Democrat wants second $350B released earlier

House Financial Services Chairman Barney Frank is preparing a bill that also would put tighter restrictions on the remaining bailout funds.

Associated Press

House Financial Services Chairman Barney Frank is preparing a bill that also would put tighter restrictions on the remaining bailout funds.

WASHINGTON — A key House Democrat is pushing to get the second half of the $700-billion rescue fund released next month, before President-elect Obama is inaugurated, in part to help stimulate the economy.

Barney Frank, chairman of the House Financial Services Committee, said Monday he is preparing legislation to require that some of the money be spent for specific purposes, such as stemming foreclosures and reducing mortgage rates.

At the same time, commercial real estate developers and other companies are seeking their own share of the bailout pot.

Frank's bill would impose tighter restrictions on the second $350-billion of the bailout funds, such as requiring banks to report on their new lending every quarter and toughening limits on executive compensation. Many U.S. banks have received federal capital in an effort to stimulate lending.

"I don't want to wait until Obama," the Massachusetts Democrat said in a phone interview. "I think we can do it now."

The bailout funds, along with a stimulus package the Obama administration is expected to push early next year, would have "the impact that you need to get this economy back out of the dumps," Frank said.

A spokeswoman for Obama did not return a call for comment Monday.

Last week, the Bush administration used the final piece of the initial $350-billion to provide loans to automakers General Motors Corp. and Chrysler LLC. The Treasury Department has earmarked $250-billion to buy stock in banks, including Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., and provided $40-billion in capital to insurance giant American International Group Inc.

Lawmakers have criticized the Treasury for not using any of the initial $350-billion to prevent additional home foreclosures. Up to 2.25-million Americans could lose their homes to foreclosure this year, Federal Reserve Chairman Ben Bernanke has warned.

Frank's plan

Rep. Barney Frank said his legislation would include:

• A version of a plan, supported by Federal Deposit Insurance Corp. Chairman Sheila Bair, to spend $24-billion to give lenders financial incentives to modify more loans and help more borrowers keep their homes. Bair has estimated it could prevent 1.5-million foreclosures.

• A measure, under consideration by Treasury, to use government-controlled mortgage companies Fannie Mae and Freddie Mac to reduce mortgage rates to 4.5 percent or lower to stimulate more home buying.

• A revamping of the Hope for Homeowners program, which was launched Oct. 1. It was intended to let 400,000 troubled homeowners swap risky loans for conventional 30-year fixed-rate loans with lower rates but early results have been disappointing, with only 312 applications so far.



Fast facts

Frank's plan

Rep. Barney Frank said his legislation would include:

• A version of a plan, supported by Federal Deposit Insurance Corp. Chairman Sheila Bair, to spend $24-billion to give lenders financial incentives to modify loans and help more borrowers keep their homes. Bair has estimated it could prevent 1.5-million foreclosures.

• A measure, under consideration by Treasury, to use government-controlled mortgage companies Fannie Mae and Freddie Mac to reduce mortgage rates to 4.5 percent or lower to stimulate more home buying.

• A revamping of the Hope for Homeowners program, which was launched Oct. 1. It was intended to let 400,000 troubled homeowners swap risky loans for conventional 30-year fixed-rate loans with lower rates, but early results have been disappointing, with only 312 applications so far.

Democrat wants second $350B released earlier 12/22/08 [Last modified: Thursday, November 4, 2010 2:17pm]

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