Media Updates
WASHINGTON – Sen. Orrin Hatch (R-Utah), Blanche Lincoln (D-Ark.), and Bob Corker (R-Tenn.) today introduced an amendment aimed at ensuring that monies returned to the Troubled Asset Relief Program (TARP) cannot be recycled to keep the program perpetual. The amendment was added to the tourism bill up for debate this week on the floor.
The amendment would require any TARP funds returned to the U.S. Department of the Treasury to be placed in the general fund in order to pay down the nation’s debt. Current law is unclear whether returned funds could be recycled into TARP and used to expand federal investment in the private sector.
Hatch, Lincoln, and Corker say the law needs to be clarified.
“TARP has become a revolving fund for the Treasury to nationalize our nation’s private sector by using taxpayer money to acquire banks, insurance companies and auto manufacturers,” Hatch said. “When TARP was signed into law last fall, it was authorized to purchase up to $700 billion in toxic or troubled assets from financial institutions to restore liquidity to the system. Unfortunately, it is now being used as a go-to solution to address all of our nation’s economic ills. This bill would change that.”
“TARP was never meant to be a permanent program, but rather an emergency initiative designed to stabilize our financial markets and bring greater confidence to investors and business,” Lincoln said. “It is only appropriate for that program to be phased out as expeditiously as possible.”
“When Congress approved TARP legislation last fall it was to avoid a financial catastrophe, not to create a lasting federal slush fund,” said Corker. “We need a responsible exit strategy from government ownership of private companies, and I believe that will come in part from ensuring that all return on investment from the American taxpayer goes toward reducing the federal deficit rather than extending the life of TARP.”
Adopted by Congress last October, the Emergency Economic Stabilization Act authorized TARP to assist financial institutions. Many, including the U.S. Chamber of Commerce and the National Federation of Independent Businesses, believed that TARP was necessary to stabilize our economy. However, Hatch, Lincoln, and Corker say, now that TARP is becoming a means to bankroll U.S. companies, Treasury should not be able to continue down this path. Some of the nation’s healthier banks are repaying some of that money. Those funds should be used to pay down the nation’s debt, the senators added.
“This money belongs to the American people,” Hatch said. “Taxpayers have been forced to foot the bill for rescuing the financial sector, but now they are being required to bail out any company deemed ‘too big to fail.’ It is time for Congress to ensure that TARP is used for its intended purpose and to require any money repaid to the Treasury Department be returned to the general fund.”
“Although TARP funds may have been necessary initially to stabilize our nation’s economy, the federal government should act to recoup taxpayers’ investment responsibly and as soon as practicable,” Lincoln said.
The Treasury Department recently approved spending $30 billion in TARP funds to acquire 60 percent of General Motors’ shares. Under the current system, if the Treasury sold these shares at a profit, the $30 billion could revert back to TARP and only the profit would be put in the general fund. Under the amendment, the original investment would also have to be placed in the general fund to pay down the nation’s debt.
The amendment would require any TARP funds returned to the U.S. Department of the Treasury to be placed in the general fund in order to pay down the nation’s debt. Current law is unclear whether returned funds could be recycled into TARP and used to expand federal investment in the private sector.
Hatch, Lincoln, and Corker say the law needs to be clarified.
“TARP has become a revolving fund for the Treasury to nationalize our nation’s private sector by using taxpayer money to acquire banks, insurance companies and auto manufacturers,” Hatch said. “When TARP was signed into law last fall, it was authorized to purchase up to $700 billion in toxic or troubled assets from financial institutions to restore liquidity to the system. Unfortunately, it is now being used as a go-to solution to address all of our nation’s economic ills. This bill would change that.”
“TARP was never meant to be a permanent program, but rather an emergency initiative designed to stabilize our financial markets and bring greater confidence to investors and business,” Lincoln said. “It is only appropriate for that program to be phased out as expeditiously as possible.”
“When Congress approved TARP legislation last fall it was to avoid a financial catastrophe, not to create a lasting federal slush fund,” said Corker. “We need a responsible exit strategy from government ownership of private companies, and I believe that will come in part from ensuring that all return on investment from the American taxpayer goes toward reducing the federal deficit rather than extending the life of TARP.”
Adopted by Congress last October, the Emergency Economic Stabilization Act authorized TARP to assist financial institutions. Many, including the U.S. Chamber of Commerce and the National Federation of Independent Businesses, believed that TARP was necessary to stabilize our economy. However, Hatch, Lincoln, and Corker say, now that TARP is becoming a means to bankroll U.S. companies, Treasury should not be able to continue down this path. Some of the nation’s healthier banks are repaying some of that money. Those funds should be used to pay down the nation’s debt, the senators added.
“This money belongs to the American people,” Hatch said. “Taxpayers have been forced to foot the bill for rescuing the financial sector, but now they are being required to bail out any company deemed ‘too big to fail.’ It is time for Congress to ensure that TARP is used for its intended purpose and to require any money repaid to the Treasury Department be returned to the general fund.”
“Although TARP funds may have been necessary initially to stabilize our nation’s economy, the federal government should act to recoup taxpayers’ investment responsibly and as soon as practicable,” Lincoln said.
The Treasury Department recently approved spending $30 billion in TARP funds to acquire 60 percent of General Motors’ shares. Under the current system, if the Treasury sold these shares at a profit, the $30 billion could revert back to TARP and only the profit would be put in the general fund. Under the amendment, the original investment would also have to be placed in the general fund to pay down the nation’s debt.
