problem with the TARP may end up being that it's too small - - something the Congress can correct.
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