Federal bank bailout isn't trickling down, panel told
A three-member oversight board hears that, in Nevada at least, the Treasury Dept.'s $700-billion rescue plan has done little or nothing to curb unemployment and foreclosures.
Reporting from Las Vegas — In this hard-hit corner of the nation's mortgage meltdown and credit crisis, it's hard to find anybody who sees evidence that the Treasury Department's $700-billion rescue plan is working after two months.
In the first public hearing of the Congressional Oversight Panel -- a three-member board mandated to keep close watch on the bailout program enacted in October -- economists, local bankers, beleaguered homeowners and government officials said Tuesday here that the billions of dollars paid out by Washington to the banking industry were not filtering down and that Nevada's desperate condition was growing worse .
Clark County has the nation's highest foreclosure rate. Unemployment has jumped over 7% and lines for free food at charity centers are growing.
"It is a sad day when a child writes to Santa that all she wants for Christmas is food," said Julie A. Murray, who operates the Three Square food bank and was one of the approximately 150 people who attended the hearing on the campus of the University of Nevada, Las Vegas.
The government's solution to the crisis was to bolster the nation's banking system by handing out about $250 billion to several scores of banks.
But "there is little evidence of what effect these billions of dollars are having on us," said Elizabeth Warren, the Harvard University law professor who chairs the panel.
Warren has repeatedly asked Treasury Department officials for an explanation of their strategy and how the bailout is supposed to help solve the credit crisis, but so far her panel has not received any answers. The same issues are being raised by the Government Accountability Office and Treasury Department Inspector General Eric Thorson.
Democrat Harry Reid of Nevada, the Senate majority leader, said at the hearing that major banks are failing to increase lending, despite getting most of the first $350 billion allocated.
"It is just not helping at all," Reid said.
Before Congress gives the Treasury approval for the second $350 billion of the rescue plan, Reid said in an interview that he intended to tighten restrictions on how the money is spent.
Reid said he intended to make sure that additional spending will be targeted to help families in foreclosure. Reid said the exact plan will depend on recommendations from Warren's panel, which is supposed to provide monthly reports to Congress and advise it on regulatory reforms.
- Lawmakers seek reform of bailout Jan 10, 2009
- Financial industry pushes for lower mortgage rates Dec 04, 2008
- Give the bailout time Oct 08, 2008
