Billions of dollars more would become available for the Obama administration’s foreclosed housing prevention program if lawmakers allocate a portion of what was left in the $700-billion financial industry bailout program enacted by the U.S. Congress in 2008 to the program.
The Treasury Department has not been allocating what was left from the Troubled Asset Relief Program because it wanted to have ready funding in case it needs it for some emergency actions.
Some in the U.S. Congress, like New Hampshire Senator Judd Gregg and Alabama Representative Spencer Bachus, wanted the money to be spent to reduce the national debt.
But liberal Democrats like Massachusetts Representative Barney Frank, chairperson of the House Financial Services Committee, insisted that a portion of what was left should be used to enhance the Obama administration’s foreclosed housing prevention program.
At a congressional hearing this week, Representative Frank explained that the federal foreclosed housing prevention program should be strengthened to contain the expected wave of foreclosure caused by growing joblessness.
Politicians contend that debates about what should be done with the rest of the TARP money will become intense in the coming months as the fate of TARP will be decided by Congress soon.
TARP is scheduled to end in December this year, but Treasury Secretary Timothy Geithner has the option to extend it to the third quarter of next year.
The TARP funding was approved in record time last year under the Bush administration to prevent total economic collapse as financial institutions lost billions in the foreclosed housing crisis.
According to government data, most of the major banks bailed out by TARP have already repaid $70 billion of what was lent to them and have stated that their finances are already stabilized and that they can continue operating without federal assistance.
Meanwhile, the Government Accountability Office has stated that the Treasury has around $328 billion left that has not been allocated or spent. GAO estimated that $339 billion has been disbursed and that $102 billion has been allocated but not yet disbursed. The remaining balance has been increased by the $70 billion repaid by the bailed out lenders.
However, Treasury Secretary Geithner said it has already made plans for a portion of the money and estimated that only about $127 billion has not been allocated. He also insisted that he wants to keep what will be left of the TARP money to give him flexibility in stabilizing the economy and accelerating economic growth.
Many Democrats hope some of Geithner’s plans include providing additional funds to strengthen the federal foreclosed housing prevention program.
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