HOUSE Republican Leader John Boehner

If At First It Fails, Try, Try Again?

The Chairman of the House Financial Services Committee, Rep. Barney Frank (D-Massachusetts), has sponsored new legislation that would allegedly make the TARP (Troubled Asset Relief Program) more accountable to the American people.  Despite the title of his bill, Rep. Frank’s “TARP Reform and Accountability Act of 2009″ (H.R. 384) provides neither reform nor accountability to the TARP.  That’s unfortunate, because both are desperately needed.

Though Rep. Frank’s bill does not authorize the release of the remaining $350 billion of TARP funds, the purpose of the bill is to help ensure that congressional efforts to stop the release of the remaining funds fail.  House Republican leaders today issued an analysis warning that “passage of H.R. 384 may facilitate the discharge of the final tranche by establishing guidelines for spending the next $350 billion for those Members concerned with how the first tranche was spent.”

There are several concerning elements of Rep. Frank’s Bill, most notably among them (From the “Statement of Republican Policy” issued Jan. 15, 2009):

1. There is a danger that the provisions in H.R. 384 place the TARP on a slippery slope to a “command-and-control” economic model.  For example, the bill provides for government observers to attend the meetings of the boards of directors of assisted institutions and at the committees of such boards while any funds from TARP remain outstanding.

2. The bill provides for the expenditure of up to $100 billion (and no less than $40 billion) to implement foreclosure mitigation programs that require taxpayers to subsidize the bad decisions of irresponsible lenders, investors, and borrowers, and have not been demonstrated to be effective in keeping borrowers in their homes or stemming the tide of defaults and delinquencies.

3. H.R. 384 attempts to “fix” the “Hope for Homeowners” program (P.L. 110-289), and make it a more attractive option for lenders and borrowers.  But in doing so, the bill abandons key safeguards in the original legislation that were designed to protect taxpayers from bearing huge losses when mortgages re-worked under the program default.  For example, H.R. 384 strikes the payment of upfront premiums paid to the Federal Housing Administration for providing the government guarantee (and sharply reduces the required annual premium), increases the permissible loan-to-value ratios, and cancels the government’s share of the profits in the event of long-term home price appreciation.

There has been a plethora of criticism from other quarters as well concerning the Frank bill and the larger effort by Democratic congressional leaders to ensure the remaining $350 billion in taxpayer funds is released. Read the rest of this entry »

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American Taxpayers Deserve a TARP Exit Strategy

Leader Boehner has an op-ed in today’s USA Today in which he expresses his reservations about approving the second tranche – which would amount to $350 billion – of money from the so-called TARP (Troubled Asset Relief Program).  The Treasury Department has already blown through the first $350 billion, but the money was spent with little transparency and virtually no accountability.  This morning in USA Today, Leader Boehner argues that unless dramatic changes are made and a clear exit strategy is defined that would get the federal government back out of the private sector, Congress should not approve the release of any further TARP money.

This program has gone off the rails.  As Leader Boehner stated in his op-ed:

Funds that were intended to buy up “toxic assets” to help unlock the credit markets at the heart of the financial crisis suddenly made their way elsewhere. Some went to help financial institutions acquire other banks. Some went to the automobile companies. And some…well, we don’t really know where some of it went. Is it any wonder that taxpayers are outraged?

Moreover, given the mismanagement of the first $350 billion, Leader Boehner asks a reasonable question:

How could Washington even consider asking middle-class families and small businesses to cough up another $350 billion for this program?

American taxpayers deserve a TARP exit strategy, and major changes in the way the program is operated.  Until taxpayers get these things, Congress should not even consider releasing the remaining TARP money

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