Congressman Lynn A. Westmoreland
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Treasury secretary needs to explain change of focus on bailout spending


Washington, Nov 14 -

U.S. Rep. Lynn Westmoreland today said Treasury Secretary Henry Paulson pulled a “bait-and-switch” on Congress by completely changing the focus of the $700 billion package.

“Secretary Paulson needs to come to Congress next week to explain what has changed so dramatically in the past month that absolutely nothing he said then holds true now,” Westmoreland said. “The Congress gave the secretary significant leeway to spend up to $700 billion, which is about the size of the Pentagon’s budget, because the secretary said we had to act immediately on bad mortgages or the economy was going to implode within hours. Now we’re told we’re not going to buy up bad mortgages after all, when that was the main focus of the legislation?”

Westmoreland would like Paulson to explain the contradictions in the following quotes from the secretary:

THEN On Sept. 19, Secretary Paulson told Congress that bad mortgages had to be addressed as soon as possible: “The underlying weakness in our financial system today is the illiquid mortgage assets that have lost value as the housing correction has proceeded. These illiquid assets are choking off the flow of credit that is so vitally important to our economy. When the financial system works as it should, money and capital flow to and from households and businesses to pay for home loans, school loans and investments that create jobs. As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to have significant effects on our financial system and our economy.”

NOW On Nov. 12, Secretary Paulson announced that the TARP money would go toward consumer credit markets: “Over these past weeks we have continued to examine the relative benefits of purchasing illiquid mortgage-related assets. Our assessment at this time is that this is not the most effective way to use TARP funds, but we will continue to examine whether targeted forms of asset purchase can play a useful role, relative to other potential uses of TARP resources, in helping to strengthen our financial system and support lending.”

Westmoreland said Paulson needs to answer questions on whether he ever intended to use the taxpayer money for bad mortgages. “It appears that the mortgage angle was what they needed to sell in order to get congressional approval of such a controversial proposal,” Westmoreland said. “That raises legitimate questions in Congress about what the treasury secretary intended to do from the beginning.”

Westmoreland would also like for Congress to investigate whether companies that have accepted money bailout money are planning extravagant bonuses for executives. Westmoreland cited a report from Wednesday that Goldman-Sachs is planning to distribute $6 billion in bonuses this year after receiving $10 billion through the Troubled Asset Relief Program.

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