Geithner Overhauls Bailout to Aid Homeowners, Small Biz

Obama team wants to cover homeowners, small business
By Jason Farago,  Newser Staff
Posted Jan 9, 2009 6:08 AM CST
Treasury Secretary-designate Timothy Geithner, left, looks on as President-elect Barack Obama meets with members of his economic team at his transition office in Washington, Monday, Jan. 5, 2009.   (AP Photo/Gerald Herbert)
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(Newser) – The incoming Treasury secretary, Tim Geithner, is conducting a top-to-bottom overhaul of the $700 billion financial rescue program passed by a skeptical Congress last fall. Geithner and other Obama advisers will expand the program to cover small businesses, municipalities, and even homeowners before asking Congress for the second tranche of the bailout, the Washington Post reports. The new approach will be laid out publicly before Geithner's confirmation hearing next week.

Today a Congressional oversight panel will release a report that slams the Treasury under Hank Paulson for "what appear to be significant gaps in Treasury's monitoring of the use of taxpayer money." Geithner is also mulling creating a new oversight bureau at Treasury to make TARP more accountable. Post sources see rejiggering the terms of the bailout as critical to getting an increasingly skeptical Congress to release the remaining $350 billion; if it's not forthcoming, the markets are expected to react violently.