This was a vote on an amendment offered by Rep. Peters (D-MI) that permitted the Federal Deposit Insurance Corporation (FDIC) to charge assessments to large financial institutions to help pay for any shortfall in the “TARP” funding. That funding was used to helped bail out troubled banks. The amendment was offered to H.R. 4173, a major financial reform bill which implemented the most significant changes in the regulation of the financial industry since The Great Depression.
Rep. Peters introduced his amendment by saying that its purpose is to see to it “that taxpayers are not asked to foot the bill for Wall Street's past mistakes . . . .” He also said that the amendment “will ensure that the Wall Street bailout does not increase the national debt one bit . . . . Instead, large financial institutions that caused the credit crisis will be required to make taxpayers whole. As large banks return to health, there is no reason why taxpayers should pay to clean up Wall Street’s mess.”
Peters also argued that, if his amendment were adopted, it would give “the American taxpayer certainty that all TARP funds will be recouped from the large financial companies that caused this financial crisis.” He also said that it would guarantee that “taxpayers will never again be on the hook for bailing out financial institutions. Institutions would pay assessments based on their potential risk to the financial system and broader economy if they were to fail.” Rep. Schauer (D-MI), speaking in support of the amendment, said it would “ensure American taxpayers will get their money back and that those that created this mess will pick up the tab.”
Rep. Hensarling (R-TX) led the opposition to the amendment. He began by arguing that if the House “really cares about protecting the taxpayer against losses in TARP, they will . . . vote to end the TARP program . . . .” Hensarling went on to say “some of the companies that received funds under the (TARP) have now repaid them back with interest. So now we are in the position to tax companies that have proven successful and paid back their funds, tax them for failing companies that didn't pay back theirs. Chrysler and GM received funds under TARP and Ford didn't. So under this, I suppose that we could assess Ford a tax to pay for losses the taxpayers will incur on GM and Chrysler . . . Is that smart? Is that fair? The answer is no.”
Hensarling also claimed:”This is yet another tax to go on capital. You can't have capitalism without capital. And so we have a $150 billion tax for the revolving bailout fund . . . Every time you increase the cost of taxes on capital, you get less lending, you get less credit, more expensive credit. And less credit is fewer jobs.”
The amendment passed by a vote of 228-198. All two hundred and twenty-eight “aye” votes were cast by Democrats. One hundred and seventy-three Republicans and twenty-five Democrats voted “nay”. As a result, language was added to the major financial reform bill that permitted the FDIC to charge assessments to large financial institutions to help pay for the “TARP” funding.