Lawmakers Blast Shifts In Bailout Plan

Treasury Official Grilled Over Changes To $700B Bailout Plan

(CBS/AP)  Lawmakers complained Friday that the Bush administration is ignoring the will of Congress and slighting homeowners on the verge of foreclosure in its latest approach to spending $700 billion in economic rescue money.

"It's very clear that Treasury cannot and will not make the effort to keep people in their homes," said Rep. Darrell Issa, R-Calif., top Republican on the House Oversight and Government Reform subcommittee on domestic policy.

In a hearing on Capitol Hill Friday on whether Treasury is using the bailout plan to prevent foreclosures, Issa and others took turns pressing Neel Kashkari, Treasury's interim head of the $700 billion bailout package.

A particular sore point, notes CBS News investigative correspondent Sharyl Attkisson, was the change in use of bailout funds, in light of Treasury Secretary Henry Paulson's recent announcement that he was diverting the originally intended target of taxpayer money from purchasing illiquid assets (such as troubled mortgages) to providing banks with capital.

"You know, we can go ring-around-the-rosy here," Issa said to Kashkari, "but you're here today because Congress is feeling that you played a bait-and-switch game. And you're not convincing anyone that you haven't."

Rep. Dennis Kucinich, D-Ohio, chairman of the panel, said the Treasury Department had "abdicated its responsibility" to prevent home foreclosures.

He said the change in implementing the bailout announced by Treasury Secretary Henry Paulson this week "breaks with congressional intent, contradicts public assurances previously made by Treasury, and leaves the federal government without an adequate mechanism to stem the tide of home foreclosures."

Congressional dissatisfaction is especially significant because Congress can block release of the second half of the rescue money - $350 billion - or put new conditions on its use. In addition to directing more money to distressed homeowners, Democrats are pushing for inclusion of funds to help the auto industry.

Paulson, citing the worsening credit crunch, said this week that Treasury no longer planned to buy up troubled mortgage assets, but was instead looking into ways to shore up credit-card, auto-loan and other non-bank businesses.

Kashkari defended the shift, saying "both banks and non-banks may need more capital given their troubled asset holdings, continued high rates of foreclosures, and stagnant global economic conditions."

He also said that restoring stability to the overall financial system was the best way to help homeowners. If the government spent all $700 billion buying up mortgage loans, it would still reach only about 3 million of the 55 million mortgage loans in the country, he said.

Kashkari also was cool to proposals by the Federal Deposit Insurance Corporation to provide $24 billion in federal aid to companies lowering mortgage payments. The goal of the rescue plan was to make investments that eventually bring returns to the federal government, he said. The FDIC proposal "at the end of the day is a spending proposal" with no chance of getting the money back.

The exchanges grew tenser as discussion revolved around recent reports that the bailout money was being used indirectly to fund the payment of bonuses, compensation and dividends by financial firms.

Rep. Elijah Cummings, D-Md., said "it makes no sense" if Treasury isn’t working to save people from being thrown out of their houses:

Cummings: "My people don't believe that you all care about them. And I hate to tell you that, but they don't and they're angry."

Kashkari: "Let me say two things, please. One, the legislation that we asked for, we asked for it to try to stabilize and prevent a complete financial collapse of our financial system, and that was not to help Wall Street. That was to help every American.
Cummings: "No. Let me tell you something. I understand that. That's why I voted for it."

Kashkari: "Yes, sir."

Cummings: "But let me tell you, when we gave that money, when we gave the banks money, they still weren't loaning any money."

Cummings reacted to the reports that AIG granted its employees more than $503 million worth of bonuses after asking for revisions to the billions in credit and loans from the Treasury.

"I wouldn't want to be asking my friend for some money to help me stay afloat," Cummings said, "Then my friend, who can barely afford to go to McDonald's, then walks around and see me in a restaurant costing $150 a meal. There's absolutely something wrong with that picture.

"And so I wonder, did you all - I mean, does that go through your head? Or is it just me? Am I missing something?"

Kashkari said, "I saw the same images that you saw of the parties. And I share your frustration with that."

Kashkari said that, to his knowledge, the money paid as bonuses had previously been set aside in a separate fund for that purpose, and was paid out as an incentive to keep people form leaving the struggling firm. "We need them to keep working so that they can sell off the assets and pay back the taxpayers," he said.

"Guess what? There are a whole lot of people that could replace them, because there are so many people losing their jobs," Cummings responded. "This is an employer's market today. Come on now. I guarantee you, there are people who are lined up saying, 'Please quit so I can get a job.' And that's what the American people are looking at, and they are frustrated.

"The problem is that a lot of the people that we represent won't even have a job at Christmas time and damn sure won't have a bonus!"

While defending Treasury's efforts, Kashkari told lawmakers, "I don't know how to work any harder than we're working."

To which Kucinich replied, "I don't think anyone questions you are working hard; the question is, who you're working for?"

Congress also bears responsibility, reports Attkisson. On Wednesday CBS News first reported that lawmakers had not filled the first slot on their own bailout oversight board. They finally named three members late Friday.

President George W. Bush also on Friday named a federal prosecutor to be a Treasury-based special inspector general to oversee the rescue plan and monitor how the money is spent.

[bhappy2-2]

I''ve said it before and I''ll say it again: If the government really wants to help the economy they would give the 700 billion to the citizens. We would pay off our mortgages, invest in new vehicles, possibly start our own businesses and thereby help the banks, the automobile manufacturers, the local stores, the local workforce and, most of all, the U.S. economy. But, if they did that, their buddies wouldn''t be able to waste 700 billion on themselves while continuing to foreclose on all these houses, etc. This whole bailout is one big fiasco. No one benefits from it except the banks, their incompetent managers and the government. The citizens are, once again, screwed.

[stupidrules3]

QUIT YOUR WHINNING PEOPLE! YOU GOT WHAT YOU ASKED FOR IN THE ELECTIONS, NOW LIVE WITH IT! Morons, there is no one to blame anymore but yourselves. Now it will begin that "I voted for the other one!!!". Dont worry - be happy.


--------------------------------------------------------------------------------

Posted by generey at 05:16 PM : Nov 14, 2008

Have you noticed that the people who are in office at the moment are the same ones we''ve had for the last 8 years? Paulsen was appointed by Bush. This bailout was done against the will of the people and it''s passage signals the powers-that-be that this is their last chance to pillage the coffers of the USA. I will confess that I am not so sure it''s going to get much better when the new bunch takes over but this thing stinks to high heaven right now and, once again, we have been robbed by the very people we trusted to take care of the problem.

[cyberus-2009]

Just a blatant last minute looting of taxpayer money by the current administration

[mdmo1]

we are looking at this and see you dont know what your doing just spending spending spending spending spending

[rational_1]

When the feds came up with the $700 Billion dollar price tage for the bail out, most of us assumed they knew what they were spending it on....
Posted by earache4 at 06:45 PM : Nov 14, 2008

Not me - I assumed (probably correctly) they were going to waste it, because government bureaucracies are paragons of waste and inefficiency. Now they''re proposing to waste more of our money to prop up car companies that build products few want to buy. Lovely, just lovely.

[earache4]

When the feds came up with the $700 Billion dollar price tage for the bail out, most of us assumed they knew what they were spending it on....

[wardoglrs]

Freemasonry has tenets peculiar to itself. They serve as testimonials of character and qualifications, which are only conferred after due course of instruction and examination. These are of no small value; they speak a universal language, and act as a passport to the attentions and support of the initiated in all parts of the world. They cannot be lost as long as memory retains its power. Let the possessor of them be expatriated, shipwrecked or imprisoned, let him be stripped of everything he has got in the world, still those credentials remain, and are available for use as circumstances require. The good effects they have produced are established by the most incontestable facts of history. They have stayed the uplifted hand of the destroyer; they have softened the asperities of the tyrant; they have mitigated the horrors of captivity; they have subdued the rancor of malevolence; and broken down the barriers of political animosity and sectarian alienation. On the field of battle, in the solitudes of the uncultivated forest, or in the busy haunts of the crowded city, they have made men of the most hostile feelings, the most distant regions, and diversified conditions, rush to the aid of each other, and feel a special joy and satisfaction that they have been able to afford relief to a Brother Mason.

[wardoglrs]

%u201CWe are opposed...by a ruthless conspiracy that relies primarily on covert means for expanding its sphere of influence--on infiltration instead of invasion, on subversion instead of elections, on intimidation instead of free choice, on guerrillas by night instead of armies by day. It is a system which has conscripted vast human and material resources into the building of a tightly knit, highly efficient machine that combines military, diplomatic, intelligence, economic, scientific and political operations.

Its preparations are concealed, not published. Its mistakes are buried, not headlined. Its dissenters are silenced, not praised. No expenditure is questioned, no rumor is printed, no secret is revealed. It conducts the [war] with a war-time discipline no democracy would ever hope or wish to match...%u201D John F Kennedy, 1961.

If it be the pleasure of Heaven that my country shall require the poor offering of my life, I will be ready, at the appointed hour of sacrifice, come when that hour may. But while I do live, let me have a country, and that a free country!
John Adams

[wardoglrs]

"Men by their constitutions are naturally divided into two parties: 1. Those who fear and distrust the people, and wish to draw all powers from them into the hands of the higher classes. 2. Those who identify themselves with the people, have confidence in them, cherish and consider them as the most honest and safe, although not the most wise depositary of the public interests. In every country these two parties exist, and in every one where they are free to think, speak, and write, they will declare themselves. Call them, therefore, Liberals and Serviles, Jacobins and Ultras, Whigs and Tories, Republicans and Federalists, Aristocrats and Democrats, or by whatever name you please, they are the same parties still and pursue the same object. The last one of Aristocrats and Democrats is the true one expressing the essence of all." ~ Thomas Jefferson to Henry Lee, 1824. ME 16:73

[generey]

What is Congress doing to the people. They are ignoring the will of the people. The people say no bailout to the Auto Companies.


--------------------------------------------------------------------------------

Posted by Hitoyou1 at 05:18 PM : Nov 14, 2008

As it has been the same since, say, just about the year 1777; THEY DONT CARE!

[hitoyou1]

The Lawmakers need to Blast themself, for even thinking about talking about a bailout for the Auto Companies.****************************
Lawmakers complained Friday that the Bush administration is ignoring the will of Congress and slighting homeowners on the verge of foreclosure in its latest approach to spending $700 billion in economic rescue money. What is Congress doing to the people. They are ignoring the will of the people. The people say no bailout to the Auto Companies.

[generey]

Lawmakers Blast Shifts In Bailout Plan.

I dont believe anything any of these people say. It''s simple propaganda. Problem is, as it has been, and always will be, that stupid americans do believe them, as they have demonstrated in the elections. QUIT YOUR WHINNING PEOPLE! YOU GOT WHAT YOU ASKED FOR IN THE ELECTIONS, NOW LIVE WITH IT! Morons, there is no one to blame anymore but yourselves. Now it will begin that "I voted for the other one!!!". Dont worry - be happy.

[billh971]

Well the Bush admin screws the little guy again. I wanted a bail out of the auto makers, but after knowing this just let them file bankruptcy. If I can do chapter 13 reorganization of debt the big 3 can too!