WASHINGTON — Lawmakers continued to criticize the Treasury Department Wednesday for its management of the Troubled Asset Relief Program, blaming the agency for not tracking how capital injections are spent and failing to implement a loan modification program.
During a House Financial Services Committee hearing, Chairman Barney Frank said Treasury must use remaining Tarp funds for a loan modification program - as required by Congress in the bailout law enacted Oct. 3.
"The refusal so far to use the money for that purpose is a violation of the intent of the law," he said.
Rep. Maxine Waters, D-Calif., said she would oppose any request from Treasury for access to the remaining $350 billion in Tarp funds.
"Please don't come here and ask for another penny," she told Neel Kashkari, the Treasury assistant secretary for financial stability. "I'm going to work 24 hours… To make sure you don't get a dime."
Rep. Waters also angrily blamed Rep. Frank — normally an ally — for collaborating too closely with Treasury.
"I'm not going to cooperate with you anymore," she told Rep. Frank. "You've been too kind. You've allowed them to walk all over us and those footprints on my back are too tough."
Rep. Mel Watt, D-N.C., also went after Mr. Kashkari, a former Goldman Sachs official, saying Treasury has hired too many people who used to work at the investment bank.(Secretary Henry Paulson is a former Goldman chief executive.)
"Is Goldman Sachs running the country?" Rep. Watt asked "It looks bad."
In response to repeated questions, Mr. Kashkari acknowledged that capital injections to banks have not worked as quickly as Treasury had hoped — but continued to maintain they would make a difference.
"It is not happening as fast as any of us would like but it will happen faster than had we not acted," he said.
Asked why Treasury did not require lenders to use the capital to finance new loans, Mr. Kashkari said it would be too difficult. "It is very hard for us to say this is how you should run your business because each bank, each business, is different," he said.
Still, Mr. Kashkari said Treasury is working with regulators to try and gauge overall lending activity by banks that received capital injections.
"We are working on that very issue with the regulators," he said. "That program is being designed and put into place."
The Oct. 3 law creating Tarp also set up a variety of oversight mechanisms, including a panel appointed by lawmakers. That group issued its first report Wednesday, and two of its members presented its findings at Wednesday’s hearing.