Dems Fear Bush Will Tie Obama's Hands On TARP

02/07/2009 05:12 am ET | Updated May 25, 2011

There is increasingly anxiety among members of Congress and fiscal watchdogs over the handling of the Troubled Asset Relief Program by the Bush administration.

Beyond the specifics of the expenditures -- much of the first $350 billion, it appears, was geared towards propping up flagging banks rather than buying up bad mortgage debt -- the approach and breadth of them has also caused concern.

Josh Marshall, over at Talking Points Memo, has an interesting post up today on how the Feds have essentially turned over management of the TARP to financial firms, which, as he notes, "creates huge potential conflicts of interest and opportunities for self-dealing."

Meanwhile, a reliable and high-ranking Democratic official expressed concern to the Huffington Post that the second $350 billion in TARP money was "already committed and thus will not be available for the incoming administration." Obama, in essence, would not have the say to divvy up the funds in ways that he deemed fit because Hank Paulson and the Bush team had made pledges to spend the money.

Already, the Bush administration has dipped from the second tranche of TARP money when it agreed to lend General Motors another $4 billion, on top of additional loans. But this concern seems to be unfounded, at least at this juncture. Congress has to be alerted to expenditures coming from the second pool of $350 billion and they retain the ability to block such spending. President Bush could veto that decision, but the process will be public.

A spokesman for House Financial Services Committee Chair Barney Frank, meanwhile, said he did not "believe the Treasury was committing funds for the next 350 billion unless they are doing it with the express consultation with the Obama folks."

If they were, he added, it would make for bad policy because the incoming administration could simply reverse course. No commitments are etched in stone. "It wouldn't make political sense to make promises to people that you can't keep," he added.

And yet, his answer does lend itself to a broader concern: that there is simply too little information known, at this juncture, as to where the TARP funds are going and for what purpose.

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