Congress aims to hold banks accountable

DERRICK Z. JACKSON ("Bank transparency," Op-ed, Dec. 31) complains that banks' failure to be forthcoming about the way in which they have used the money provided under the federal government's financial rescue plan "has not been met with enough anger by President-elect Obama and Congress." Jackson substantially understates the reaction of Congress.

We have not only been vehement in our criticism, we have frozen half of the money and have made it clear that it will not be released until banks' failure to lend any money they are given is remedied.

When Congress passed the bill, we resisted the Bush administration's demand for an unrestricted $700 billion grant, and required that before the second half could be dispersed, the administration had to notify Congress of its intention to do so and wait 15 days during which period Congress could pass a bill to cut it off.

Several weeks ago I made it clear that we would exercise that option if they did not fix certain aspects of this program, including, most important, their failure to use any of the money to prevent foreclosures, and their unwillingness to put pressure on the banks to lend.

Fortunately, the Obama administration understands our point, and has agreed in principle to a bill we expect to pass this week setting forth tough conditions that must be met in using the second $350 billion.

These include spending funds to reduce foreclosures, tougher restraints on compensation at recipient banks, and requirements that banks lend these funds in turn, rather than sitting on them or using them to buy other banks.

BARNEY FRANK
Chairman, House Financial Services Committee
Washington