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Klobuchar: Increased Transparency, Accountability and Small Business Measures Needed to Protect Consumers and Boost Economy

Cosponsors measure to boost small business start-ups Calls for reforms to credit rating industry and TARP oversight

September 14, 2009

Washington, D.C. – A day before the one year mark of Lehman Brothers bankruptcy filing, U.S. Senator Amy Klobuchar today pushed for three bills to strengthen the nation’s financial system.  The three measures are designed to help small businesses that have been hurt by the tight credit markets, reduce conflicts of interest in the nation’s financial markets and increase transparency in the TARP program. 

Senator Klobuchar is a sponsor of the bipartisan Small Business Jump Start Act of 2009, which will give small businesses a financial boost in their first year by increasing the small business start-up expenses deduction from $5,000 to $10,000 and increases the threshold for the deduction phase-out from $50,000 to $60,000.  According to the latest data available from the U.S. Small Business Administration, Minnesota had 121,742 small employers in 2006, representing 98.0% of the state’s employers.  

“Our small businesses are a vital part of Minnesota’s economy,” said Klobuchar.  “This measure would help new small businesses that are struggling with the lack of available credit to create jobs and promote economic growth in our local communities.”

Saying that the cozy relationships between credit rating agencies and the companies they rated contributed in part to last year’s credit crisis, Klobuchar called on the Senate to pass the Rating Accountability and Transparency Enhancement (RATE) Act of 2009, a measure that would improve the accountability and accuracy of credit rating agencies. 

“Conflicts of interest on Wall Street must no longer be allowed to go unchecked,” said Klobuchar.  “Preventing another credit crisis requires a commitment to ensuring that those credit agencies that assess risks are independent, accurate and accountable.”

The Rating Accountability and Transparency Enhancement (RATE) Act of 2009 would require rating firms to have independent compliance offices and give the Securities and Exchange Commission (SEC) new authority to oversee credit rating firms and hold them accountable for conflicts of interest and other internal control deficiencies that have weakened ratings in the past.  It would also require more comprehensive disclosures by credit rating agencies, including notifications when rating models change.  The measure is sponsored by Senator Jack Reed (D-RI) and cosponsored by Senator Klobuchar.

Klobuchar also is sponsoring S. 910, the TARP Transparency Act, with Senators Mark Warner (D-VA), Mel Martinez (R-FL), Sherrod Brown (D-OH), Sam Brownback (R-KS), and Jon Tester (D-MT) to provide greater oversight of TARP funding by creating a centralized electronic database to help track how funds are being used by financial institutions. 

“I strongly believe that we need transparency and other safeguards to protect American taxpayers’ money,” said Klobuchar.  “This will create a full accounting of the funds financial institutions have received and provide the oversight we deserve.”

Specifically, the bill directs the Secretary of the Treasury to provide to the Special Inspector General of the Troubled Asset Relief Program (TARP), the Comptroller General, and the Congressional Oversight Panel ongoing, continuous, and close to real-time updates of the status of the use of funds that have been distributed.  



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