The letter says Obama intends to use the Troubled Asset Relief Program to help community banks, small businesses, consumers and homeowners as well as large financial institutions. It says Obama intends to launch a "sweeping effort" to mitigate foreclosures.
While all these goals maybe worthy, most of them were not approved under the original terms of TARP passed in September. Under the original terms, only major troubled financial institutions were supposed to get any part of TARP because without these institutions the entire credit system would freeze.
TARP wasn't supposed to be used to save small businesses, struggling homeowners, or local banks. While these maybe good goals, that's not what the legislation intended.
Barack Obama is desperate to get a stimulus package going and it appears the package continues to get delayed. So, now it appears he is going to pull a sleight of hand. Instead of waiting to pass his stimulus package, he will just use TARP in place of the stimulus package he can't seem to pass right away. This would be fine if he were king but he isn't. He is the President and he can't simply use the TARP money for whatever he pleases. The bill doesn't allow him to do this. President Bush was rightfully criticized by many quarters for using TARP to save the automakers. That's not what the bill intended either, but Bush certainly opened the door for Obama to have carte blanche over this money.
Just like Bush et al essentially ignored the bill and spent the money as they pleased, so to does Barack Obama seem to think that the TARP money can be spent as he pleases not as the bill was written. If both these Presidents think that TARP gives them carte blanche they should have just skipped the formality of going in front of Congress to get this bill passed. They should have just started spending as they pleased, because it seems the end effect is largely the same.
The folks were none too happy when the bailout was passed, but the language was clear. It was intended to go to large financial institutions in order to unfreeze the credit market. Local banks are NOT necessary to unfreeze the credit market. Folks can bank at an international bank locally if their local bank falters. Small businesses are not necessary to unfreeze the credit market either. While everyone sympathizes with struggling borrowers, they are also not necessary to unfreeze the credit markets. I, for one, hope that all the liberals that screamed for eight years that Bush was a tyrant will point out that spending TARP money as he pleases makes Obama the same kind of tyrant they accused Bush of being.