The Department of the Treasury would be required to take significant steps to mitigate foreclosures under legislation outlined today by House Financial Services Committee chairman Barney Frank, D-Mass.
The bill, which has not yet been introduced, would amend the Troubled Asset Relief Program “to strengthen accountability, close loopholes and increase transparency,” according to a statement from Mr. Frank.
Under the plan outlined by Mr. Frank, the most stringent executive compensation restrictions would apply for all types of TARP funding. Currently, different compensation restrictions apply, depending on the type of aid banks receive.
That would include provisions adopted in the auto industry bailout that prohibit bonuses or incentive compensation to the 25 highest-paid employees of each company and require divestment of aircraft.
In addition, all “golden parachute” payments would be banned for the duration of TARP investments, “claw-backs” of compensation based on statements found to be materially inaccurate would be required and incentives that encourage excessive risks would be barred.
Release of the second $350 billion of the $700 billion TARP money would be conditioned on the use of a minimum of $50 billion for foreclosure mitigation.
The Treasury Department would be required to reach agreement with banks that receive TARP funding and their regulators on how the funds are to be used and benchmarks they would be required to meet. Regulators would have to look at how the funds are used, and the banks would be required to file quarterly reports on the amount of lending attributable to the financial assistance.
The Congressional Oversight Panel, created to oversee the expenditure of TARP money, today also released its second monthly report, saying that it had been unable to get answers on what banks are doing with taxpayer money they have received.
