By Jim Snyder - 06/04/09 06:36 PM EDT
Not so with the new man nominated to run it.
Senators credited Allison’s experience, intellect and willingness to take on the challenge of managing the $700 billion program, passed by Congress last fall to inject capital into the nation’s teetering financial system.
Since then, some members have expressed buyer’s remorse, criticizing the program for what they see as its failure to fulfill its main goal.
The kid glove treatment Allison received — at least two senators said they would give him a pass after he punted their questions — contrasts with how the committee treated the man Allison would replace. Neel Kashkari’s role was as much punching bag as TARP overseer during his appearances before the Banking Committee and other congressional panels. But that was during the height of the financial crisis, which raised members’ blood pressure.
With hopeful economic signs, like steadier home sales and positive results from stress tests designed to measure the financial health of banks, the economic crisis seems to have slipped down the congressional priority list. Healthcare and climate change legislation are on a faster pace than a bill to reform the nation’s regulatory system.
Still, senators used the hearing to raise a series of lingering concerns about TARP, which may provide a hint that, should Allison win confirmation, future appearances before the committee might not go so smoothly.
Among the questions they asked: if banks were using the billions of dollars they have received to make loans; whether bailing out struggling auto companies amounted to mission creep; how the administration planned to ensure adequate taxpayer returns for the stock the government now holds as collateral; and whether a program that allows mortgages to be modified to help homeowners avoid foreclosure was being effectively utilized.
Allison, a 28-year veteran of Merrill Lynch who most recently was the CEO at troubled mortgage lender Fannie Mae as it transitioned into government conservatorship, dodged the most direct questions. He pledged that his main objective as assistant secretary for financial stability would be to restore liquidity and stability into the financial system.
In response to Sen. Jon Tester’s (D-Mont.) concern that banks were using TARP money to speculate in oil markets, Allison said that he would not micromanage the banks under the program. But he pledged to make decisions in as transparent manner as possible, and to meet routinely with the people responsible for overseeing how the money is spent, including officials at the Government Accountability Office and congressional committee staff.
With banks on the verge of repaying some of the taxpayer money, this is a more tenable time politically to take over TARP than during the heady days when Kashkari and other Treasury officials scrambled to head off a financial calamity by doling out unprecedented sums of federal dollars.
But Allison said that dangers continue to lurk. He aligned himself with a statement from Banking panel Chairman Chris Dodd (D-Conn.), who said the economy was not out of the woods yet.
The chairman was among the members who praised Allison. “I think is a great choice,” Dodd said after the hearing.
The chairman also disputed the contention that financial reform had slipped down leadership’s to-do list. “This is a big-ticket item. Not something that you just throw together,” Dodd said.
He predicted that a bill would be ready by the end of the year.