Geithner Implements Rules to Limit Lobbyist Influence on TARP
Hours after his confirmation, Treasury Department secretary Timothy Geithner got to work, imposing regulations to limit lobbyist influence in the distribution of funds through the Troubled Asset Relief Program. The Senate voted 60 to 34 late Monday in favor of confirming Geithner for the position of Treasury secretary. The confirmation came after a Senate panel voted last week to approve the nomination despite criticism surrounding Geithner's now-infamous tax flub: He failed to pay more than $34,000 in taxes because, as he has claimed, he didn't realize he was self-employed at the time he worked at the International Monetary Fund. In statements made moments after being sworn in by Vice President Joe Biden, Geithner promised to "move quickly" with the Treasury to meet economic challenges, to "launch the programs that will bring economic recovery sooner, to make our economy more productive, to restore trust in our financial system with fundamental reform, to make our tax system better at rewarding work and investment, more fair and more simple." The former president of the Federal Reserve Bank of New York made good on his promise early Tuesday when he issued new rules to limit lobbyist, special-interest influence on the $700 billion rescue package.The rules aim to maintain objectivity in the issuance of TARP funds and by limiting the contact officials can have with lobbyists that are connected with bailout funds applications. The rules also aim to keep politics out of funding decisions by using limits on political influence over tax matters as a model. Another rule aims to ensure the objectivity of investments made under the Emergency Economic Stabilization Act by requiring the Office of Financial Stability (OFS) to certify each investment is based only on facts of the case and certain criteria: banks must be recommended by the primary bank regulator to be eligible for capital investments, the OFS will publish the investment review process, and the Treasury will "ensure adequate resources exist to process applications as quickly as possible...." In his remarks, Geithner seemed to acknowledge the rising criticism lately over the lack of transparency in the TARP and weak oversight of funds distributed to major banks. "American taxpayers deserve to know that their money is spent in the most effective way to stabilize the financial system," Geithner said in a media statement regarding the new rules. "Today's actions reaffirm our commitment toward that goal." President Barack Obama's economic team has also been pushing for additional bank bailout funds, possibly tied with the $800 billion-plus economic stimulus package in the works and excess of the remaining funds under the $700 billion rescue package. Pending legislation authored by Barney Frank, D-Mass., aims to enforce regulations on how the rescue funds are administered and tracked. If the so-called "Frank legislation" passes, some $50 billion of the bailout funds could be reserved especially for modifying mortgages and helping struggling borrowers to stay in their homes. Write to Diana Golobay at email@example.com.