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Chairman Frank to Secretary Paulson: Our Intent Couldn’t Be Clearer

Posted on by Karina

Today the Financial Services Committee held and oversight hearing on the implementation of the Emergency Economic Stabilization Act of 2008. Committee Members questioned Treasury Secretary Paulson, Federal Reserve Chairman Bernanke, and FDIC Chairwoman Bair about the implementation of the TARP program and the lack of addressing the foreclosure crisis. As Chairman Frank said in his opening remarks, “the fundamental policy issue is our disappointment that funds are not being used out of the 700 billion to supplement mortgage foreclosure reduction…the negative effect of this cascade of foreclosures goes far beyond the individuals who lose their homes. It has to do with neighborhood deterioration. It has to do with municipal inability to make their governments work. And it impacts, obviously, the macro economy…it is essential that we do something to use some of the TARP funds for the diminution of the rate of mortgage foreclosures.”

Chairman Frank reads a portion of the Emergency Economic Stabilization Act to Secretary Paulson, reminding the Secretary of the language giving him the authority to take action to reduce foreclosures:

Frank:
“No. I’m sorry, Mr. Secretary. Those are not substitutable because I will tell you this…It is nobody’s view that we have been as successful as we need to be for the sake of the economy in reducing foreclosures. We have a very large pot that was intended to be part of that effort that’s going untapped.”

Rep. Maxine Waters:

Waters:
“So the fact that you, Mr. Paulson, took it upon yourself to absolutely ignore the authority and the direction that this Congress had given you just amazes me. I just could not believe it when I heard that somehow you had abandoned the whole foreclosure mitigation effort…I’m disappointed that you have not utilized the authority and you have just divorced yourself from dealing with that.”

Rep. Nydia Velazquez:

Velazquez:
“It’s just not enough to say to the banks here is the money. And by the way, I trust you, because they are not lending. They’re not lending to small businesses. They are not working on loan modification strategy. You just told Mr. Frank here that you are examining strategy to mitigate foreclosures. You don’t have the strategy to mitigate foreclosure. You are examining.”

Rep. Mel Watt:

Watt:
“Unless we are provided the kind of information and assurance that people are looking at it, and looking at it with integrity, we can’t reassure the public.”

Paulson:
“I would just say with that, this is…”

Watt:
“That’s not a question, Mr. Paulson.”

Rep. Carolyn Maloney:

Maloney:
“Today’s Wall Street Journal talks about insurance companies that are buying up banks just to get access to the TARP money. And we then read many articles that banks are using TARP monies for buying other banks. So we’re basically funding mergers and acquisitions, not lending. So my basic question is why shouldn’t we be giving TARP money out based on the activity it funds?”

Watch the archived webcast>>

Read prepared testimony>>

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