WASHINGTON
(MarketWatch) -- President-elect Barack Obama's incoming administration
has agreed to commit billions of the second half of a $700 billion
financial bailout bill for foreclosure relief.
"We believe we have agreement in principle that the incoming
administration will use TARP [Troubled Asset Relief Program] funds for
foreclosure," said House Financial Services Committee spokesman Steven
Adamske.
The committee's chairman, Rep. Barney Frank, D-Mass., is seeking to
have roughly $100 billion of the remaining funds be used to help
struggling homeowners.
Frank has introduced a bill that would impose conditions on the use of
the second $350 billion in bailout money. One provision of the
legislation would require the Treasury Department to spend $50 billion
of the funds to modify mortgages of troubled borrowers so that they can
avoid foreclosure.
As Congress contemplates the second half of the bank bailout bill, the
Treasury Department is close to committing billions of additional aid
to Bank of America (BAC:![]()
BAC 10.20,
-0.45,
-4.2%)
to help it complete its acquisition of Merrill Lynch & Co.,
according to The Wall Street Journal. It's unclear whether the cash
infusion would come from remaining assets in the capital purchase plan
of the $700 billion bank bailout bill. Bank of America has already
received $25 billion from the program. Read more about Bank of America.
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4:01pm 01/14/2009
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In addition to allocating funds for foreclosure relief, Frank's measure
would impose new monitoring and executive-compensation requirements on
participating banks and auto companies. The legislation will be
considered in the House and Senate on Wednesday evening and Thursday.
According to Adamske, Treasury Secretary nominee Timothy Geithner has
agreed to many of the principles in Frank's bill.
At the same time as lawmakers consider the Frank bill, they will also
consider legislation introduced by Republicans in both the House and
Senate that would prohibit the release of the bank bailout funds. Sens.
Jim DeMint, R-S.C., David Vitter, R-La., Jim Inhofe, R-Okla., and Jeff
Sessions, R-Ala., have introduced a veto bill, known as a resolution of
disapproval. A similar bill has been introduced by GOP lawmakers in the
House.
"We've seen so many times angry Americans call their senators to stop
and not to do what is coming on this bill," said DeMint. "We have
ability to stop this because there are a number of senators on the
fence."
Lawmakers that want to oppose the allocation of the new funds have to
veto the release of the funds by Jan. 27, 15 days from the White
House's notification. If Congress doesn't act to block the capital by
Jan. 27, the $350 billion is then automatically allocated to Treasury.
If Frank's bill had not passed by that time, the money would be released with none of the proposed conditions. 
Ronald D. Orol is a MarketWatch reporter, based in Washington.
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