Friday, January 16, 2009

Senate gives Obama $350 billion in bailout funds to financial industry

This is from The New York Times:

WASHINGTON — President-elect Barack Obama’s economic agenda advanced rapidly in Congress on Thursday as the Senate voted to release the second half of the financial industry bailout fund and House Democrats unveiled an $825 billion fiscal recovery plan aimed at putting millions of unemployed Americans back to work.

The Senate action, by a vote of 52 to 42, spares Mr. Obama a messy legislative fight just as he takes office and gives him a $350 billion war chest to further stabilize the financial sector. The vote came amid renewed distress in the banking industry, including further deterioration of Citigroup and a pitch for more government aid by the Bank of America.

Mr. Obama had personally lobbied reluctant senators to release the money. His top economic adviser, Lawrence H. Summers, made three visits to the Capitol and sent two letters to reassure lawmakers that the program would be better managed.

In the most recent letter, delivered shortly before the vote, Mr. Summers promised to use $50 billion to $100 billion for “a sweeping effort to address the foreclosure crisis.” He promised tough oversight and clear tracking of how the money is used, and new restrictions on executive pay at firms that receive help.

The vote was an early test for Mr. Obama, in which 6 Republicans joined 46 Democrats to release the money and keep the new administration’s agenda on track.

After personal entreaties from Mr. Obama, all but one of the seven Democratic freshmen senators voted to release the money, including Senators Mark Udall of Colorado and Tom Udall of New Mexico, who as House members twice voted against the original bailout bill.

In a statement, the president-elect applauded the outcome.

“I know this wasn’t an easy vote because of the frustration so many of us share about how the first half of this plan was implemented,” Mr. Obama said. “Now my pledge is to change the way this plan is implemented and keep faith with the American taxpayer.”

The one item I find interesting about this story is that Obama's economic adviser, Larry Summers, is promising "tough oversight and clear tracking of how the money is used, and new restrictions on executive pay at firms that receive help." We never saw that type of oversight when the Bush administration poured billions in taxpayer dollars into the Wall Street financial institutions, and the banks used that taxpayer money for everything else, except for providing mortgage relief to the nation's struggling homeowners facing foreclosure. I'm not sure if the Obama administration will be able to provide such oversight in this incredible mess that is the financial bailout, but I do hope they succeed.

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