I’ve been looking for this all morning; many thanks to the NYT for finally clearing it up for me. How will Congress approve the $350 billion second tranche of TARP money, now that its legislative session is closed for the year? It doesn’t have to:
Under the legislation governing the program, Congress has 15 days to say “no” to the Treasury Department after a request for the money is made, or else the department automatically gets the money. To vote on a Treasury request, House and Senate members would probably have to interrupt their holiday vacations to return to Washington in the waning days of the 110th Congress.
This is good news. So long as Congressional Republicans don’t actually have to vote for the money to be released, they can simply remain in their constituencies and quietly let it happen, claiming that it’s out of their hands. What’s more, I think that an absolute majority in the Senate would be needed to vote this down; given that 52 Senators voted for the bailout bill, the chances of that happening seem slim.
I expect Treasury to make a formal request as soon as today; once that’s happened, and once it’s clear that Congress is not going to schlep back to Washington to try to vote the request down over the holidays, I suspect that any number of banks would be happy to structure a back-to-back loan whereby they extend money to Detroit right now, only to be paid back with TARP funds in a couple of weeks’ time.
This is only a stopgap solution, of course, but right now any solution is so obviously better than the alternative that we can probably all start breathing again, at least for the time being.
All the same, it’s worth pointing out the irony here. If Treasury requested the TARP funds for their original purpose, Congress would be much less happy. But since some small part of those funds is necessary for bailing out Detroit, the full $350 billion is likely to be released in to the largely-unaccountable hands of Paulson and Kashkari. How much of it they’ll manage to spend before January 20 remains to be seen.