This vote was on an amendment by John Thune, R-S.D., that would prohibit the Treasury Department from reusing funds returned by financial institutions who received that funding as part of the housing bailout, known as TARP. Instead, the money would be paid back into the treasury and TARP’s spending authority would be reduced by an equal amount. The amendment was offered to a bill that would make the application process easier and loosen eligibility requirements for a $300 billion foreclosure prevention program enacted to help blunt the impact of the economic downturn.
Thune said he has been concerned that the Treasury Department is using the funds to aid other areas of the economic sector, such as banks, in addition to the mortgage-related programs TARP originally envisioned.
“This amendment reduces TARP authority by any amount of principal returned by a financial institution to the Treasury,” Thune said. “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,” Thune said.
Chris Dodd, D-Conn., said he has yet to hear of anyone who doesn’t want the money spent as part of the TARP program to be returned to the federal coffers, but that the financial system is still unstable enough that America should retain that money in reserve in case it needs to be used again.
“If we adopt the amendment of the Senator from South Dakota, it would take those resources off the table. We couldn’t use them. I know this much about our colleagues: Whether you serve on one side or the other, none of us would rather go back and have to vote again on yet another tranche of TARP money. Wouldn’t it be wiser, since the previously passed legislation allows for any money that comes back into the Government from these institutions repaying the TARP money, to recycle that money rather than coming back again and asking for additional money, which we may very well be asked to do very quickly?”
By a vote of 47-48, the amendment was rejected. Of Democrats present, 8 voted for the amendment and 45 voted against it. All but one Republican present voted for the amendment. The end result is that the measure went forward without language that would have prohibited the Treasury Department from redeploying funds returned by financial institutions under the TARP program.