AUGUSTA, Maine — U.S. Rep. Michael Michaud declared Tuesday that he will not vote for any additional funds to bail out the nation’s financial sector without increased transparency and oversight of how the money is spent.
“The proposal from [Treasury] Secretary [Timothy] Geithner is not acceptable to me,” he said in a telephone interview from Washington. “I felt during the Bush administration, and now under the Obama administration, that they are not getting any vote from me, as it relates to TARP, unless there is strong accountability and transparency in that legislation.”
TARP is the Troubled Asset Relief Program passed last fall, over Michaud’s objections, which was supposed to get the nation’s financial system functioning once again to provide credit to individuals and businesses. Michaud said there was “nearly no” transparency and accountability for the first $350 billion, which was spent under the Bush administration.
“I am disappointed with some of my colleagues, those who were against the TARP funding on the Democratic side and voted against it in the previous administration, but now they seem to be supporting it under the Obama administration,” he said. “I am disappointed with the secretary’s proposal because he does not propose a detailed plan to make sure that banks actually start lending again.”
Geithner said Tuesday the Treasury Department was creating a sweeping plan to address the nation’s financial woes. As outlined, it would leverage federal funds with private sector funding to buy up the hard-to-sell “toxic” assets that have plagued banks and financial institutions for the past year. He said the combination of tax-payer and private resources in the plan could exceed $2 trillion.
Michaud said the proposals lack the details needed to assure taxpayers that their money is being spent appropriately and said it will face opposition among members of the president’s own party.
“People are outraged that there has not been accountability in the spending of the first $350 billion, and what they know about how it was spent makes them angry,” he said. “Bonuses for executives and parties and banks buying up banks — it has been just disgraceful.”
Michaud and other members of the conservative Blue Dog Democrats met with President Obama on Tuesday evening at the White House to express their concern over the lack of openness in the Treasury proposal. “This is not acceptable to us,” Michaud said earlier of the Treasury proposal.
After the meeting with Obama, Michaud said “The president expressed concern about foreign ownership of our debt and talked about the need to address the long-term costs of entitlement programs. When discussing the need to balance the budget, he said that everything was on the table and that there are no sacred cows. I was pleased to hear that he is committed to holding a fiscal summit to address these problems and has invited the Blue Dog Coalition to participate.”
Michaud said he believes “that the president will be an ally of ours on restoring fiscal responsibility. We must grow our economy and put Americans back to work if we are ever going to get out of this recession. But it must be coupled with responsible federal budgets so that we do not make our future fiscal challenges worse.”
Earlier Tuesday, Michaud noted that the House passed a bill last month that would strengthen accountability, close loopholes, increase transparency and require the Treasury Department to take significant steps to ease the mortgage foreclosure problem.
Michaud voted for the measure, and also for a motion that would have stopped the release of the remaining bailout funds and required the Treasury secretary to develop a plan for taxpayers to get paid back. Despite bipartisan support in the House, the Senate never has acted on the bill.
“They could add it to the stimulus bill in conference,” Michaud said, “but I don’t think that will happen because the Senate has not passed similar legislation to what we did in the House.”
Neither of Maine’s U.S. senators could be reached for comment on Michaud’s concerns with the Treasury proposal, although both have criticized the lack of accountability and transparency in the TARP program in recent weeks.
“Like millions of other Americans, I was astonished and outraged to learn that 21 banking organizations that received at least $1 billion each in TARP funds were unwilling or unable to provide a public accounting of the use of those public funds,” Sen. Susan Collins said last month.
Sen. Olympia Snowe voted for the release of the second $350 million, but only after discussing the need for greater accountability with then President-elect Obama last month.
“Indisputably, a lack of transparency and accountability in the first half of the TARP funding fostered an environment in which taxpayer dollars were invested in banks and other financial institutions that have refused to reveal how the money was used — and this is unacceptable,” she said.
Michaud said there will be several opportunities to require needed accountability as additional proposals are made by the Obama administration. He said the president will find that he does not have a “blank check” from the Congress.