CQ Politics
Published: 11-13-08
Treasury Secretary Henry M. Paulson Jr. on Wednesday reiterated the Bush administration’s reluctance to expand a financial bailout to the ailing auto industry and also said purchasing troubled assets from banks and other financial institutions “is not the most effective way to use” funds under the program.
At a news conference updating the status of Treasury’s Troubled Asset Relief Program Paulson called automobile manufacturing a “critical industry” and agreed U.S. automakers need help.
But he said the $700 billion program probably was not the place to find it. Democratic congressional leaders have indicated they will try to push legislation next week to force the Treasury Department’s hand.
“We need a solution but the solution has got to be one that leads to viability” Paulson said. “The intent of the TARP was to deal with the financial industry.”
Instead Paulson suggested Detroit look to $25 billion in loans authorized by Congress in September.
It is still unclear whether Democratic leaders could move such a bill quickly. The Senate has a lame-duck session scheduled next week but so far the House has not officially announced similar plans.
House Speaker Nancy Pelosi D-Calif. and House Majority Leader Steny H. Hoyer D-Md. have said they won’t bring the House back unless President Bush and Senate Republicans agree to allow a stimulus bill to move with auto-industry aid included.
The Paulson news conference also marked the first time the Bush administration has openly acknowledged that asset purchases — the intended cornerstone of the financial rescue legislation Congress passed Oct. 3 — were no longer a viable solution to the economic crisis.
“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” Paulson said.
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