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Obama pledges bail-out cash to save homes, not Wall St
Paul Thompson in Miami13 Jan 2009
FAMILIES faced with losing their home will be the first to benefit from a huge cash handout once Barack Obama is sworn in.
In requesting the second half of the $700billion bail-out money agreed last month, Mr Obama said he will make a "fundamental change" to where the money goes.
Instead of it all going to Wall Street, which is what President Bush did with the first part of the cash, it will be diverted to help homeowners facing foreclosure and small businesses struggling in the economic climate.
An estimated 3,000 people a day face losing their homes as the credit crunch grips the US.
Mr Obama promised not to waste the second half of the bail-out package TARP - the Trouble Asset Relief Programme.
Banks and other financial institutions have already received $350billion, but Congressional leaders admitted they do not know exactly what the money has been used for.
Mr Obama said in handing over the remaining money he would ensure Congress were told where it was going. The TARP fund has so far been used to bail out mostly ailing banks and car makers, and insurance and credit card companies, among others.
But many Americans are opposed to money being used to help banks whose greed and bad practices they blame for the downturn in the economy.
"My commitment is that we are going to fundamentally change some of the practices in this next stage of the program," said Mr Obama.
He said that it would focus on creating jobs, aiding small businesses and easing home mortgage foreclosures. "This is going to be a part of a broader financial strategy that involves strengthening regulations on Wall Street, on the financial and banking sector."
Mr Obama asked President Bush to release the $350billion. Mr Bush immediately agreed in what will be one of the final orders of his eight -year presidency.
Mr Obama said there had been an "absence of clarity" in how the first package had been spent. But he said the cash bail-out seemed to have an effect. "It is clear that the financial system, although improved from where it was in September, is still fragile," said Mr Obama.
His top economic adviser, Lawrence Summers, sent top Congressional leaders a five-point reform plan for spending the remaining bail-out money.
The plan includes efforts to replace massive public funds used in the financial bail-out with private investment as soon as possible, and the launch of a "sweeping effort" to address the home mortgage crisis. Mr Obama also wanted the use of a "full arsenal of tools" to ease a credit squeeze following the financial turmoil, Mr Summers said.
The massive bail-out was approved to bolster the financial industry and unfreeze credit as the sector reeled under the stress of toxic mortgage-related assets.
Reader views (1)
More taxpayers' money squandered with no benefit to the majority of them.
- Alan Preen, McLean, Texas, USA., 13/01/2009 15:14
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