WASHINGTON (Reuters) - U.S. Senator Charles Grassley said he sees no prospects of Congress granting more financial bailout funds, at least through the summer, because of taxpayer anger that such actions have produced little public benefit.
Grassley, speaking at the Reuters Global Financial Regulation Summit in Washington on Monday, said he does not believe the Obama administration will even try to request more funds.
"I don't believe they will," the ranking Republican on the Senate Finance Committee said, adding that "town hall" meetings in his home state of Iowa have drawn larger-than expected crowds who voiced outrage over bailouts of large financial institutions through the Troubled Asset Relief Program, or TARP.
He said people are already concerned about future inflation that such actions may cause and the effects of massive amounts of debt the government is taking on, as well as government interference in the private sector.
"It's because of this outrage that's being expressed... that's what's coming back to haunt the majority in Congress. And that's why you aren't going to have a second TARP and a second stimulus," Grassley said.
Even if U.S. Treasury Secretary Timothy Geithner came to Congress and warned of another systemic meltdown, Grassley said there would be little appetite to provide more funds. Lawmakers trusted Geithner's predecessor, former Goldman Sachs chief Henry Paulson, when he asked for $700 billion last fall, but this will not happen again, he said.
Asked if there were no circumstances under which Congress would be willing to provide new funds, he said: "I can see through the August recess, none. If you want to project out next fall I can't project out that far."
Grassley also said he disliked the idea of converting government preferred shares in banks to common equity as a means of recapitalizing them, calling it a "scheme" to get around resistance in Congress to providing more money.
"They aren't going to get a new TARP bill -- more TARP money in -- so that's one way of injecting more money into it," he said, adding that under the initial bailout, lawmakers "bragged" that they were protecting taxpayers by taking preferred shares in banks.
"When you get into common stock, and being a shareholder and running the darn thing. that's what we need to not do, and have more nationalization of the banks than we already have that comes from this great influence that comes from these of massive amounts of injections of federal dollars."
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