February 02, 2009

President Barack Obama will require banks to boost lending to consumers and companies in return for taxpayer aid from the $700 billion bailout fund, in a departure from Bush administration policy, a key lawmaker said. “You’re going to see the Obama administration,” learning lessons from the first phase of the program, “push for much more lending,” House Financial Services Committee Chairman Barney Frank, who helped write the financial-rescue law, said yesterday on ABC television’s This Week program. “There are going to be some real rules in there.”

Obama will include the restriction in a bank-rescue strategy he is expected to announce in coming weeks, responding to congressional criticism that firms receiving funds from the first $350 billion instalment failed to pass on the aid. Obama last week blasted Wall Street executives for paying bonuses, and reports showed some aid helped recipients to finance mergers and acquisitions that may lead to job cuts.