Bailout Chief Faces Angry Lawmakers

Nov. 14, 2008— -- The government's bailout czar had a rough morning on Capitol Hill Friday as a panel of angry lawmakers berated him for the administration's perceived failure to stem the foreclosure crisis while rapidly deploying hundreds of billions of dollars to shore up U.S. banks.

Both Republicans and Democrats on the House Oversight and Government Reform Committee's domestic policy subcommittee blasted Neel Kashkari; his boss, Treasury Secretary Henry Paulson; and the White House for pushing Congress to approve $700 billion to buy troubled mortgage assets, only to switch course weeks later and commit $250 billion to banks and other financial institutions.

The result, they said, was that Wall Street got help while millions of Americans lost their homes and their jobs.

"We've got people holding on, hoping against hope somebody's going to help them," Rep. Dennis Kucinich, D-Ohio, who chaired the hearing, told Kashkari. "All of a sudden, the Treasury sent a signal to the banks: 'Forget about it -- we're going to give you the money you want, and you do what you want with it.'"

"I guess you get a taste for how Mel Gibson felt in the last scene of 'Braveheart,'" Rep. Brian Bilbray, R-Calif., joked darkly with a visibly struggling Kashkari, whose full title is interim assistant secretary of Treasury for financial stability.

Incidentally, Gibson's character in "Braveheart" does not actually appear in the film's final scene -- and offscreen he probably isn't feeling too great: That's because he has already been killed, his body has been beheaded and quartered, and its pieces have been scattered around England.

Kucinich, who chaired the hearing, accused Paulson of "gutting" the Emergency Economic Stabilization Act, which Congress passed and President Bush signed into law Oct. 3.

Rep. Darrell Issa, R-Calif., said the administration had been "disingenuous" and was "ignoring congressional intent and reversing course on its original request."

"For weeks, Secretary Paulson and others within the administration begged Congress for the authority to spend $700 billion," mostly to buy mortgage-related securities, said Issa.

Instead, they have bought stakes in financial institutions, Issa said. "What we have not seen is a plan to mitigate foreclosures."