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Secretary Paulson’s policy reversal breaks with Congressional intent, contradicts public assurances previously made by Treasury, and leaves the federal government without an adequate mechanism to stem a tide of home foreclosures, subcommittee Chairman Dennis Kucinich said opening a hearing on the use of US bail out funds.
On November 12th, Treasury Secretary Henry Paulson announced that TARP would not acquire mortgage-related assets (see here).
Members of the subcommittee grilled Neel Kashkari, Treasury Department's Interim Assistant Secretary for Financial Stability on the restructuring of the bailout plan questioning him whether Kashkari was Treasury Secretary Henry M. Paulson’s ‘chump’.
In particular, the decision to deny funds to National City Bank fuelled the debate about whether bailout money was improperly used to decide which banks should survive. Committee members accused the Treasury of using the bailout programme to pick financial industry winners and losers.
“It’s fairly obvious that Congress would have never passed the EESA had it known how Treasury would marshal the resources it was given”, Kucinich said.