Helping Families Save Their Homes Act of 2009

Floor Speech

HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009--Continued -- (Senate - April 30, 2009)

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Mr. THUNE. Mr. President, I ask unanimous consent to call up amendment No. 1025 to the pending bill, and I ask that amendment be made pending.

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Mr. THUNE. Mr. President, if I might speak to the amendment for a few moments.

I offered a similar amendment last week to the fraud recovery bill and was told at the time--and, of course, cloture ultimately was invoked on that bill, and I was told it was not germane. So it fell postcloture.

In order to make it germane to this underlying bill--in fact, I was told at the time last week, when I brought it up, it would be germane to the housing bill, which would be considered next. So I decided I would offer this amendment again. But running into the same sort of question about whether this amendment would be germane postcloture, I have adapted the amendment so it is germane to the underlying bill.

I will tell you, I would have preferred keeping it in its original form because, essentially, it would have taken TARP moneys repaid to the Federal Treasury by lending institutions and applied them to debt reduction. That was the amendment in the form it was in last week when I offered it to the fraud recovery bill. I still think that is a good, sound idea: As TARP funds are paid back into the Federal Treasury, rather than being recycled or used on some other Government program, we apply it to debt reduction.

Lord knows we are spending and borrowing enormous amounts of money. The least we could do when these moneys are paid back is put them toward paying down the Federal debt so we are not handing this enormous--enormous--bill to our children and grandchildren.

But, as I said before, in order to get this amendment in a form that it would be germane postcloture, I have revised it. I will describe it in a minute. But I wish to start by saying, on October 7, 2008, we all know Congress passed the Troubled Asset Relief Program, or TARP, as part of the Emergency Economic Stabilization Act. It authorized $700 billion for the purchase of toxic assets from banks, with a goal of restoring liquidity to the financial sector and restarting the flow of credit in our markets.

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

Financial lending was not increased with the implementation of the CPP and the expenditure of $218 billion of TARP funds, despite the goal of the program.

Those receiving funds through CPP are now faced with additional restrictions related to accepting those funds. A number of community banks and large financial institutions have expressed their desire to return those CPP funds to the Department of Treasury. Treasury has, in fact, begun the process of accepting receipt of these funds. However, because of the financial stress test Treasury is currently conducting, it is possible Treasury will restrict some banks from returning funds they received from the CPP.

I mentioned last week when I offered the amendment to the fraud recovery bill that there were banks I was aware of that were not able at the time to return funds to the Treasury. They were told they couldn't. They had money from the TARP, they were banks that were in good financial standing, and they wanted to pay back that TARP money and couldn't do it. I believe now, at least, the Treasury is working with a number of banks to try and receive some of these monies that the banks want to pay back, but it is entirely possible, because of these stress tests, that some banks will be restricted from returning funds they received from the CPP.

In his testimony before the TARP congressional oversight panel on April 21, 2009, Secretary Geithner stated that Treasury estimates $134.6 billion of TARP funds are still available. What is interesting about that number is that in that figure, he includes $25 billion they expect to receive back from banks under CPP. Geithner also stated he believes that $25 billion is a conservative number and that private analysts, of course, are predicting that more--much more--is going to be returned. But the important point is that of the $134.6 billion that Treasury Secretary Geithner referred to in terms of TARP funds that will be available, $25 billion of that is in the form of payments they expect to receive back from banks under the CPP.

So my point is there is money coming in, and rather than using that to pay down the debt, which I think many of us assumed was going to be the use of those funds if they came back in, that they are sort of planning on, it looks like, recycling back into TARP or, perhaps--I hope not but perhaps--using them for some other purpose.

Section 120 of the Emergency Economic Stabilization Act terminates the authority for TARP funds on December 31, 2009, and the Secretary can request an extension to that deadline not later than 2 years after enactment, which would be October of 2010. But keep in mind, that 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. So there is no prohibition on the Treasury using these recycled TARP funds.

The TARP Reduction Priority Act, which is the subject of my amendment, reduces TARP authority by any amount returned by a financial institution to Treasury. So instead of having TARP monies that are returned from the banks back into the Treasury applied to debt reduction, what I do now with this amendment--in order to have it fit within the confines of this bill and to remain germane should, in fact, cloture be invoked--is reduce the TARP authority by whatever amount is returned by a financial institution to the Treasury. In other words, the TARP amount--the amount that would be available for lending under TARP--as it is paid back, monies come back from the banks, the TARP lending amount is reduced commensurate with the amount that is returned, so that those monies cannot be recycled. Once they have been out there and returned by the banks, they can't be recycled and reused or put to some other purpose.

Let me also say that until the December 31, 2009 expiration date, and possibly longer--again, if the Secretary is granted an extension--that without this legislation, Treasury can continue to use TARP funds, including those repaid in any manner they see fit. It is certainly not what Members of Congress envisioned when this legislation passed last year. These are taxpayer dollars. They should not become a discretionary slush fund for the administration. Under the Constitution, Congress controls the power of the purse, and I, as do many Members of Congress and others around the country, have major concerns regarding the Treasury's handling of TARP funding. If the new administration, the Obama administration, or the Treasury Department believes it needs additional funding to address problems in the financial sector, they should come to Congress for that authority.

Inspector General Neil Barofsky stated in his quarterly report to Congress that there are 12 separate programs being funded under TARP involving up to $3 trillion of government and public funds. Amazingly, that is the equivalent amount of the size of the entire Federal budget. It certainly wasn't what Congress was told the funding would be used for.

Mr. Barofsky also mentioned in his April 4, 2009 CBO report--he estimated that TARP would cost the Federal Government $356 billion, meaning that the Treasury will only be able to recover $344 billion or approximately 49 percent of the $700 billion that was originally allocated by the Congress.

When this program was initially pitched to Congress--and my colleagues in the Senate should remember--Secretary Paulson at the time argued that the Government would end up making money once those toxic assets were sold after the economy recovered. Clearly, this is no longer the case. Barofsky's report spans 247 pages. 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 interfacing fund managers, inclusion between participants, and vulnerabilities to money laundering.

So again, the point of the amendment is very simple; it is very straightforward. All I am trying to do is to make sure the TARP funds, as they come back in, when they are repaid by banks, are not recycled, they are not reused, they are not put into some program which the inspector general says in his report is inherently vulnerable to fraud, waste, and abuse; that it actually be used to reduce the amount of the TARP authority. It is the best solution we could come up with short of applying those repaid funds to deficit or to debt reduction which, as I said, was the original form of this amendment, but under the rules of the Senate, to make sure it is germane, this is the approach we have selected. I think it accomplishes the same purpose. It makes certain that the monies that come back in, that are paid back by banks that have received TARP funds are not reused, reallocated, put into some other purpose or some other fund, but it actually is reducing the amount of TARP authority that is available to be used and, therefore, protecting taxpayer interests and taxpayer dollars that were extended under this program in the first place.

So I hope my colleagues, when they are making final determinations about which amendments are going to be on the so-called list--and it seems to me, at least, that on a bill such as this, a housing bill, it ought to be wide open to amendments and we ought to be able to get votes on some of these amendments but evidently the leaders on the other side have concluded they are going to limit those amendments and try to come up with some finite list--I hope they will include this amendment on that list. I think it makes sense. It is perfectly fitting with the purpose of the underlying bill, which is a housing bill.

TARP funds, of course, were supposed to deal with the credit crisis, the housing crisis, and I would hope this amendment would be one that the other side, as they make those decisions about which amendments are going to be allowed to be debated and voted on with respect to the base bill, that this amendment will be on that list. I think it makes a lot of sense.

I hope some of the other amendments my colleagues have offered also will be allowed to be voted on. I think that is the way the Senate is intended to work and to function. All Members of the Senate are supposed to be able to come to the floor and offer amendments and have those amendments debated and voted upon. It seems to me that sort of arbitrarily putting in place a construct that limits amendments and picks and chooses ones that get voted on does not represent the heritage and the tradition of this body. I hope my colleagues who are managing the bill on the floor will decide what I think is in the best interests of this institution, and that is that these amendments all be offered, be debated, and be voted on, and I hope this certainly is the case with the amendment I put before the Senate right now.

With that, I yield back the balance of my time and I hope this amendment can be made pending and get voted on whenever we get back on the underlying bill.

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