Congress: Yes to Budget, No to $250B TARP Reserve

An historic $3.6 trillion budget passed Congressional votes late Thursday, signaling a major victory for President Barack Obama’s sweeping plans to build up a receding economy, primarily with government spending programs. Although Democrats trimmed Obama’s spending initiatives, both versions of the fiscal year 2010 budget allow for the original vision of expanded health care coverage, expanded funding for college loans and a so-called “cap and trade” system that would aim to reduce emissions and pollutants that are said to contribute to global warming. Missing, however, is a controversial $250 billion reserve for future bank bailouts. The budget for FY10 — which begins in October — passed the house largely along party lines, with 233 Democrats voting in favor; 20 House Democrats joined the 176 House Republicans voting against the legislation, for a final passage of 233 to 196. One Senate independent party member joined the 54 Senate Democrats that voted in favor of the budget. Only two Senate Democrats joined the 41 Senate Republicans that voted against it. The legislation passed the Senate in a final 55-43 vote. A substantial focus of amendments passed in the Senate version lay on increased transparency and oversight of the Federal Reserve “concerning the use of emergency economic assistance,” continued funding for international affairs and protection efforts against “potential spillover violence from Mexico.” The Senate’s version even includes an amendment from Jeanne Shaheen, D-N.H., that aims “to establish a reserve fund for monitoring of FHA-insured lending,” which has come under scrutiny recently for an increased delinquency rate among Federal Housing Administration-insured loans. Both versions of the budget leave out the $250 reserve for additional TARP spending that Obama had requested. The absence of the reserve would not prevent Obama, the Treasury Department or the Fed from requesting extra funds for future bank bailout initiatives. Write to Diana Golobay at diana.golobay@housingwire.com.