Rep. Barney Frank, who heads the House Financial Services Committee, issued an outline of his proposal to attach strings to spending of the money by either the Bush administration or the incoming Obama government. It also slaps strict limits on executive compensation - both for companies receiving new federal money and those that already have - including a ban on any bonuses for the 25 highest paid executives.
The banning of some bonuses, and relinquishing of private jets, would be applied to all banks and other institutions receiving bailout money, as they were in the loan agreements with General Motors Corp. and Chrysler LLC last month.
The new conditions also would include a better method for the government to track whether banks are using the money to boost lending.
"We will trust but verify," Frank told reporters on Capitol Hill.
In addition, the Treasury Department would be required to quickly make funds available for smaller community banks, which Frank says have gotten short shrift under the federal program.
For months, Democrats in Congress have lashed out at the Bush administration's mortgage aid programs, saying the government needs to do more to help tens of thousands of home borrowers avert foreclosure. Rather than just spending more billions to inject capital into banks, they have argued, the federal rescue dollars also should be channeled into programs for modifying mortgages into more affordable loans.
Frank, D-Mass., said Friday that President-elect Barack Obama's team had indicated to him they planned to retain Sheila Bair as chairman of the Federal Deposit Insurance Corp. Bair, a Bush appointee, also had criticized as insufficient the administration's mortgage programs. Frank's proposal would expand the role of the FDIC in overseeing the government programs.
Frank said his bill could be voted on by the House as soon as next week.
Acknowledging that the proposal may not clear the hurdle of Senate adoption or be accepted by the Bush White House, Frank said that if it passed the House with a large majority, he'd be willing to accept the word of the Obama team "that they will act as if it were law."
Obama's team is , aiming to unfreeze credit for homeowners, consumers, small businesses and local governments.
The Bush administration hasn't asked for the second $350 billion, which it would legally be unable to spend in the 11 days remaining before leaving office, Frank noted.
In a memo to House members this week, Frank said conditions on the money were needed "because there has been widespread unhappiness with the failure of this administration to use any of the first $350 billion for mitigation of foreclosures and because money given to banks under this program flowed with virtually no strings attached."
Earlier Friday, Elizabeth Warren, the head of a congressional panel overseeing the Treasury's $700 billion bailout program, said lawmakers need to "take a very hard look" at how banks have used the money.
CBS News correspondent Sharyl Attkisson reports that Warren's panel asked the Treasury Department 45 questions but says Treasury "did not provide complete answers" and "failed to address a number of questions at all."
"I'm shocked that we have to ask these questions," said Warren, who is a Harvard law professor. "But what I will say is that I'm not giving up on this. The best news is that these questions have gotten a lot of attention and a lot of people are demanding answers and when a lot of people demand answers, things start to change."