US Rep Frank Bill Would Use TARP Income For Housing
June 30 2009 - 4:51PM
Dow Jones News
House Financial Services Committee Chairman Barney Frank has a
plan to funnel income from the government's $700 billion bailout
fund toward the housing sector.
The powerful Massachusetts Democrat last week quietly introduced
legislation that aims to use $1 billion in dividends paid by the
recipients of government aid to provide rental housing
opportunities for low-income and homeless families. The money would
go into a national housing trust fund established last summer in
connection with legislation that allowed for Fannie Mae (FNM) and
Freddie Mac (FRE) to be placed under government
conservatorship.
The fund currently is empty, however President Barack Obama's
fiscal year 2010 budget calls for it to receive $ 1 billion - a sum
the Frank legislation would provide.
"This would be the seed money to get the trust fund up and
running," said Danna Fischer, legislative director for the National
Low Income Housing Coalition.
Fischer said the trust aims to garner $150 billion in total
funding over the next decade.
Frank said it is feasible to use income from the Troubled Asset
Relief Fund, known as TARP, to finance the trust for at least "a
couple of years."
Frank's legislation also proposes funneling $1.5 billion in TARP
dividend payments to state and local government efforts to
redevelop abandoned and foreclosed properties.
"We made some money on this. It's now reasonable to use some of
that to deal with these problems," Frank said.
Banks participating in TARP have so far paid the U.S. Treasury
more than $4.9 billion in dividends.
Separately, Frank's legislation aims to reallocate some funds
from the TARP itself.
The legislation would divert $2 billion in TARP dollars to an
emergency mortgage relief program administered by the Department of
Housing and Urban Development and another $2 billion for HUD to use
for the creation of a program to cope with foreclosures on
multifamily properties.
-By Meena Thiruvengadam, Dow Jones Newswires; 202-862-6629;
meena.thiruvengadam@dowjones.com