- The Washington Times - Friday, June 5, 2009

President Obama’s nominee to oversee the $700 billion Wall Street bailout warned against spending much more of the fund’s remaining $100 billion, telling a Senate panel Thursday that a cushion is needed in case of another financial crisis.

“It’s important that we leave some headroom in this program, because we’re not yet out of this crisis,” said Herb Allison Jr. during his confirmation hearing before the Senate Banking, Housing and Urban Affairs Committee.

“The Treasury, the government needs some flexibility so that if there’s a need in the future, we can intervene in a timely manner on behalf of the American public.”

But Mr. Allison said he expects an increase in repayments in coming weeks from banks that received taxpayer aid.

“I think that’s quite likely that there will be a bump next week,” he said.

He declined to say how much bailout money he thought would be repaid next week, when the Federal Reserve is expected to announce its initial set of redemption approvals from 19 banks that received taxpayer assistance.

Mr. Allison also sidestepped several questions regarding how involved the federal government should be in managing the assets it controls of failed business such as General Motors Corp., Chrysler LLC and American International Group Inc.

But he added that government has no desire to be a “day-to-day manager of those companies.”

Mr. Allison, if confirmed, would serve as a Treasury Department assistant secretary to run its Troubled Asset Relief Program, or TARP. He has worked at Treasury since May 1 as a counselor to Secretary Timothy F. Geithner.

Former Treasury Secretary Henry M. Paulson Jr. chose Mr. Allison, a former president of New York brokerage Merrill Lynch, to run Fannie Mae last September after the housing-finance company was put into government receivership.

Mr. Allison promised that if confirmed he would spend TARP money wisely, saying that the success of the program is crucial to stabilizing the economy.

“I will keep in mind that the financial crisis isn’t mainly about banks. It’s about alleviating the real hardships Americans are facing every day,” he said. “I will strive to be a prudent investor on behalf of the American people.”

The global financial crisis is not over, he added, so Treasury and Congress must be flexible and willing to modify programs such as TARP to ensure a full economic recovery.

The committee, which greeted Mr. Allison warmly, is expected to approve his nomination in the coming days. His nomination then would be sent to the full Senate, where he is expected to win confirmation.

Committee Chairman Christopher J. Dodd said he was “excited” about Mr. Allison’s nomination.

“This is going to be a great opportunity for us to get this right and to give the country that renewed sense of confidence about how this program is working and why it’s in their interest that we succeed with it,” the Connecticut Democrat said.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide