Democrats may control both Congress and the executive branch now, but Senate Banking Committee Chairman Chris Dodd made it clear Thursday that lawmakers intend to grill the Treasury Department over its handling of the financial crisis.
The Connecticut Democrat announced that Treasury Secretary Tim Geithner will testify before the committee Feb. 10 on how the Obama administration intends to spend the second half of the $700 billion bailout Congress authorized last October.
"I would strongly urge them, as I have privately, and I'll do it publicly here as well, that the secretary be prepared that day to talk in great detail about exactly how this is going to work," Sen. Dodd told reporters.
Just how the new Treasury team may change the course set by the Bush administration is being closely watched; speculation is rampant — ranging from bank nationalization to creating an entity that would buy troubled assets. Mr. Geithner, sworn in just Tuesday, has said a "comprehensive" plan would be released in "coming weeks."
Sen. Dodd said he wants to know whether Treasury will be requesting more funds, and he cautioned the administration that it must earn taxpayers' trust that the bailout funds are in more reliable hands now.
"I hadn't heard a dollar amount," he said. "I am not going to be terribly surprised if there's going to be a request forthcoming for additional revenues or additional sources of revenues. Before any such request is made, I think the new administration — I'm confident they will — has an obligation to demonstrate they know how to handle what they've been given, and if they fail to do that well enough, I see a very high mountain to climb."
In fact, asking for any more money will be a hard sell to constituents, he said.
"I'm not arguing about whether or not it may be needed, [but] … the public's level of anger on this subject matter is hard to" overestimate, he said. "I'm not arguing about a number yet … , but I do know this: The ability of this Congress to support those kind of numbers will depend upon whether or not they sense that the present resources are being managed far better."
Sen. Dodd said he was open to a multifaceted approach, including loss guarantees or establishing a bad bank.
"I think we need to be open to a combination of ideas," he said. "This idea that you have to choose one or the other has been part of the problem in the past."
Sen. Dodd laid out an ambitious two-hearings-a-week schedule for the banking panel, and the first order of business is to get a handle on the economic crisis. He also wants to begin hashing out legislation to avert systemic risk as a first step toward modernizing oversight of the financial services industry.
The senator said that the Obama administration is pressing Congress to produce a regulatory modernization plan in time for the G-20 meeting in April.
Sen. Dodd made no promises but said he plans to get as far as he can on systemic risk and consumer protection by then, working with House Financial Services Committee Chairman Barney Frank.
"It's a huge issue; it's tremendously complicated; but obviously we want to move quickly on it. Barney and I are in agreement on this — we are going to work together and, if we can, put together similar ideas if not similar proposals as we go forward in this area."
So far, Rep. Frank has indicated the Federal Reserve Board would likely be charged with safeguarding against systemic risk, but Sen. Dodd said he has some concern about giving the central bank too much power. "I'm uneasy of … politicizing the Fed," he said.
One area where the two chairmen appear to share ground is in pursuing the financial product safety commission idea touted by Elizabeth Warren, the Harvard law professor who leads the congressionally appointed panel overseeing the Troubled Asset Relief Program. "I am very intrigued by Elizabeth Warren's proposal on this financial product safety commission idea," he said. "Barney and I both agree on this."
The committee plans to hold two hearings next week: one on regulatory reform with Paul Volcker and the General Accounting Office and another on Tarp oversight with Ms. Warren and the Tarp inspector general, Neil Barofsky.
Federal Reserve Board Chairman Ben Bernanke is to be asked for his recommendations on regulatory restructuring during the Humphrey-Hawkins hearing on Feb. 24. A credit card hearing has been scheduled for Feb. 26, and Sen. Dodd said he hopes to enact card reform and anti-predatory-lending reform this year.