GovTrack’s Bill Summary
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The bill’s title was written by its sponsor. H.R. stands for House of Representatives bill.
This bill was introduced in a previous session of Congress and was passed by the House on January 21, 2009 but was never passed by the Senate.
Last updated Jan 22, 2009.
|Referred to Committee|
To reform the Troubled Assets Relief Program of the Secretary of the Treasury and ensure accountability under such Program.
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H.R. 384--111th Congress: TARP Reform and Accountability Act of 2009. (2009). In www.GovTrack.us. Retrieved March 12, 2014, from http://www.govtrack.us/congress/bills/111/hr384
“H.R. 384--111th Congress: TARP Reform and Accountability Act of 2009.” www.GovTrack.us. 2009. March 12, 2014 <http://www.govtrack.us/congress/bills/111/hr384>
|title=H.R. 384 (111th)
|accessdate=March 12, 2014
|author=111th Congress (2009)
|date=January 9, 2009
|quote=TARP Reform and Accountability Act of 2009
We don’t have a summary available yet.
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.
The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.
This summary can be found at http://www.gop.gov/bill/111/1/hr384.
On October 3, 2008, the President signed the Emergency Economic Stabilization Act (EESA), which established the Troubled Asset Relief Program (TARP). The $700 billion program authorized the Department of Treasury to purchase “troubled assets” from financial and lending institutions in an effort to provide stability and restore confidence and liquidity to the financial markets. Upon receiving the authority, Treasury quickly changed gears and announced the Capital Purchase Program as the primary focus of the first $250 billion. The nine largest banks in the country were given $125 billion and the rest of the industry currently has the ability to seek TARP funds to support their capital. The authority of Treasury to use capital injections was clarified on the House Floor prior to passage during a colloquy between Representative Moran and Chairman Frank. In addition to the capital purchases made under the program, TARP funds have also been used to create a facility to support the issuance of asset-backed securities and give loans to the domestic auto industry and continue the bailouts of AIG and Citigroup.
Since its passage, TARP, as implemented by Treasury, has been sharply criticized for a lack of transparency and accountability regarding Treasury’s disbursement of TARP funds. According to a December Government Accountability Office (GAO) report, “Treasury has yet to address a number of critical issues, including determining how it will ensure that Capital Purchase Program is achieving its intended goals and monitoring compliance with limitations on executive compensation and dividend payments. The lack of transparency has made it increasingly difficult for lawmakers and the public to follow distributed TARP funds and assess the impact on lending. It has also made it difficult to assess the amount, if any, of taxpayer funds that may be recouped in the future.
TARP advocates stated that the program would be well regulated, transparent, and likely cost taxpayers far less than $700 billion. In a letter sent to House Minority Leader John Boehner, Office of Management and Budget (OMB) Director Jim Nussle stated that, “The $700 billion figure is substantial, of course, but the size of the problem in our financial markets requires a commitment of this size. For several reasons, however, the impact on the taxpayer will be considerably less than $700 billion.” In a September 30, 2008, President Bush reiterated the argument that the total cost of the program would be far less than $700 billion, stating, “both the nonpartisan Congressional Budget Office and the Office of Management and Budget expect that the legislation considered would ultimately cost the taxpayer far less than the $700 billion. Because the government would be purchasing troubled assets and selling them once the market recovers, it is likely that many of the assets would go up in value over time.”
Due to the variety of changes in the use of TARP funds, combined with a lack of consistent and adequate oversight, GAO noted that it has become difficult to track exactly what institutions have done with the assistance received through the TARP program. Sparse transparency requirements, and insufficient oversight by Treasury, have combined to make it undeterminable whether “the legislation considered would ultimately cost the taxpayer far less than the $700 billion” as the President stated in September.
The first $250 billion of TARP funding was immediately authorized for use by Treasury after the passage of EESA. The next $100 billion was given at the request of the President. As of January 2009, Treasury had committed $354 billion in TARP funds to a myriad of companies and financial institutions, including $250 billion for the Capital Purchase Program, $40 billion to buy stock from AIG, $20 billion to Citigroup, and $19.4 billion in loans to auto manufactures, of which $4.4 billion is anticipated to come out of the second $350 billion tranche. According to the Republican Staff at the Financial Services Committee, Treasury has yet to dispense approximately $62 billion of the funds allocated to the Capital Purchase Program, which was intended to allow lenders to free up credit for consumers.
Despite one of the program’s stated goals of adding liquidity to financial markets, lending has not significantly increased. While Treasury has committed $250 billion to purchasing preferred stock through Capital Purchase Program in order to “build capital to increase the flow of financing to U.S. businesses and consumers and to support the U.S. economy,” banks and other lending institutions have generally continued to hold back credit. In addition, the infusion of $350 billion into the market has done very little to reduce residential foreclosures. This has led many lawmakers, as well as the general public, to question the effectiveness of TARP and prompted a debate about whether an additional $350 billion in taxpayer dollars should be reconditioned or even released at all.
As a result of criticisms of the program, Republican and Democrat Members have expressed reluctance to release the final $350 billion tranche of TARP. H.R. 384 is intended to set tighter restrictions on the use of TARP funds in order to pave the way for the release of the second $350 billion, which was formally requested by President Bush, at the behest of President-elect Barack Obama, on January 12, 2009. Under EESA, Congress has 15 days to vote on a joint resolution of disapproval that would stop the second $350 billion from being released. The resolution could be vetoed by the President. Congress would then need a 2/3 majority to override the veto and stop the release of the $350 billion. However, press reports have indicated that the incoming Administration does not want to be forced to use a veto in the first weeks of the Administration to access the funds. Congressional leaders, such as Financial Services Chairman Barney Frank, have stated that a disapproval resolution would likely pass if restrictions on the next tranche—like those contained in H.R. 384—are not agreed to but the Senate appears unlikely to take up any similar legislation. According to press reports, it’s the hope of the incoming Administration that H.R. 384 (or some other TARP agreement) would create an avenue for Members that have been critical of TARP to support the release of the next $350 billion and vote against a disapproval resolution.
Although both the Bush and Obama Administrations have called for a release of the second tranche, many Members of Congress continue to question the need for releasing the second $350 billion, even if the conditions included in H.R. 384 are applied. Even Treasury, when pushing for the initial TARP package, admitted that they had no plan to determine if the entire $700 billion would be necessary to shore up financial markets. According to a Treasury spokeswoman quoted in Forbes Magazine, the $700 billion figure was “not based on any particular data point. We just wanted to choose a really large number.” Given the questionable effectiveness of the first $350 billion, many Members may question whether it is necessary, beneficial or responsible to release $350 billion more to Treasury, especially under a more stable financial system.
Furthermore, the legislation may prove to be nothing more than a template for a future an agreement between Congressional Democrats and the Obama Administration. Press reports have indicated that the Senate is unlikely to take up the legislation. Indeed, Rep. Frank has even stated that he does not consider legislation to be necessary and would allow the incoming Administration to take sole control of the final tranche if certain assurances were made. According to Rep. Frank, “If they (the Obama Administration) give us their absolute word that they will abide by the bill, that will be enough. I’m willing to accept their word.”
While the legislation does include many conditions on TARP spending, and transparency improvements that Republicans may support, many Members may be concerned that H.R. 384 is designed to grease the wheels for a release of the final $350 billion tranche of taxpayer money to a Treasury Department that has yet to take office, let alone explain its intentions to Congress.
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