Washington, DC – Michael Bennet, U.S. Senator for Colorado, today urged key Senate and House negotiators of the Wall Street reform bill to retain the bipartisan ‘Pay it Back’ amendment. This amendment, which was authored by Bennet and passed the Senate with broad bipartisan support, responsibly winds down the bank bailout, reduces the bailout by $150 billion and reduces our deficit.
In letters to U.S. Senators Chris Dodd and Richard Shelby and Representatives Barney Frank and Spencer Bachus, Bennet joined seven of his Senate colleagues in supporting inclusion of this common sense language in the final bill. Senators Tester, LeMieux, Isakson, Klobuchar, Scott Brown, Mark Udall, and Begich also signed the letter.
“This amendment complements Wall Street Reform by sending a strong signal to our financial markets that the bailout is coming to an end,” Bennet said. “By winding down the TARP, our nation’s largest financial institutions will know immediately that the days of reckless and excessive risk taking are over.”
Specifically, the ‘Pay It Back’ Plan captures funds from taxpayer investments in financial institutions and auto companies through the Trouble Asset Relief Program (TARP), taxpayer investments to stabilize Fannie Mae and Freddie Mac, and unused stimulus funds and makes sure that these funds are used to pay down the national debt and not for additional spending. It also establishes a sunset for unobligated stimulus funds after 2012.
As of March 31st, 77 TARP recipients had returned a total of $180.8 billion to the U.S. Treasury. The Pay It Back plan would restrict that money from being used for further spending on new programs or reused by the TARP, effectively leaving banks unable to count on future TARP assistance and forcing them to shape up.
The Pay It Back Plan does not undermine emergency and recovery efforts. Rather, it sets a schedule for getting the government out of the business of owning businesses. This bill looks at critically open-ended policies, created to weather a real economic disaster, and establishes a responsible ‘exit strategy’ that will protect and benefit the American taxpayer.
For more information on Bennet’s Pay It Back Plan, please click here.
The full text of the letters follows:
We write to request that the Conference Committee retain the language in the “Pay it Back” amendment (amendment #3928) that the Senate adopted unanimously to its Wall Street reform bill.
This bipartisan amendment takes several commonsense steps to wind down the TARP, prevent banks from tapping into our Treasury going forward, and reduce our deficit. It accomplishes these goals by reducing the TARP’s authority to $550 billion. Similarly, the amendment prohibits the Treasury from using repaid TARP funds barring an immediate and substantial threat to the economy arising from financial instability. Instead, such funds would go toward reducing our deficit. The amendment also requires taxpayer investments from the sale of Fannie Mae and Freddie Mac stock to be used for deficit reduction. Finally, it increases oversight of Recovery Act funds and creates a responsible sunset for unobligated Recovery Act funding after 2012.
This amendment complements the underlying bill by reducing moral hazard and sending a strong signal to our financial markets that the TARP is coming to an end. By winding down the TARP, the management of our nation’s largest financial institutions will know immediately that the days of reckless and excessive risk taking are over. No longer will there be an explicit or implicit guarantee of government support for behavior that subjects the American taxpayers to unacceptable losses.
The amendment also takes prudent steps to reduce the deficit at a time when our nation’s overall debt threatens the long-term vitality of our economy. As of the end of March, over $180 billion in TARP funds have been repaid. By restricting the government’s ability to access these funds, we can make demonstrable progress at reining in our deficit.
In total, the amendment represents a balanced approach at restricting unnecessary spending and winding down the TARP.
It is our hope that the language will be retained as the Conference Committee on Wall Street reform performs its work.
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