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October 30, 2009

Bennett Urges Vote on His Amendment to Expire TARP

Says TARP fulfilled its purpose of stabilizing the financial system and questions reasons for preventing a vote

WASHINGTON D.C. - Senator Bob Bennett (R-Utah), today urged a vote on an amendment he filed to the Unemployment Insurance bill that would remove the secretary of the treasury's authority to extend the Troubled Asset Relief Program (TARP), thus allowing the program to expire at the end of this year.

"It is clear now that TARP fulfilled its purpose and was successful in preventing a systemic collapse of the financial system," said Bennett, a senior member of the Senate Banking Committee. "Now that the emergency has passed and the financial markets have stabilized, TARP is no longer needed and we must allow it to expire at the year's end. The longer TARP remains, the more it becomes a slush fund for the Obama administration and congressional Democrats. Every time the Democrats need to find a way to pay for something, there is a proposal to use unspent TARP funds. This is entirely inappropriate and a complete misuse of the program and taxpayer dollars."

Under Section 120 of the Emergency Economic Stabilization Act, TARP is scheduled to terminate on December 31, 2009 unless the secretary of the Treasury submits a written certification to Congress exercising his authority to extend the program to October 10, 2010. The Bennett amendment will strike the secretary's authority to extend the program, which will, in effect, terminate the program at the end of the year.

"A free market cannot function if it does not have access to credit, and I strongly believe we did the right thing by passing the initial round of TARP to make credit available and avoid a collapse of the entire system," added Bennett. "We must remember that TARP was intended to be timely and targeted and we no longer need the Treasury to shovel out more money. It is in the best interest of American taxpayers that Congress terminate the program at the end of the year and work toward implementing the right tax and regulatory system that will allow businesses to solve their own problems, making America stronger long-term."

Bennett filed his amendment under the Unemployment Insurance bill, but unfortunately Democratic leadership is preventing his amendment from receiving a vote saying it is not relevant to the overall bill. The Democratic leadership, however, has included housing provisions to the Unemployment bill and most recently attached a controversial, unrelated Hate Crimes provision to a defense spending bill.

"If the Democrats feel that my amendment is unnecessary and TARP should continue despite the fact that the emergency has passed then they should cast their vote accordingly," added Bennett. "The clock is ticking and Congress must strip the Treasury secretary's authority to extend TARP before the year's end."

Background on TARP:

• On October 3, 2008, the Emergency Economic Stabilization Act of 2008 was signed into law and created the Troubled Asset Relief Program. (The bill passed the Senate by a vote of 74-25.)
• The U.S. Treasury indicated to Congress that it would use TARP funds to purchase troubled assets in institutions.
• The U.S. Treasury requested $700 billion to stabilize the financial markets. Recognizing that there was no way to distribute such a large sum of money so quickly and in an effort to minimize the exposure of the taxpayers, Bennett was part of a group that successfully cut TARP in half authorizing only $350 billion.
• The first TARP allocation of $350 billion was largely used for to stabilize the banking system. As of August 2009 $204 billion has been disbursed directly to Banks through the program. Total repayment/return including dividend/interest/warrants is: $79.9 billion.
• Bennett opposed the second round of TARP funds stating that the first half of TARP stabilized the financial markets and there was no longer a need for the second half. Bennett also opposed the use of TARP funds to aid the auto industry.
• Additional TARP funds have been allocated by the Obama administration to support the auto manufactures ($85 billion), fund foreclosure prevention and loan modification programs ($50 billion), support business lending ($70 billion), support systemically significant financial entities ($110 billion), and fund the asset guarantee program ($12.5 billion), and the troubled assets purchase program ($100 billion).

 

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