Looks like Barack Obama’s word is worth quite a lot just now. About $350 billion, in fact.
Congress has been talking tough lately, for good reason, about the need to impose strict conditions on the second $350 billion for the bailout — lest it meet the same fate as the first $350 billion, which, at least for now, appears not to have eased lending or stabilized the housing market.
But yesterday, the Senate went ahead and voted not to block the incoming administration from getting the money — despite the fact that there are no strings attached. Congress could still add restrictions, of course, but, as we’ve reported in depth over at Election Central, leaders in both the House and Senate have suggested that they won’t. Instead, they’re apparently willing to accept the Obama team’s voluntary assurances that they’ll do things differently from the Bush crew.
As for those voluntary assurances, they’re not nothing. As laid out in a letter to Congressional leaders by Larry Summers, who’ll run Obama’s White House Economic Council, they read as a pointed indictment of the current administration, which failed to do any of them.
For instance, Summers pledged:
The Treasury will require detailed and timely information from recipients of government investments on their lending patterns broken down by category.
Executive compensation above a specified threshold amount [will] be paid in restricted stock or similar form that cannot be liquidated or sold until the government has been repaid.
Prevent shareholders from being unduly rewarded at taxpayer expense. Payment of dividends by firms receiving support must be approved by their primary federal regulator. For firms receiving exceptional assistance, quarterly dividend payments will be restricted to $0.01 until the government has been repaid.
Preclude use of government funds to purchase healthy firms rather than to boost lending.
Limit assistance under the EESA to financial institutions eligible under that Act. Firms in the auto industry, which were provided assistance under the EESA, will only receive additional assistance in the context of a comprehensive restructuring designed to achieve long-term viability.
And perhaps most important:
Implement a sweeping foreclosure mitigation plan for responsible families including helping to reduce mortgage payment for economically stressed but responsible homeowners, reforming our bankruptcy laws, and strengthening existing housing initiatives like Hope for Homeowners.
Those all sound like crucial ideas. But it’d be nice if we didn’t have to take anyone’s — even Obama’s — word for it.