WASHINGTON – Congressional Democrats are drafting legislation to demand that the White House do more to reduce home foreclosures before Congress will agree to release additional money for the $700 billion bank bailout program.
Looking toward a possible request for $350 billion more cash for the Troubled Asset Relief Program (TARP), House of Representatives Speaker Nancy Pelosi said on Monday she and Rep. Barney Frank were discussing a prerequisite bill.
She said the Bush administration has "totally ignored" a provision of October's original TARP law requiring strong efforts to reduce home foreclosures, which have soared this year since the bursting of a historic real estate bubble.
"Absolutely nothing has been done to respect that part of the legislation," Pelosi, a California Democrat, told reporters as she discussed the House's agenda in coming weeks.
She and Frank have talked about "legislation that insists that the provisions of the (TARP) law be honored, before we release any more funds," Pelosi said.
Legislation demanding more foreclosure mitigation will be ready within the next couple of weeks, said Steven Adamske, an aide to Frank, the Massachusetts Democrat who chairs the House Financial Services Committee.
Senate Banking Committee Chairman Christopher Dodd said last month he was willing to legislate if the financial sector failed to do more to curb foreclosures, restrain executive pay and modify mortgages to help struggling homeowners.
It was unclear whether the Pelosi-Frank bill would also address executive compensation and mortgage modification.
It was also uncertain when or if the Bush administration would ask Congress to release the second half of TARP funding before leaving office. Of the $350 billion already released by Congress, only $15 billion remains uncommitted.
The administration said on Friday it might dip into the TARP to aid struggling U.S. automakers, which failed on Thursday to win a separate bailout of their own from Congress.
Pelosi said on Monday she expects the Bush administration will use the TARP to help the automotive industry.
Any commitment of TARP money to General Motors Corp or Chrysler LLC would further deplete the TARP bailout fund, possibly leaving the first installment tapped out weeks before President-elect Barack Obama takes over.
Ford Motor Co said on Monday that it "does not face a near-term liquidity issue" and will not seek possible short-term aid from the administration.
As required by law, if the administration wants access to the second half of TARP funding, it would have to seek congressional release of the next $350 billion. If Congress wants to prevent release of the funds, it must vote to reject the administration's request.
Pelosi said she was working on an economic stimulus package "and other legislation that will come to the floor" between January 6, when the new Congress is sworn in, and January 20, when Obama takes over as president from George W. Bush.
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