Summers Seeks to Calm Bailout Concerns

Posted January 15, 2009 at 3:27pm

President-elect Barack Obama’s top economic adviser, Larry Summers, has penned a second letter to Congressional leaders in a continued attempt to calm concerns on Capitol Hill about releasing additional funds from last year’s financial sector bailout.

“This program must promote the stability of the financial system and increase lending, preserve home ownership, promote jobs and economic recovery, safeguard taxpayer interests, and have the maximum degree of accountability and transparency possible,” Summers wrote in a letter to Senate Majority Leader Harry Reid (D-Nev.).

Summers’s letter is his second to Congressional leaders on the Troubled Assets Relief Program.

Members of both parties have strongly criticized the Bush administration for not properly managing the first half of the bailout money, and critics also have claimed that the entire program, swiftly passed through both chambers in October to rescue the financial markets, does not include strong enough oversight provisions.

Summers outlines oversight measures, including posting investment decisions on the Treasury Department’s Web site, reporting lending activity on a quarterly basis and limiting executive compensation packages at firms receiving government funds to stock only. Mortgage foreclosure mitigation and small-business protection are priorities also listed in the letter.

“With these safeguards, it should be possible to improve the effectiveness of our financial stabilization efforts,” Summers wrote, stressing “urgency to stabilize and repair the financial system.”

Senate Democratic leaders are rallying Members to ensure the release of the funds. A Republican proposal would block the release of $350 billion in bailout funds for the struggling financial markets.