Senators Skeptical on Bank Rescue's Price Tag
Lawmakers on Wednesday urged Treasury Secretary Timothy Geithner to provide more details on how much taxpayer money the Obama administration's bank rescue plan ultimately will cost.
Geithner declined to speculate on the likelihood the administration will ask for more funds beyond the roughly $350 billion remaining in the original $700 bailout program, but he told the Senate Budget Committee that further requests are possible.
That did not satisfy Sen. Lindsey Graham, R-S.C.
"So you have no clue," Graham said. "Why not just ask for more? We know you will," she said.
Committee Chairman Sen. Kent Conrad, D-N.D., defended the administration but agreed the financial bailout likely will cost more than the original $700 billion.
"People have got to take a deep breath here," he told reporters after the hearing. "This administration has been in office for two weeks."
Conrad estimated that it will take $300 billion to $500 billion more in taxpayer funds to fully bail out the financial system, an amount that he said members of Congress could grant.
"These are unhappy circumstances," Conrad said. "But most people around here know we've got to respond in a way that's effective."
The administration's plan includes a public-private fund of up to $1 trillion that would seek to purchase bad assets weighing down banks' balance sheets.
But Sen. Lamar Alexander, R-Tenn., cited economists' estimates that banks have $2 trillion in bad assets. "Aren't you really underestimating the size of this?" he asked.
Geithner said the administration would provide more information, including on costs, "as quickly as we can." He estimated that about $387 billion of the $700 billion rescue fund, formerly known at the Troubled Asset Relief Program, has been spent.
"Many of us were looking forward to a plan that could be presented in a straightforward, clear and detailed way," said Sen. Jeff Sessions, R-Ala. "Unfortunately, that is not what we received yesterday."
Geithner defended the lack of detail included in the plan, which was widely criticized Tuesday on Wall Street and Capitol Hill. The plan seeks to pump up to $2 trillion into the financial system to boost ailing banks and spur more lending.
"I did not want to compound the mistakes of the past 12 months by rushing out a plan," Geithner said Wednesday. "I will live with that disappointment because it is better than the alternative."
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Other senators urged Geithner to demand more accountability from banks and their executives in exchange for government money.
"We've poured $10 billion into Goldman Sachs and we have no say on whether (the CEO) can stay on the job?" asked Sen. Bernard Sanders, I-Vt.
Geithner said that "where necessary to protect the taxpayer," the administration would seek to remove executives from ailing companies.