WASHINGTON — The $700 billion already allocated to the Troubled Asset Relief Program is unlikely to be sufficient to accomplish all of its goals, President Obama said Tuesday in a speech to both chambers of Congress.
Mr. Obama used a large chunk of his speech – his first unofficial state of the union address – to outline what his administration will do to thaw the credit markets, but acknowledged more resources may be necessary.
“This plan will require significant resources from the federal government – and yes, probably more than we’ve already set aside,” he said, according to remarks prepared for delivery.
Mr. Obama did not offer an updated price tag, but said he would “ask this Congress to join me in doing whatever proves necessary.”
“Because we cannot consign our nation to an open-ended recession,” he said.
Mr. Obama said his administration is already moving to help unclog markets, including creating a new lending fund that “represents the largest effort ever to help provide auto loans, college loans, and small business loans to consumers and entrepreneurs who keep this economy running.”
He also touted a foreclosure prevention plan outlined last week and defended it against accusations it helped undeserving homeowners.
“It’s a plan that won’t help speculators or that neighbor down the street who bought a house he could never hope to afford, but it will help millions of Americans who are struggling with declining home values – Americans who will now be able to take advantage of the lower interest rates that this plan has already helped bring about,” he said.
Mr. Obama also pledged to “act with the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money to lend even in more difficult times.”
He blamed the Bush administration for improper management of Tarp, and said his administration would hold banks responsible for their mistakes.
“When we learn that a major bank has serious problems, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy,” he said.
During the speech, he sought to tap into anger about the bank bailout, arguing his administration would “hold these banks fully accountable for the assistance they receive.”
“This time, they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer,” he said. “This time, CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over.” But he also said helping banks was necessary to economic recovery, and attempted to show how such assistance benefits most Americans.
“I know how unpopular it is to be seen as helping banks right now, especially when everyone is suffering in part from their bad decisions,” he said. “I promise you – I get it. But I also know that in a time of crisis, we cannot afford to govern out of anger, or yield to the politics of the moment.”
He said he would not spend a “single penny” of the government’s money to reward a Wall Street executive, but said he would “do whatever it takes to help the small business that can’t pay its workers or the family that has saved and still can’t get a mortgage.”
“That’s what this is about,” he said. “It’s not about helping banks – it’s about helping people. Because when credit is available again, that young family can finally buy a new home. And then some company will hire workers to build it….Slowly, but surely, confidence will return, and our economy will recover.”
To ensure such a crisis never happens again, Mr. Obama also asked Congress “to move quickly on legislation that will finally reform our outdated regulatory system.”
“It is time to put in place tough, new common-sense rules of the road so that our financial market rewards drive and innovation, and punishes short-cuts and abuse,” he said.