Bipartisan Plan Would Ensure Returned Bailout Funds are used to Pay Back Taxpayers Through Deficit Reduction, Not for More Spending
Washington, DC - As the Senate considers a bill that would create new rules of the road for Wall Street, Michael Bennet, U.S. Senator for Colorado, announced today his amendment to the Wall Street reform bill that mirrors his Pay It Back plan, which would ensure repaid bailout funds are used to pay down the deficit, not fund further spending.
"One of the keys to real Wall Street reform is making sure American taxpayers are never again put in the ridiculous position of having to bail out banks that are ‘too big to fail.' But as we work to end big bank bailouts in the long-term, we should make sure that the current bailout winds down and that taxpayers aren't stuck supporting this revolving bailout fund. Repaid bailout funds should be used to pay down the deficit, not fund further spending," Bennet said. "It's time we stood up for Main Street against Wall Street's greedy and reckless behavior. That means stronger consumer protections, increased transparency, and ensuring American taxpayers are paid back now and that big banks can't count on them for bailouts in the future."
Bennet has filed a ‘Pay It Back' amendment to the Wall Street reform bill, which is currently on the floor of the U.S. Senate.
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 unused stimulus funds.
As of March 31st , 77 TARP recipients had returned a total of $180.8 billion to the U.S. Treasury. The Pay It Back legislation would prevent 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 Bipartisan Pay It Back Plan would:
- Get Taxpayers' Money's Worth from TARP - As financial institutions regain their health, the Pay It Back Act captures repaid TARP funds and applies those funds for deficit reduction. This includes revenues generated from the sale of Chrysler and GM stocks. This new legislation also closes TARP's $700 billion revolving door of credit. Although some healthy companies have already repaid assistance, TARP currently allows the Treasury to keep $700 billion "outstanding at any one time." The Pay It Back Act closes this loophole.
- Get Taxpayers' Money's Worth from Fannie Mae and Freddie Mac - The Pay It Back Act requires returned investments from the sale of Fannie Mae and Freddie Mac stock or securities to be used for deficit reduction. It also requires the Federal Housing Finance Agency (FHFA) to provide a report to Congress on efforts to ensure the American taxpayer does not suffer unnecessary losses.
- Exercise Responsible ARRA Oversight - The Pay It Back Act requires inspectors general and agency secretaries to identify and capture any ARRA funds that have been turned down or unobligated and directs such funds to pay down the national deficit.
- Establish an ARRA Sunset - The Pay It Back Act ensures that ARRA funds not obligated by December 31, 2012, will be returned to the Treasury and used to pay down the national deficit.
- Reduce the National Debt - The Pay It Back Act reduces the national debt limit - which was raised under TARP and ARRA - by every dollar that is repaid through the bill's enactment.
The Pay It Back Act 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.