Congress Dems Prepare to Defer to Obama
Image has not been found. URL: /wp-content/uploads/2009/01/frank.jpgRep. Barney Frank (D-Mass.)
A trusting Congress might be setting itself up to be burned again.
Last week, even as he introduced legislation to bolster Washington oversight of the Wall Street bailout, Rep. Barney Frank (D-Mass.) all but proclaimed his own proposal unnecessary.
Illustration by: Matt Mahurin
“It doesn’t have to be enacted,” Frank, who chairs the House Financial Services Committee, told reporters Friday in the Capitol. “It would be helpful if it was. But if the bill passes the House with a large majority, and we have smart and cooperative people in this [Obama] administration, I’m willing to accept their word that they will act as if it were the law.”
The message was clear: Despite Congress’s many objections to the Bush administration’s handling of the $700 billion Troubled Assets Relief Program (TARP), lawmakers — at least Democrats — are professing their faith that President-elect Barack Obama will spend the money more wisely and transparently than his predecessor. Trust, under this arrangement, has replaced the desire to legislate.
It’s a strategy that’s not finding a friendly reception from consumer advocates and government watchdog groups, who’d prefer that the bailout spending be clarified by force of law.
“I don’t think Congress should take any politician at his word,” said Steve Ellis, vice president of Taxpayers for Common Sense. “Just because the person at the other end of Pennsylvania Avenue is in the same party doesn’t mean you don’t hold him accountable … They [Democrats] absolutely need legislation.”
Graham Steele, legal associate at Public Citizen’s Congress Watch, echoed that message. Despite the natural urge among Obama supporters to give the incoming-president and his team the benefit of the doubt, Steele said, “binding legislation is the best scenario to ensure that they do what they say they’re going to do.”
The comments arrive as President George W. Bush, at Obama’s request, is seeking the release of the second $350 billion of the TARP funding, which requires congressional approval. Obama met with Democrats at the Capitol Tuesday to address their concerns about releasing the money.
Complicating that request, lawmakers on both sides of the aisle have grown more and more impatient with the Bush administration’s implementation of the financial rescue. Congress approved the legislation in October after Treasury Dept. officials vowed to use the money to buy up the toxic, mortgage-backed assets that threatened to topple countless financial institutions. Instead, the White House invested directly in the troubled banks in an effort to thaw frozen credit lines — a change of strategy prompting no absence of congressional criticism.
Lawmakers have also blasted the Bush Treasury for its lack of spending transparency and its failure to use the bailout cash to target the foreclosure crisis that remains at the root of the financial meltdown. Both issues — along with efforts to rein in executive compensation for bailed out banks — are tackled in Frank’s reform bill.
But it’s a proposal not likely to be enacted. Despite a hearing and an expected House vote on Frank’s bill this week, it’s tough to find anyone who thinks the legislation has legs in the Senate. Indeed, Banking Committee Chairman Christopher Dodd (D-Conn.) said this week that he would consider legislation similar to Frank’s, but assurances from the Obama camp would likely be an ample substitute.
Dodd says the problem is not with the TARP bill, but simply with the Bush administration’s implementation of it — a problem the Obama team can fix without new legislation. “They agree,” Dodd said in a statement Monday, “that we need a comprehensive, coherent strategy to replace the current piecemeal approach, and have committed to using additional funds to help Main Street.”
On Monday, Larry Summers, Obama’s top economic adviser, issued a letter to congressional leaders outlining the incoming administration’s strategy for spending the second half of TARP funds, including heightened oversight and a vow to help struggling homeowners avoid foreclosures.
“Confronting this [foreclosure] challenge,” Summers wrote, “is an absolute imperative if we are to restore the health of our housing sector and the financial system as a whole.”
After months of struggling to get the Bush administration to target foreclosures as part of the rescue strategy, some housing advocates are willing to believe that things will change under an Obama White House — even without TARP reform legislation. “This administration, apparently, is getting it,” said David Berenbaum, executive vice president of the National Community Reinvestment Coalition.
Still, Summer’s nonbinding document is just three pages long. Many consumer groups want more assurance that the Obama White House will follow through with its plans.
“The danger is that we get off the rails,” Steele said, “and the next industry comes along, hat in hand, and the money starts going to places it was never intended.”
Linda Sherry, director of national priorities at Consumer Action, a consumer-rights group, said Obama’s promises of spending transparency are great, but they lack the force of law that would guarantee that taxpayers know where the TARP money is going. “It’s very harmful when the public doesn’t have access to this information,” Sherry said. “The companies can’t just get a free lunch here.”
Some good-government advocates are scratching their heads over the alacrity of congressional Democrats’ to trust the White House — even a Democratic White House — after eight years bemoaning the runaway powers of the Bush administration. If lawmakers get burned this time around, they say, they’ll have no one to blame but themselves.
“Fool me once, shame on you,” said Ellis, of Taxpayers for Common Sense. “Fool me twice, shame on me.”