Senator Bob Bennett on TARP Repayment

Says first round of TARP worked to stabilize the financial system

June 9, 2009 -- WASHINGTON, D.C. - Senator Bob Bennett (R-Utah) today applauded the announcement that 10 major financial institutions have met all of the requirements to fully repay the U.S. Treasury $68 billion, including five percent interest or $6.2 billion, which was borrowed from the taxpayers through the first part of the Emergency Economic Stabilization Act.

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"Today's news is a promising sign that the financial system continues to stabilize and we will begin to see the taxpayer dollars repaid," said Bennett, a member of the Senate Banking Committee. "The first round of $350 billion in TARP money, which I supported, did what Congress hoped it would do; it stabilized the banks and prevented a systemic collapse of our financial system, which serves as the life blood of our main street economy."

The Department of the Treasury announced today that it expects to receive $68 billion in repayment proceeds from 10 of the largest U.S. financial institutions participating in the Capital Purchase Program (CPP). This would bring the total in repayments from CCP participants to approximately $70 billion. Under the Emergency Economic Stabilization Act, proceeds from repayment will be applied to help to reduce national debt. Treasury Secretary Geithner, however, has indicated that the repayments may also be used to respond to any future economic instability.

"I disagree with the secretary's interpretation that these monies can be reused in the future," continued Bennett. "The repaid taxpayer dollars should only be used to pay down the national debt, and I think the administration is required to return to Congress and make its case if a new crisis arises. Much like the auto bailout, this is an end run around Congress."

During the negotiations on the economic rescue plan in October 2008, Bennett reiterated the need to protect the taxpayers and worked to implement safeguards. Bennett's main contribution included a provision that said the Treasury could only distribute $350 billion of the $700 billion requested and required the secretary to return to Congress to make the case for the urgent need for the second half of the funds. Bennett opposed the disbursement of the remaining $350 billion of Troubled Asset Releif Program (TARP) funds because the Treasury did not make the case that the threat of a systemic financial collapse remained. The senator also voted against money for the auto industry saying that the automakers did not represent a systemic risk to the economy.

"I don't agree with every decision that has been made with respect to how the first half of the money has been used, but I am pleased to see that the part I did support - the capital investment in the financial system to prevent a systemic collapse - is working as demonstrated by the significant progress being made in the repayment process," added Bennett.

Source: Senator Bob Bennett