‘I appreciate the incoming administration’s assurance in that letter to use these funds for the original purpose of stabilizing the economy and preventing a systemic economic collapse. However, the incoming administration also indicated it would use the money in ways I cannot support’
WASHINGTON, D.C.- U.S. Senate Republican Leader Mitch McConnell made the following remarks Thursday on the Senate floor regarding the TARP vote:
“I voted for the disapproval resolution.
“Three months ago I voted in favor of government action to rescue the nation’s financial system. The early indications suggest that our actions had a stabilizing effect. But the problems persist. And based on what we know about our current financial situation, it’s clear the full $700 billion we voted for in October is still needed.
“Republicans have insisted from the beginning that the outgoing administration agree to strict oversight and taxpayer protections related to the Troubled Asset Relief Program, the TARP. And we asked for similar assurances from the incoming administration this week when it requested the second round of TARP funds.
“In response, the incoming administration graciously agreed to meet with senators, and spent a good deal of time explaining to Republicans last night how they plan to use these funds. I want to express publicly our appreciation for their time and their efforts.
“After last night’s conversation, Republicans asked for one more thing: a public assurance from the incoming administration that these funds would be used in a manner consistent with the original purpose of the TARP. And today, the incoming administration again graciously responded to our request by providing a letter of intent for the second round of TARP funds.
“I appreciate the incoming administration’s assurance in that letter to use these funds for the original purpose of stabilizing the economy and preventing a systemic economic collapse. However, the incoming administration also indicated it would use the money in ways I cannot support.
“The letter explicitly states that they will pursue a policy of ‘cram down,’ both by amending the bankruptcy laws and by forcing banks that receive TARP funds to write down mortgages. This will result in higher mortgage rates for everyone who seeks a home loan.
“The letter states that the Federal Government will require banks that receive TARP funds to make loans. And while we want banks to resume lending, forcing them to make loans is exactly how this crisis started. We need to show that we’ve learned from past mistakes.
“The letter also states that participating firms will need federal approval before issuing dividends. I fear this will hamstring their ability to raise capital and thus perpetuate their dependence on federal funds. We should encourage firms to raise private money, but that will be impossible if they can’t promise investors a return on investment.
“Again, I want to express my appreciation to the incoming administration for its responsiveness to Republican concerns. Every time we asked a question it was promptly answered. So far, Republican interactions with the incoming administration have been quite encouraging and appreciated.
“While I voted on the losing side, I hope the new administration will consider some of my concerns, and we hope their stewardship of these funds is successful in stabilizing the markets according to the original purpose of the TARP and we will continue to work with them to strengthen our nation’s economy.”
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