Less than three months after the financial services bailout was passed, Treasury Secretary Henry Paulson says he needs the second half of the allocated money:
Treasury Secretary Henry M. Paulson Jr. said today Congress must release the second half of the $700 billion rescue package to shore up the financial markets, noting that nearly all of the funds remaining at his disposal have now been committed for a loan to the nation’s automakers.
Paulson said he would meet with lawmakers and President-elect Barack Obama’s transition team to discuss when to ask for the rest of the rescue money. But some administration officials suggested that the final decision to request the funds might not come until after Obama takes office.
A Treasury official added that the department is looking at ways to aid financially struggling homeowners. Democrats have made this a condition for approving the second installment of the rescue package, known as the Troubled Asset Relief Program, or TARP.
Treasury officials also face a heated battle on Capitol Hill because lawmakers on both sides of the aisle have expressed anger at the way the department used the first half of the money.
Of the $350 billion allocated to Treasury, the department so far has committed $315 billion to inject capital into banks and American International Group, and another $20 billion to unfreeze consumer credit markets. Today, the administration announced a $13.4 billion loan for General Motors and Chrysler, leaving the Treasury with less than $2 billion at its disposal.
There are only a few problems with Paulson’s request.
First of all, there’s really no evidence that the first $ 350 billion has done any good. Credit markets remain incredibly tight. The real estate market continues to look bleak for the foreseeable future. And, the economy continues it’s down town.
Second, we have absolutely no idea where the first $ 350 billion has actually gone:
Once the request is formally made when the new Congress convenes on January 6th, Congress has 15 days to try to block it. Here’s betting they’ll drop the ball, again.