Fraud Enforcement and Recovery Act of 2009

Floor Speech

FRAUD ENFORCEMENT AND RECOVERY ACT OF 2009 -- (Senate - April 23, 2009)

BREAK IN TRANSCRIPT

AMENDMENT NO. 1002

Mr. THUNE. Madam President, I ask unanimous consent that amendment No. 1002 to the bill be brought up and made pending.

BREAK IN TRANSCRIPT

Mr. THUNE. Madam President, on October 7, 2008, Congress passed the Troubled Asset Relief Program as part of the Emergency Economic Stabilization Act--or TARP--and allocated $700 billion for the purchase of toxic assets from banks with the goal of restoring liquidity to the financial sector and restarting the flow of credit in our markets.

The Department of Treasury, without consultation from Congress, changed the purpose of the TARP and began injecting capital into financial institutions through a program called the Capital Purchase Program rather than purchasing toxic assets.

Financial lending was not increased with the implementation of CPP, and the expenditure of $218 billion of TARP funds disputes the goal of the program. Those receiving funding through the CPP are now faced with additional restrictions related to accepting that funding.

A number of community banks and large financial institutions have expressed their desire to return their CPP funds to the Department of Treasury, and Treasury has begun the process of accepting receipt of those funds. However, because of the financial stress test Treasury is currently conducting, it is possible that Treasury will restrict banks from returning funds they received from the CPP.

In his testimony before the TARP Congressional Oversight Panel on April 21, 2009, earlier this week, Secretary Geithner stated that Treasury estimates $134.6 billion of TARP funds are still available. What is important about that figure is he includes $25 billion which they expect to receive back from banks under CPP. Geithner also stated that he believed $25 billion is a conservative number, and private analysts predict more will be returned.

Section 120 of the Emergency Stabilization Act terminated the authority for TARP funds on December 31, 2009, and the Secretary can request an extension to the deadline not later than 2 years after enactment. Keep in mind that this restriction only applies to Treasury's issuance of new loans and does not cover the reuse of previously issued assistance that was returned to the Treasury.

Essentially, to summarize what my amendment does, it requires Treasury to use any of the funds that are recovered through TARP to reduce the national debt. Basically, this amendment prevents the Treasury from reallocating money for other purposes. The amendment establishes the public debt reduction payment account and requires Treasury to deposit any amounts received from repayment of financial assistance through TARP into this account. The Secretary of the Treasury must use the money in the public debt reduction payment account to pay, redeem, or buy any Government obligation included in the public debt. The obligations paid, redeemed, or bought are canceled and cannot be reissued. In addition, the statutory debt limit is automatically reduced by any amount equal to funds that are deposited in this account.

I think the amendment is very straightforward, and it really is directed at ensuring that the taxpayer dollars that were allocated for the TARP program, which, as I said before, was about $700 billion last fall, much of which has been expended but much of which now is in the process of being repaid, assuming, again, the mechanism is put in place to allow the Treasury to take receipt of funds that banks wish to repay, TARP funds which they wish to repay--with that money coming into the Treasury--and as I said before, Secretary Geithner earlier this week indicated that it would probably be about $25 billion, at least that we know of now, and there are predictions that it could be much more, that money comes back into the Treasury and could be recycled, reused--what we want to do and what my amendment does is it ensures that those TARP funds that are repaid by banks actually go to reduce the public debt.

We know we have incurred an enormous amount of debt. In fact, the inspector general, Neil Barofsky, stated in his quarterly report to Congress that 12 separate programs are being funded under TARP, involving up to $3 trillion of Government and public funds. Amazingly, that is equivalent to the size of the entire Federal budget. This is certainly not what I believe Congress intended or was told, for that matter, the funding would be used for. So Congress needs to have a role in this. If the administration wants additional authority under TARP, they should come here. Congress retains, under the Constitution, the power of the purse.

What this amendment simply does is directs those funds that come back in as a result of repayments by banks of TARP funds into the Federal Treasury, that those funds go toward reducing the Federal debt, which, as we all know, based on the budget that was passed a couple of weeks ago, is going to double in 5 years and triple in 10, at a rate of $1 trillion a year. The average deficit over the next 10 years, by the end of the 10-year period, will amount to $17 trillion. The very least we can do for the taxpayers of this country is ensure that TARP funds that are repaid by banks, the taxpayer dollars that were extended to help recapitalize the banks, when those are no longer necessary and banks give that money back to the Treasury, Treasury receives that, that those funds not be recycled, reused, go to some discretionary program to fund other programs of Government, but that they be used to reduce the Federal debt. I believe the taxpayers deserve that. This amendment, No. 1002, would do that. So I would hope my colleagues will support it and, in my view, make it very clear that tax dollars expended under TARP, when repaid, are going to go to debt reduction and not be used for some other Federal Government program.

That is what the amendment does. I would urge my colleagues to support it.

I yield the remainder of my time.

The ACTING PRESIDENT pro tempore. The Senator from Vermont.

Mr. LEAHY. Madam President, I thank my friend from South Dakota for his courtesy in talking to me first about the amendment. As I pointed out to him, these are matters before the Banking Committee. The Judiciary Committee has really got nothing to do with it, the same as many of these. I will wait for Senator Dodd and Senator Shelby to respond; I will not.

I am going to make a unanimous consent request. I have notified both sides of this. There is a Boxer-Snowe amendment No. 1000. I ask unanimous consent that at 10:50--I realize it is going to be objected to, but I am trying to save both Republicans and Democrats from being here until 2 o'clock tomorrow morning because of the bill that comes up after this. I ask unanimous consent--and if this is objected to, I will repeat the request later on--that at 10:50 the pending business be set aside, the Boxer-Snowe amendment No. 1000 be brought up, there be 8 minutes of debate evenly divided before a vote, and that it then be in order to go to a rollcall vote on the amendment.

The ACTING PRESIDENT pro tempore. Is there objection?

Mr. DeMINT. I object.

The ACTING PRESIDENT pro tempore. Objection is heard.

Mr. LEAHY. I have been advised that there would be an objection because they have not heard from the Banking Committee, from Senator Dodd and Senator Shelby. I would urge them to come to the floor so we can move forward, as most of the amendments pending or about to be pending have absolutely nothing to do with the jurisdiction of the Judiciary Committee, have nothing to do with the jurisdiction of the bill on the floor, have everything to do with a bill that is coming up next week from the Banking Committee. So I would urge the Banking Committee to come to the floor and speak to the amendments that are all within the jurisdiction of their committee.

I mention this because if we don't, the other alternative is to accept everything and go immediately to final passage. I don't think that would be responsible because then the fraud bill that virtually everybody in this body, Republicans and Democrats, supports is going to die because it won't go past the other body. I realize every Senator has a right to offer any amendment he or she wants, but at some point we have to be realistic. If we are against the people who are committing fraud on the American taxpayers, something for which all of us have made speeches that we are in favor of stopping them--newspapers from the right to the left have editorialized in favor of stopping them--let's be honest and actually pass a bill that does it. The message amendments should wait until an appropriate bill that has something to do with them.

I am also trying to help Senators. We are going to complete this bill before we go to budget matters. We can complete it easily by noon. As Senators know, I have supported Republican amendments that came up yesterday. They have all been accepted, including an amendment by Senator Grassley and myself. But we want to complete this legislation. I am perfectly willing to stay here all night long to finish this and the budget. But every hour we take on this is an hour longer on the budget. It is somewhat frustrating that Senators who have a concern can't find time to show up on the floor. Senators from both sides of the aisle don't have time to show up on the floor on a bill which we were notified 3 weeks ago was going to be on the floor at this time. I urge them to do so. Because as soon as these amendments are disposed of one way or the other, we will go to final passage.

I yield the floor.

The ACTING PRESIDENT pro tempore. The Senator from South Dakota.

Mr. THUNE. I appreciate the observations of the Senator from Vermont. It is a bill that is broadly supported. I understand the objection he will raise with respect to his committee's jurisdiction and what the bill covers.

With regard to my amendment, there is a connection between the underlying bill and what we are trying to accomplish. I previously referenced the inspector general's report about 12 separate programs being funded under TARP that involve up to $3 trillion in government and public funds. Bear in mind, this report spans 247 pages. In that report, it says the very character of the bailout program makes it ``inherently vulnerable to fraud, waste, and abuse, including significant issues related to conflicts of interest facing fund managers, collusion between participants, and vulnerabilities to money laundering.''

I believe this amendment is related to the underlying bill which deals with fraud recovery. The inspector general's report bears that out.

Mr. LEAHY. Madam President, while the Senator from South Dakota is in the Chamber, if I may ask him a question, we also have amendment No. 982 offered by Senator Coburn which allows the unused TARP funds to pay for the Fraud Enforcement and Recovery Act. I ask the Senator if the Coburn amendment and his amendment are mutually exclusive?

Mr. THUNE. In response, Madam President, to the Senator from Vermont, my amendment would prevent funds from being reused, recycled, that were directed to debt reduction. I guess my short answer, without having reviewed the Coburn amendment carefully, would be, I suspect, that they are probably mutually exclusive.

BREAK IN TRANSCRIPT

Source