Letter to Secretary Henry M. Paulson, Jr., U.S. Department of Treasury

Letter

November 11, 2008

The Honorable Henry M. Paulson, Jr.
Secretary
U. S. Department of Treasury
1500 Pennsylvania Avenue NW
Washington D.C. 20220

Dear Secretary Paulson:

We are writing to insist that Mr. Neel Kashkari, Interim Assistant Secretary of the Treasury for Financial Stability, testify at the Domestic Policy Subcommittee's hearing on Friday, November 14, 2008. There are serious questions about Treasury Department's plans to realize the goals of the Emergency Economic Stabilization Act of 2008 that can only be addressed by the official in charge.

As you know, on October 3, 2008, Congress passed the Emergency Economic Stabilization Act (EESA) and thereby created the Troubled Assets Relief Program (TARP) to further two Congressional objectives: the unfreezing of the credit markets and the prevention of foreclosures. Congress authorized two sequential tranches of $350 billion to achieve those goals.

TARP has already committed $250 billion to the purchase of preferred equity in a number of national and regional banks. There have been numerous news reports that the banks have used their TARP-provided equity stakes not for new lending, but for purposes contrary to the intent of Congress in passing EESA, such as the acquisition of other financial institutions, compensating employees and paying bonuses, and paying for the distribution of dividends for shareholders.

In his October 23 testimony before the Senate Banking Committee, Mr. Kashkari spoke only in broad generalizations, and did not provide the Committee with specifics about asset-acquisition or plans to promulgate new rules. As recently as last week, our staff interviewed high ranking TARP officials. Unfortunately, what they heard from Treasury consisted predominantly of generalities and aspirations.

The time has come for the Treasury Department to speak clearly and definitively to Congress and the American people about its plans for the extraordinary sums Congress has authorized. We do not believe that can occur in any other way than to have the testimony and answers of the person appointed by you to head the TARP. For that reason, Mr. Kashkari's appearance is imperative.

We look forward to your response.

Sincerely,

Dennis J. Kucinich
Chairman
Domestic Policy Subcommittee

Darrell E. Issa
Ranking Minority Member
Domestic Policy Subcommittee

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