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The Daily Wildcat

The Daily Wildcat


North Carolina Republican to lead TARP probe

WASHINGTON — Republicans on the top congressional investigations panel will launch hundreds of hearings on the Obama administration in the coming year — and one of the chief oversight agents will be Rep. Patrick McHenry, R-N.C.

McHenry, 35, is no stranger to partisan politics on the national stage, establishing himself over the past three terms as a solid conservative and eager irritant to Democrats when they were in charge.

But with Republicans now in charge of the House, McHenry will take the lead role on the Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs. That puts him in charge of probing some of the key concerns of U.S. Rep. Darrell Issa, the California Republican who chairs the full House Committee on Oversight and Government Reform.

“”There’s plenty of oversight that needs to be done,”” McHenry said in an interview last week. “”There’s plenty to look at in terms of government inefficiency, duplicative programs, how decisions will be made.””

This week, McHenry is finally expected to learn which members will sit on his subcommittee. He’s still hiring staff for the panel and doesn’t yet know when the first hearing will take place — or what it might be about.

But he knows some of the priorities, both for his panel and the full committee. They include taking another look at the roles of Fannie Mae and Freddie Mac in the financial meltdown of 2008. “”It was a contagion for this crisis,”” he says.

He’s worried about cash-strapped states such as Illinois and California coming to the federal government seeking bailouts.

And he thinks the government’s Home Affordable Modification Program — HAMP — is in dire straits.

For all these issues, McHenry expects his staff will visit with the inspector generals of the various federal financial agencies.

Just Thursday, the special inspector general for TARP issued a report on the $20 billion taxpayer bailout paid to Citigroup in November 2008 to keep it afloat. The deal worked, the probe found, but investigators criticized federal regulators for working on “”gut instinct”” without objective criteria.

That follows another of McHenry’s concerns: whether the Treasury Department implemented federal policy by inconsistent deal-making and pushed an ill-conceived purchase of Wachovia by Wells Fargo in 2008, rather than bailing out the N.C.-based bank.

“”Why did Wachovia not meet the threshold of being saved?”” he asked.

Consumer groups say they’re watching McHenry’s investigations closely.

Barry Zigas, director of housing policy for the Consumer Federation of America, pointed out that Democrats already have delved into Fannie and Freddie’s role in the financial crisis.

“”We look forward to working with new leadership, but I hope the work will move things forward rather than covering ground that others have covered,”” Zigas said.

Still, McHenry said he’s going to start by looking back to get a “”holistic view”” of the meltdown.

“”We need to better understand the direct and individual causes of the financial crisis,”” he said. “”That book has not been completely written.””

He’ll also be looking at how the Obama administration is spending bailout money for the Home Affordable Modification Program.

The program was meant to encourage servicers to work with borrowers to create more affordable monthly payments so families could stay in their homes. But several iterations have stumbled, with homeowners strung along for months without help. “”A failure,”” McHenry said.

“”It’s made things worse for thousands of Americans,”” he said. “”You’re paying (servicers) to do things they don’t want to do. So they’re taking the money and not getting the results.””

Zigas, of the Consumer Federation of America, agrees that the HAMP program has significant shortcomings. He said McHenry’s investigative focus should be on “”what further work can be done to protect homeowners.””

Even as McHenry wants to investigate the bailouts in the 2008 meltdown, he expects more requests for federal tax dollars from state governments — largely from blue states such as California, Illinois and New York — facing their own crises.

“”We need to look at what states are doing,”” McHenry said. “”Nothing surprises me right now.””

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