Rep. Barney Frank, chairman of the powerful House Financial Services Committee, Friday warned banks getting money from the $700 billion bailout fund that they must use it for lending and only lending. Other uses, such as acquisitions and bonuses, are in \u201cviolation\u201d of the Troubled Asset Relief Program, Frank said.\u201cI am deeply disappointed that a number of financial institutions are distorting the legislation that Congress passed at the president\u2019s request to respond to the credit crisis by making funds available for increased lending,\u201d Frank said in a statement. \u201cAny use of these funds for any purpose other then lending–for bonuses, for severance pay, for dividends, for acquisitions of other institutions, etc.–is a violation of the terms of the act.\u201d Frank said his committee would hold hearings Nov. 12 and Nov. 18 on TARP and the ongoing financial crisis. Lawmakers are concerned that banks receiving payments from the $250 billion put aside for the government to buy preferred shares in banks are not using them for lending to unlock the credit markets, but for other uses including acquisitions, bonuses and dividends. PNC Financial Services of Pittsburgh, which is expected to get $7.7 billion from the program, agreed to acquire National City Corp. on Oct. 24. Rep. Henry Waxman, who chairs the House Oversight and Government Reform Committee, is investigating bonus payments being made by banks that received bailout funds, as is New York State Attorney General Andrew Cuomo. Lawmakers seem worried that they didn\u2019t attach enough conditions to the bailout funds, other than restrictions on executive compensation, such as so-called \u201cgolden parachutes,\u201d and restrictions on increasing dividends and repurchasing stock. Friday\u2019s Wall Street Journal quoted Sen. Christopher Dodd, chairman of the Senate Banking Committee, as saying, \u201cMaybe if we\u2019d have 13 weeks instead of 13 days we would\u2019ve written that bill with even more detail.\u201d Nine of the country\u2019s largest banks got the first $125 billion of the TARP money. As reported Oct. 28 by CPN, at least 16 community and regional banks, including PNC Financial Services, are next in line for the rest of the $125 billion. Among the other banks set to get slices of the bailout pie are Capital One Financial, of McLean, Va., expected to receive $3.55 billion; Regions Financial of Birmingham, Ala., and SunTrust Banks of Atlanta, both slated to receive $3.5 billion; and BB&T of Winston-Salem, N.C., expected to get $3.1 billion. Even smaller banks like First Niagara Financial of Lockport, N.Y.,which is scheduled to receive $186 million, are expected to get a capital infusion from TARP. Meanwhile, Ed Yingling, executive director of the American Bankers Association, said in a letter to Treasury Secretary Henry Paulson that it was unfair to ask thousands of banks to participate \u201cin a program when the impact of the program on those banks is unknown.\u201d Yingling\u2019s letter also raised concerns about the lack of details in the plan. He added that ABA member banks are worried that it falsely looks like they all need a handout. \u201cThis is not a program the banking industry sought.\u201d On the mortgage front, no agreements were reached Friday between the Treasury and Federal Deposit Insurance Corp., which are reportedly trying to come up with a plan to help as many as 3 million struggling homeowners refinance their mortgages. As reported Friday by CPN, officials are considering a plan that could cost between $40 billion and $50 billion, and would lower interest rates for homeowners in danger of foreclosure for up to five years. Under the plan proposed by FDIC Chairman Sheila Bair, the government would agree to absorb half the losses if mortgage companies would lower the payments of some homeowners deemed creditworthy enough to quality for the assistance. A Bloomberg story by Alison Vekshin and Robert Schmidt noted that the White House and Paulson seemed hesitant to approve the plan at this time because of the cost. A Treasury spokeswoman said the administration is continuing to examine ways to reduce foreclosure. Plans for stopping the flood of foreclosures can\u2019t come soon enough. A new study from First American CoreLogic reported that almost 20 percent of mortgage holders owed more than their homes were worth. Michigan and Nevada were the top two of six states that have almost 60 percent of the homes with negative value, according to the study as reported Friday by Bloomberg\u2019s Dan Levy. If home prices drop another 5 percent, more than 9 million properties will have negative equity, according to the study.<\/p>\n","protected":false},"excerpt":{"rendered":"
Rep. Barney Frank, chairman of the powerful House Financial Services Committee, Friday warned banks getting money from the $700 billion bailout fund that they must use it for lending and only lending. Other uses, such as acquisitions and bonuses, are in \u201cviolation\u201d of the Troubled Asset Relief Program, Frank said.\u201cI am deeply disappointed that a…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37301],"tags":[],"class_list":["post-1003886039","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n