Rep. Dennis Kucinich, D-Ohio, chairman of the House Oversight and Government Reform's domestic policy subcommittee, said changing the direction of the bailout "breaks with congressional intent (and) contradicts public assurances" when Congress passed the bailout.
Treasury Secretary Henry Paulson earlier this week said the rescue plan for U.S. financial markets was shifting to investing in financial institutions and away from buying toxic mortgages. He said an investment posture would provide leverage to the institutions and, ultimately, free up credit.
The reversal, Kucinich said in his opening statement, "leaves the federal government without an adequate mechanism to stem a tide of home foreclosures."
"Congress' intent in enacting the Emergency Economic Stabilization Act of 2008, the statute that created the Troubled Asset Relief Program, was in part to buy troubled mortgage assets and implement a plan to minimize risk for foreclosures," he said.
Treasury Assistant Secretary Neel Kashkari, who heads up the government's implementation of the rescue plan, defended the department's actions, saying, "It's not a stimulus, it's not an economic growth plan. It's an economic stabilization plan."
With a stronger capital base, banks "will be more confident and better positioned to play their necessary role to support economic activity," Kashkari said.
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