Frank: Americans Can Trust Obama More Than Bush With Bailout Money
Frank, D-Mass., denied in a nationally broadcast interview that Congress has failed to put strings on these loans to ensure that banks do not pay extravagant executive bonuses or take expensive retreats.
"We didn't give them the second half ($350 billion) with no strings attached," Frank said on CBS's "The Early Show."
"The Treasury Department has agreed to impose very strict rules," the congressman added, "and I think it would be a very big mistake to assume that the Obama administration is going to be as lax as the Bush administration."
Frank did acknowledge that a bill he pushed to place specific limits on bonuses and other perks is not likely to get through Congress.
"The error is to assume that because the Bush administration resisted compensation restrictions ... that the Obama administration is going to do the same," he said.
"In fact, the Obama administration is behaving very differently," Frank said.
He was talking about disbursements to financial institutions of moneys from the second half of the $700 billion TARP initiative (Troubled Assets Relief Program) that was instituted last fall.
"The fact is, these funds are being conditioned by the Obama administration," Frank said. "If they get the money, they are legally bound to follow certain rules."
Frank also said that none of the money from the second part of TARP has been disbursed yet, and he said the new administration will insist that a much larger chunk of it go toward reducing home foreclosures.
The House chairman was interviewed a day after leading bank CEOs came before his committee to defend their practices in the wake of rampant criticism from both lawmakers and the public.
"We're Americans first and bankers second," said John Stumpf, president and chief executive of Wells Fargo & Co.
"As an industry, we clearly made mistakes," added John Mack, chairman and CEO of Morgan Stanley.
Eight chief executives sat at a witness table for more than six hours Wednesday, assuring lawmakers that an infusion last fall of $165 billion in taxpayer money to their banks was good for consumers. The money was part of that $700 billion rescue plan.
They also told Congress that lending has increased and that CEO bonuses have been eliminated.
And while some lawmakers said they hoped that by their testimony the bankers could gain some credibility, some of their inquisitors weren't convinced.
"America doesn't trust you anymore," declared Rep. Michael Capuano, D-Mass.