Critics say jobs programs will need congressional approval
In a speech Tuesday, Obama said he would order the Treasury to use unspent funds from the TARP program, as well as funds being repaid by banks, to help finance a number of his job creation proposals, including small business loans, more infrastructure spending and a program to encourage homeowners to make their houses more energy efficient. The $700 billion TARP program was set up last year as an emergency measure to prop up banks suffering from the credit crisis.
But some members of a congressional oversight committee said they doubted the funds could be used directly for jobs without congressional approval.
"Direct jobs programs, other kinds of investments, are decisions to be made by Congress and the administration," Elizabeth Warren, chairwoman of the Congressional Oversight Panel on TARP, told CNSNews.com. "They don't come out of the TARP fund [because] they're not part of TARP.
Another panel member, former Securities and Exchange Commission chairman Paul Atkins, also said Obama couldn't use TARP funds to fund jobs. "I don't think it's permissible under the statute," Atkins said.
It's not clear whether Obama meant he would use the funds directly. The Washington Post reported Friday that the administration is considering a plan to give banks access to TARP funds without restrictions as long as the money is used to provide loans to small businesses. The TARP funds are for use by any financial institution, so they could be used for this purpose, administration officials believe.
Another plan being considered, according to the Post, would involve getting congressional approval to change TARP by easing pay curbs and other restrictions so that lenders could use TARP money to support small business loans.
An estimated 60% of American jobs are with small and medium-sized companies, which have been hit hard by the recession because they are unable to get loans to support their businesses. One major lender, CIT Group (CIT), which was the biggest lender to small businesses such as Dunkin' Donuts franchisees, filed for bankruptcy in November, but emerged from court protection on Thursday. Whether it will resume lending at the same level is an open question.
Treasury Secretary Timothy told the Congressional Oversight Panel the TARP funds would be used to aid small business lending and community banks, as well as homeowners unable to pay their mortgages.
Geithner said banks are "very reluctant to come and do business with the government and they're concerned that if they come, they will be stigmatized and they will be subject to the risk of conditions in the future that might make it harder for them to run their businesses." He said it would require help from Congress to solve the problem.