WASHINGTON – Senator Chuck Grassley today joined other senators in introducing a bill to end the TARP program at the end of the year.
Under current law, the Treasury Secretary has the power to extend the Troubled Assets Relief Program though October 3, 2010. The newly introduced bill would revoke this authority so that the program would end on December 31, 2009.
Grassley said the bill responds to indications that Treasury Secretary Timothy Geithner wants to extend the bailout program. The latest quarterly report of the Special Inspector General for TARP says $317.7 billion of the $700 billion total funds for the program remain unobligated.
“This program was supposed to make sure credit flowed to Main Street, America, but instead it has been used as a slush fund to pick winners and losers in New York and Detroit,” Grassley said. “It’s also clear that this kind of massive spending by the government hasn’t helped the struggling economy. Taxpayers have had enough, and the responsible thing to do is to shut down TARP and protect taxpayers from further risk and additional spending.”
Two months ago, Grassley and 39 other senators, led by Senator John Thune of South Dakota, wrote to Treasury Secretary Timothy Geithner urging him to allow the bailout program to expire this year. Their letter said, “Subsequent to enactment of this legislation ... TARP has been used by the federal government to acquire ownership stakes in banks, financial institutions, and automakers. This direct investment certainly was not the intention of Congress in passing this legislation. In fact, Congress explicitly rejected legislation to provide federal funds to bail out car manufacturers.”
Grassley has been an outspoken critic about the lack of transparency with how TARP funds have been used. The Special Inspector General for the program was created at the urging of Grassley and Senator Max Baucus of Montana, and when the Treasury Department changed the focus of the program less than a month after it began, Grassley worked with Senator Claire McCaskill of Missouri to retool the Inspector General’s authority and empower the office to adequately scrutinize TARP spending and management.
Grassley has gone to bat for the Inspector General throughout the year, when the White House and Treasury Department put up barriers to the Inspector General asking questions and collecting information about where the money has gone.
The text of the senators’ September letter to Geithner is below.
September 18, 2009
The Honorable Timothy Geithner
Secretary
United States Department of Treasury
1500 Pennsylvania Avenue NW
Washington, DC 20220
Dear Secretary Geithner:
As we approach the termination date for authority to spend federal funds allocated to the Troubled Asset Relief Program (TARP) through the Emergency Economic Stabilization Act of 2008 (EESA) (PL 110-343), we ask you to allow the authority to expire on December 31, 2009. As you know, the latest TARP report shows a significant amount of unobligated funds. Ending the authority for TARP would help improve the Federal debt going forward and reduce the need to increase the debt limit, which Congress has raised three times in the last 14 months.
When Congress passed EESA last October, the financial markets were in a downward spiral, and our country was facing an unprecedented credit crisis. Then Treasury Secretary Paulson requested $700 billion in federal funds to purchase toxic assets, which were at the heart of the financial crisis. Congress was told it was imperative to act quickly before the financial markets crashed, taking with it the pensions, savings and investments of hardworking, American taxpayers. As you know, the Senate passed EESA on a bipartisan basis, including the support of then-Senator Obama. Subsequent to the enactment of this legislation, however, TARP has been used by the federal government to acquire ownership stakes in banks, financial institutions, and automakers. This direct investment certainly was not the intention of Congress in passing this legislation. In fact, Congress explicitly rejected legislation to provide federal funds to bail out car manufacturers.
Based on your comments to the TARP Congressional Oversight Panel on September 10, 2009, it appears that you believe that our financial markets are recovering. In addition, borrowing costs are down for both business and consumer lending and banks are reporting stronger balance sheets. While we understand that our economy is still recovering, we believe it can function without added TARP funding. Additionally, the cost to the taxpayer if TARP authority was extended could be substantial. Already the taxpayer is expected to lose tens of billions of dollars on funding that was provided to GM, Chrysler and AIG.
As elected officials with the responsibility to the American public when it comes to overseeing taxpayer interests, we urge you not to extend TARP. To the extent you have concerns that allowing TARP to expire after this year would jeopardize the progress made in the recovery of our financial markets, we would remind you that Congress stands ready to work alongside the Administration if future action is required. This program should expire on December 31, 2009, and all TARP repayments should be returned to the Treasury for debt reduction.
Sincerely,
Senator Lamar Alexander
Senator John Barrasso
Senator Mark Begich
Senator Bob Bennett
Senator Kit Bond
Senator Sam Brownback
Senator Jim Bunning
Senator Richard Burr
Senator Saxby Chambliss
Senator Tom Coburn
Senator Thad Cochran
Senator Susan Collins
Senator Bob Corker
Senator John Cornyn
Senator Mike Crapo
Senator Jim DeMint
Senator John Ensign
Senator Mike Enzi
Senator Lindsey Graham
Senator Charles Grassley
Senator Orrin Hatch
Senator Kay Bailey Hutchison
Senator Jim Inhofe
Senator Johnny Isakson
Senator Mike Johanns
Senator Jon Kyl
Senator George LeMieux
Senator Dick Lugar
Senator John McCain
Senator Mitch McConnell
Senator Lisa Murkowski
Senator Jim Risch
Senator Pat Roberts
Senator Jeff Sessions
Senator Richard Shelby
Senator Olympia Snowe
Senator John Thune
Senator David Vitter
Senator George Voinovich
Senator Roger Wicker