Sen. Charles Schumer (D-N.Y.), after blasting Treasury Secretary Henry Paulson's handling of the $700 billion bailout, called for Treasury to be charged with approving any mergers or acquisitions among financial institutions that have received some of taxpayer dollars from that bailout.
Schumer and other lawmakers are wary that banks that have received capital injections from Treasury are using the money to buy competitors, boost executive compensation or just plain hoarding the cash, rather than lending it out as was intended.
Schumer, speaking during a hearing of the Senate Banking, Housing and Urban Affairs Committee, said Treasury should turn down proposals to merge if it finds that the banks are using the bailout funds to finance the deal.
On executive compensation, Chairman Chris Dodd (D-Conn.) warned companies that want to "conduct business as usual" with their compensation policies: "If you believe that you would be no worse off than you are today [without taxpayer money], then I invite you to return to the Treasury the billions of dollars in taxpayer investments, guarantees and discounts that you currently receive, and I wish you well as you try to make it on your own."
He told witnesses from JP Morgan Chase & Co., Goldman Sachs and Bank of America -- and surely the scores paying attention to the hearing -- that he wants to see more progress on foreclosure prevention, affordable lending and curbed executive compensation. "And if that progress is not forthcoming, we are prepared to legislate -- now if possible, but next year if necessary," Dodd said, alluding to the fact that Democrats will have one of their own in the White House come January plus enhanced majorities in both chambers.
But Democrats aren't the only ones frustrated. Florida Republican Mel Martinez, whose home state has one of the highest foreclosure rates in the country, said he was "dismayed" by Paulson's announcement that Treasury no longer plans to use bailout funds to purchase troubled mortgage-related assets "and that reducing the risk of foreclosure ranks at the bottom of Treasury's list of program priorities."
Martinez said it's time for the government to get more "aggressive" in tackling the foreclosure problem. The Bush administration has made some efforts, but the proposals have "all been timid [and] they've all been late," he said.