At a House hearing, Frank called for rapid progress on a major economic stimulus package and "the release of the second $350 billion of the TARP, provided that we can agree on appropriate measures to govern the allocation of those funds."

Under his bill, Treasury would have to devote at least $40 billion to reducing home foreclosures via a plan that it must develop by March 15 and start funding by April 1.

Treasury would also have to give small banks more access to the TARP and require quarterly disclosure by TARP participants about their use of TARP funding. [ID:nN09486527].

Other provisions of the draft bill would constrain the use of TARP funds in bank buyouts. TARP fund recipients could not buy other depository institutions without a Treasury finding that a deal "reduces the risk to taxpayers or ... could have been accomplished without funds provided under the TARP."

The bill would standardize limits on the pay of executives employed by TARP recipients, regardless of what sort of aid received under the program. It would also make wider pay provisions retroactive to existing program participants.

"If they don't like it, they can give the money back," Frank said, referring to the retroactive limits on pay.

In an attempt to encourage more modification of troubled mortgages to help distressed homeowners, the bill would give a legal safe harbor to mortgage servicing companies seeking to modify loans under their supervision.

The Frank bill would require Treasury to develop a program outside the TARP to stimulate home buyer demand and urges this be done by ensuring affordable mortgage rates.

Finally, the bill would clarify that Treasury can use the TARP to support consumer, student, vehicle and commercial real estate loans, as well as markets for mortgage-backed securities, municipal bonds and auction-rate securities. (Editing by Andre Grenon)