Below The Beltway

Oklahoma Senator Jim Inhofe wants to stop the $ 700 billion financial industry bailout in its tracks:

WASHINGTON — U.S. Sen. Jim Inhofe said Saturday that Congress was not told the truth about the bailout of the nation’s financial system and should take back what is left of the $700 billion “blank check” it gave the Bush administration.

“It is just outrageous that the American people don’t know that Congress doesn’t know how much money he (Treasury Secretary Henry Paulson) has given away to anyone,” the Oklahoma Republican told the Tulsa World.

“It could be to his friends. It could be to anybody else. We don’t know. There is no way of knowing.”

Inhofe’s comments, unusually pointed even for a senator known for being blunt, come on the heels of Paulson’s shift in how he thinks the bailout funds should be spent.

Last week the Treasury secretary announced he was abandoning his plan to free up the nation’s credit system by buying up toxic assets from troubled financial institutions. Instead, Paulson wants to take a more direct action on the consumer credit front.

“He was able to get this authority from Congress predicated on what he was going to do, and then he didn’t do it,” Inhofe said.

Inhofe has also called on his fellow Senators to join him:

Dear Colleague,

I write to inform you of the actions I will be taking during the lame duck session of Congress regarding the funding status of the Troubled Asset Relief Program (TARP). Given the recent news about Secretary Paulson’s execution of the TARP program, I firmly believe action is required by Congress. I plan to push for legislation that will require Secretary Paulson’s plan for the remaining $350 billion in authorized TARP funds to be ratified by an affirmative vote in the U.S. Congress.

In my statement opposing the Paulson Plan last month, I laid out two primary reasons why I voted ‘no.’ The first is that I wasn’t convinced that asset-purchase program was the right way to do this, and the second is that it would lead to increased lobbying for handouts and bailouts by any industry facing financial trouble.

I stated at the time that my vote was against the Paulson plan – not against taking extraordinary action to provide necessary confidence to financial markets. I stated that “The Paulson plan would have Washington take $700 billion worth of toxic Wall Street assets from financial firms’ balance sheets and put them on the balance sheet of the federal government…. I’m not confident in its success.”

The critics were right. On October 14th, in a significant shift, Treasury outlined a plan to directly purchase equity stakes in of major financial institutions. The Wall Street Journal noted that “critics…say Treasury should have formulated a comprehensive plan earlier in the crisis.” This past week, Secretary Paulson announced that he has completed a remarkable about face, as summarized by November 13th Investor’s Business Daily front page headline, which read, “In Major Reversal, Treasury Won’t Buy Bad Mortgage Debt.” This is a complete reversal. Why did Paulson reverse course? Thursday’s Los Angeles Times provides the answer. “Treasury Secretary Henry M. Paulson’s decision to abandon plans to buy troubled bank assets shows that he has come to two conclusions about what was once the chief focus of the government’s $700-billion bailout: The first is that it wouldn’t work.”

I know many of you have serious concerns about how Secretary Paulson has executed the financial rescue program and I share them with you. Congress abdicated its Constitutional responsibility by signing a truly blank check over to the Treasury Secretary. However, the lame duck session of Congress offers us a tremendous opportunity to change course. We should take it.

During the lame duck session, I will be taking the following actions. First and foremost, if Secretary Paulson submits his plan to Congress in order to access the remaining $350 billion while we are in session, a doubtful prospect, I plan to immediately introduce the disapproval resolution pursuant to Section 115 of the EESA and push for its enactment. I will also introduce and actively pursue enactment of legislation to do two things: First, it will amend Section 115 of the Emergency Economic Stabilization Act of 2008 (EESA) to require an affirmative vote on the part of Congress to approve Treasury’s plan for the remaining $350 billion, instead of the current statutory process which gives Secretary Paulson far too much latitude. Second, it will require a freeze on any remaining funds of the first $350 billion. It is imperative that we not allow that amount of money to be added to a deficit approaching $1 trillion this year without any input from the legislative branch.

Secretary Paulson stated in a CNBC interview at 2:00pm on Friday, November 14th that “the financial markets have been stabilized.” If that is the case, it is Congress’s duty to have a say in what happens with the remaining authorized amount of $350 billion. It is clear that it was a mistake to sign a blank check to one man for such a tremendous amount of money. Though there are still significant challenges in financial markets, it appears that the threat of a catastrophic financial crisis, which was the justification for the grant of such sweeping authority, has subsided. Perhaps the additional $350 billion should not be added to the deficit. Congress should have a debate.

I appreciate your time and attention to this matter and look forward to working with you in the coming week.

Sincerely,

Senator Jim Inhofe

Inhofe appears to have an ally in the Independent Senator from Vermont:

(The Politico) Sen. Bernie Sanders, an independent from Vermont who caucuses with Democrats, plans to introduce legislation to block the second tranche of the $700 billion bailout.

Sanders, who voted against the bailout initially, cited a range of concerns: a lack of oversight and transparency and uncertainty over how the money will be used. Treasury Secretary Henry Paulson initially persuaded Congress to pass the legislation by saying that he would buy toxic mortgage-backed securities from banks. Instead, he has been purchasing stakes in major institutions — a move initially encouraged by Democrats and rejected by the White House.

Works for me !

H/T: Leslie Carbone