Helping Families Save Their Homes Act of 2009

Floor Speech

HELPING FAMILIES SAVE THEIR HOMES ACT OF 2009 -- (Senate - May 05, 2009)

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AMENDMENT NO. 1030 TO AMENDMENT NO. 1018

Mr. THUNE. Madam President, I ask unanimous consent to call up and make pending amendment No. 1030.

The PRESIDING OFFICER. Without objection, the pending amendment is set aside. The clerk will report.

The legislative clerk read as follows:

The Senator from South Dakota [Mr. Thune] proposes an amendment numbered 1030 to amendment No. 1018.

Mr. THUNE. I ask unanimous consent that the reading of the amendment be dispensed with.

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Mr. THUNE. Madam President, the amendment I offer today essentially follows along with the bill I introduced earlier called the TARP Reduction Priority Act. Essentially, this amendment reduces TARP authority by any amount of principal returned by a financial institution to the Treasury.

Again, by way of background, I spoke to this amendment a little bit last week. On October 7, 2008, as we all know, Congress passed the Troubled Asset Relief Program, or TARP, as part of the Emergency Economic Stabilization Act, authorizing $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 the Treasury, without consultation with Congress, changed the purpose of 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 implementation of the CPP, and $218 billion, I believe, has been allocated thus far, despite the goal of the program. These institutions receiving funding through the CPP are now faced with additional restrictions related to accepting those funds.

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

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. In that figure, he includes $25 billion which Treasury expects to receive back from banks under the CPP.

Geithner also stated that he believed the $25 billion is a conservative number and that private analysts predict more will eventually be returned. 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 the deadline not later than 2 years after enactment, which was October of last year, 2008. So keep in mind this restriction applies only to Treasury's issuance of new loans and does not cover the reuse of previously issued assistance that was returned to the Treasury.

So, essentially, my argument for why this piece of legislation, this amendment, is important is, until the December 31, 2009, expiration date or possibly longer, as I said earlier, if the Secretary is granted an extension, without this legislation Treasury can continue to use TARP funds, including those repaid, in any manner they see fit.

This 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 Treasury. Under the Constitution, Congress controls the power of the purse, and there are major concerns regarding the Treasury's handling of TARP funding. If the Treasury Department believes it needs additional funding to address problems in the financial sector, they should come to Congress to get that authority.

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, this is the equivalent to the size of the entire Federal budget, certainly not what Congress was told the funding would be used for.

Mr. Barofsky also mentioned on April 4, 2009, the CBO report which estimated that TARP will cost the Government $356 billion, meaning the Treasury will only be able to recover about $344 billion, or approximately 49 percent of the $700 billion that was originally authorized. When this program, as I said earlier, was initially pitched to Congress, Secretary Paulson argued that the Government could end up making money once the toxic assets were sold, after the economy recovered.

Clearly, based on what the inspector general is saying, that does not appear to be the case.

Because if the numbers CBO is using are correct, they are estimating that TARP will cost the Government $356 billion, and therefore only about $344 billion or 49 percent of it will actually be recoverable of the original $700 billion.

Barofsky's report spans 247 pages. It says that:

The very character of the 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.

It would seem irresponsible to continue recycling money in the TARP if the very nature of the program makes it susceptible to fraud. In fact, the special investigator's office already has 20 criminal investigations underway.

What amendment No. 1030 does is amend the underlying bill to say that TARP funds that are repaid by financial institutions, if they choose to do it--and that is going to be in consultation with Treasury--if the funds come back in--and according to Secretary Geithner, about $25 billion of the amount they say is available under TARP, still available to lend, consists of moneys being paid back by financial institutions--that when those moneys come back in, they should reduce the amount, the principal amount of TARP available to be used.

Again, I offered a similar amendment to the fraud recovery bill a couple weeks ago. In that case, I offered it with the intention of having any funds paid back under TARP by financial institutions to be dedicated to paying down the public debt--in other words, to debt reduction. Under that arrangement, it was considered not to be germane. So when cloture was filed, it fell postcloture. It was not, therefore, able to be voted on. We worked with folks who are involved in trying to make sure this is germane, that it fits within the parameters of the bill under consideration. It addresses it in a slightly different way; that is to say, whatever TARP funds are repaid, it reduces the amount of TARP authority available to be used.

I hope my colleagues will support this amendment. It is a responsible thing to do. These are taxpayer dollars. Many of us, when we supported this last fall, had an understanding about how the funds would be used. They were used differently. It would appear at this point that much of the moneys put out under the program, which at the time we were told would be paid back, that will not be the case. As much as half or more of this is probably going to be lost.

It seems to me the dollars that are paid back should not be recycled or reused. They ought to reduce the amount of TARP lending authority that is available.

It is a fairly straightforward amendment. I urge colleagues to support it. At the appropriate time, I will ask for the yeas and nays.

I yield the floor.

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