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Obama's Economic Plan
Below are excerpts from a letter Lawrence Summers, director-designate of the National Economic Council, sent to the leaders of the House and Senate about President-elect Barack Obama's reforms to the Troubled Asset Relief Program.
These are the changes that Barack Obama is committed to making happen. In particular, he will call for:
• Use our full arsenal of tools to get credit flowing again to families and businesses.
We also must do everything in our power to ensure our efforts are more directly reaching Main Street. We will work in close cooperation with the Congress, the Federal Reserve and other agencies to strengthen financial institutions and restart lending for small businesses, auto purchases and municipalities.
• Reform our system of oversight, regulation and management of financial crises: Obama is committed to ensuring a full and accurate accounting of how the Treasury Department has allocated the funds spent to date and going forward. We will report on a continuous basis the earnings and repayments the federal government receives from institutions that have received financial rescue assistance. We will work with Congress to strengthen oversight and reform a weak and outdated regulatory system. Obama has asked his Treasury Department and economic team to analyze the recommendations of the Congressional Oversight Panel and other oversight bodies and implement those we believe will make the program more effective. Since this is a global crisis, we will work with the G-8 and within the G-20 to ensure international coordination on recovery, financial and regulatory policies.
• Launch a sweeping effort to address the foreclosure crisis: Obama has directed his White House and Cabinet to work with Congress to implement smart, aggressive policies to reduce the number of preventable foreclosures by helping to reduce mortgage payments for economically stressed but responsible homeowners while also reforming our bankruptcy laws and strengthening existing housing initiatives like Hope for Homeowners. Confronting this challenge is imperative if we are to restore the health of our housing sector and the financial system as a whole.
• Impose tough and transparent conditions on firms receiving taxpayer assistance: Obama has directed his Treasury Department to monitor, measure and track what is happening to lending by recipients of our financial rescue assistance. We will ensure that resources are directed to increasing lending and preventing new financial crises.
Those receiving exceptional assistance will be subject to tough but sensible conditions that limit executive compensation until taxpayer money is paid back, ban dividend payments beyond de minimis amounts and put limits on stock buybacks and the acquisition of already financially strong companies.
• Maximize the role of private capital and plan for exit of government intervention: Obama plans to invest tax money only when sufficient private capital cannot be attracted. We will seek to replace government investments with private investment as quickly as possible.
Obama believes it is not too late to change course, but it will be if we don't take dramatic action as soon as possible.