Obama and Geithner are now cracking down on the banks.  They are saying that in order for banks to receive more money from the bailout funds, they will have to cap their pay.  They will also be held accountable for where the money is being spent and used.

Okay, let’s back track.  What happened to the first round of funds that was distributed while the old administration was running the show?  Well, no one really knows.  As a result of the government not holding banks accountable, the funds ran out.  The public learned of these banks’ continued spending, along with the $18 billion in bonuses that these bank executives earned.

When consumers apply for a loan or a mortgage, their financial past is put under a microscope during the underwriting process.  Banks need to know details about the potential borrower’s income, any outstanding debt and financial track records.  If this is standard procedure, why aren’t banks subjected to these checks when they ask to borrow money from us??  Why can banks borrow money from public funds and not have to show where it is being used or spent?

Thankfully it looks like Obama and Geithner will not allow this lack of accountability to continue with the second round of funding.  With the first round of funding distributed,  I have not seen any evidence of credit markets opening back up.  So where exactly did the money go?  We may never know where the first round of funds were spent.  Moving forward, hopefully the public will see evidence of more transparency when it comes to detailing how the rest of the funds are being used.

The big bank CEOs returned to Capitol Hill this week, adding to the overall chaos that characterized the American Economy.  In addition to the CEO arrival, Obama’s stimulus plan was pushed through the house and senate.  Geithner outlined his plan as to how this administration plans to distribute the remaining funds for the bank bailout.  A number of banks that will be receiving these funds vowed to suspend or halt home foreclosures for the time being.

The bankers came to Capitol Hill to plead their case to congress, desperate to convince congress that the money they were given-nearly $165 billion combined-has not been used to pay excessive bonuses.  They stated that all of their effort was being put forth to increase lending, and hope to return all of the tax payers’ money by 2012 or sooner.

Timothy Geithner was less exact with the specific amount of money needed to pick up the financial system and increase lending.  Details of Geithner’s plan were vague; however, Geithner did promise promised that more details will follow.

Obama seemed to have better success this week on Capitol Hill, as the House and Senate reached an agreement on his stimulus plan.

The effects of the activity on Capitol Hill this week could not come at a more crucial moment.  It was reported that 6.3 million Americans are on unemployment.  The stimulus plan is key, as part of these funds will increase and extend unemployment to those who qualify.

The biggest banks involved in the escalating foreclosure numbers have vowed to stop foreclosures until early March.  Some said they will wait to hear details from the Obama administration’s loan modification program, which is said to invest at least $50 billion more to prevent foreclosures.  The plan is set to be released in the upcoming week.

Many more of these busy weeks are in store for the government.  The administration is working tirelessly to curb the long term effects that are characterize this recession.  I’m not sure if I trust the bank CEOs, as I have seen no evidence of lending opening up.  I will await details of Geithner’s plan before passing judgment.  The stimulus plan was without a doubt the most promising thing to happen on Capitol Hill this week.