barney-small.thumbnail.jpgBarney Frank wants to give Paulson the rest of the TARP money early next month.  He’s putting together a bill which will mandate help for homeowners, try and drive down interest rates on mortgages, set some restrictions on executive compensation and require some reporting of loans from banks. 

I find this odd.  If I were Bush and Paulson, I’d be waiting for Congress to go on vacation.  When they do, I’d ask for the money.  The way the original bill was set up Congress has to vote (in a veto proof majority) to stop the money from being disbursed once the President requests.  Unless they want to come back during their holiday, Bush gets the money.  Of course they might just be angry enough to do so, but still, not a bad play on Bush’s part.  Congress does love its holidays.  So by January there’s a good chance of the money being gone.

If it’s not gone, waiting 21 days till Obama takes office would seem to make a fair bit of sense.  No matter how many restrictions you put on it, at the end of the day if Paulson is disbursing it odds are it’s going to get spent without any effective oversight, as a complete bailout of Paulson’s buddies with no control over how most of the money is spent.  Paulson and Bush simply aren’t trustworthy.  Of course, it won’t just be 20 days, Obama’s Treasury Secretary designee, Geithner, does have to be confirmed by the Senate, and until he is, it’s still Bush appointees making the call.  And maybe that’s too long, though I’d figure Geithner would be one of the first people to be submitted to Congress and I don’t see any movement by Republicans to hold him up.

So unless you really think that period is make or break for the economy, the only reason you’d want it through first is if you don’t much trust Obama and Obama’s treasury designee: Geithner.

Which, arguably, is not unreasonable. Geithner’s been at the heart of creating TARP as it exists now.  Obama pushed for the bailout in the form it passed Congress.  If Barney’s having buyers remorse, and lately he seems to, he may not be trusting the new administration to do the right thing without being told to do it, any more than he now knows he can trust the Bush administration.

In any event, it’s a bit of a strange move on Barney’s part, and I’m not quite sure what he’s thinking.

Related posts:

  1. Barofsky Report: What Happened to All That TARP Money?
  2. Barney Frank: Committee to Hold Hearings on the Federal Reserve Transparency Act
  3. WaPo: Supplemental Bill in Chaos (Your Calls are Working)
  4. Interview With Barney Frank: Why He’s Switching His Vote on the Supplemental
  5. The Next Big Taxpayer Bailout? IMF Could Get Hundreds of Billions for European Banks