GOP Seeks More Information on Bailouts

Posted September 17, 2008 at 3:50pm

House GOP leaders complained Wednesday that the Federal Reserve and Treasury Department are not keeping Congress in the loop when making decisions affecting the financial sector.

“I frankly think that Members of Congress could have gotten a little more heads-up as to how AIG was intertwined with so many things in the marketplace out there right now,” Minority Whip Roy Blunt (R-Mo.) said. “Our caucus doesn’t feel like they understand the coherent strategy, if there is one.”

Republicans thought the Fed and Treasury Department sent “a very important message” on Monday by allowing Lehman Brothers to fall into bankruptcy, Blunt said. That message was “the government is not going to be there to back up every faltering financial institution. At some point, bad decisions made by those institutions make bad results.”

But 48 hours later, the decision to loan AIG $85 billion “seems to contradict that,” Blunt said.

Republican Conference Chairman Adam Putnam (Fla.) said it is important the Fed and Treasury send an envoy to Capitol Hill to keep Members up to speed on their decisions that affect the economy.

“The communication lines are not operating efficiently,” he said.

During the past few weeks, there have been “ample opportunities” for the Fed and Treasury to share with Congress the criteria they use for proceeding with a bailout, Putnam said. “How do you decide that AIG is worthy of a bailout and Lehman Brothers is not? There has to be some better understanding of that.”

Asked what counsel he would give to the Fed and Treasury regarding other financial institutions on shaky ground, Blunt said, “It’s time for them to share a whole lot more information with Congress about what they’re doing, why they’re doing it, and what they might do in the future.”