Senators Corker, Warner Introduce TARP Recipient Ownership Trust Act of 2009

June 17, 2009 -- WASHINGTON – In an effort to protect the interests of taxpayers, U.S. Senators Bob Corker (R-TN) and Mark Warner (D-VA), both members of the Senate Banking Committee, today introduced legislation with the ultimate goal of removing the federal government’s control of TARP (Troubled Asset Relief Program) assisted institutions. The bill provides for a responsible exit strategy from government ownership of TARP-recipient companies, which by this fall, will include AIG, Citigroup, and General Motors.

“Over the last seven months, we have seen unprecedented government intervention into the private market. In particular, the TARP legislation has taken American taxpayers into uncharted territory as common equity owners of private companies. We need a responsible exit strategy from government ownership, which is why Senator Warner and I have introduced this bill to expedite that process, shield taxpayer investment, and remove the potential politicization of the important core governance decisions at TARP-recipient companies,” said Corker.

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The TARP Recipient Ownership Trust Act of 2009 moves any government ownership stakes in private companies greater than 20 percent (which, by fall 2009, will include AIG, Citigroup, and General Motors) into a newly created Limited Liability Corporation (LLC).

The assets will be placed in a trust that will be managed by three independent, non-political trustees, appointed by the administration, with the objective of looking at TARP-recipient companies with fiduciary responsibility to the taxpayers. The bill directs the trustees to liquidate the government’s interests by December 24, 2011, but stipulates that if the trustees feel liquidation is not in the best interest of taxpayers, they can come back to Congress at that time with their alternative recommendation.

“We envision these trustees as people with great experience in the private markets with a record of success in running profitable companies or turning around unprofitable ones. These won’t be paid positions. They would do this as a public service for our country,” said Corker.

A Rasmussen survey released yesterday (June 17) indicates that 80 percent of U.S. voters want the government to sell its stake in General Motors and Chrysler as soon as possible. Seventy-one percent say the government should sell the ownership interest it has taken in bailed-out banks to private investors as soon as possible.

“Clearly, a majority of Americans believe the private markets would do a better job of determining a company’s success or failure. The government should exit ownership as quickly as is responsible to protect taxpayer investment,” Corker said.

06.17.09 Corker-Warner Bill (pdf)

Source: Senator Bob Corker