II 111th CONGRESS 1st Session S. 862 IN THE SENATE OF THE UNITED STATES April 22, 2009 Mr. Thune introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To require the Secretary of the Treasury to use any amounts repaid by a financial institution that is a recipient of assistance under the Troubled Assets Relief Program for debt reduction.

1.

Short title

This Act may be cited as the Debt Reduction Priority Act.

2.

Findings

Congress finds the following: (1)On October 7, 2008, Congress established the Troubled Assets Relief Program (TARP) as part of the Emergency Economic Stabilization Act (Public Law 110–343; 122 Stat. 3765) and allocated $700,000,000,000 for the purchase of toxic assets from banks with the goal of restoring liquidity to the financial sector and restarting the flow of credit in our markets. (2)The Department of Treasury, without consultation with Congress, changed the purpose of TARP and began injecting capital into financial institutions through a program called the Capital Purchase Program (CPP) rather than purchasing toxic assets. (3)Lending by financial institutions was not noticeably increased with the implementation of the CPP and the expenditure of $250,000,000,000 of TARP funds, despite the goal of the program. (4)The recipients of amounts under the CPP are now faced with additional restrictions related to accepting those funds. (5)A number of community banks and large financial institutions have expressed their desire to return their CPP funds to the Department of Treasury and the Department has begun the process of accepting receipt of such funds. (6)The Department of the Treasury should not unilaterally determine how these returned funds are spent in the future and the Congress should play a role in any determination of future spending of funds returned through the TARP.

3.

Debt reduction

(a)

In general

Title I of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5211 et seq.) is amended by adding at the end the following:

137.

Debt reduction

Not later than 30 days after the date of enactment of this section, the Secretary of the Treasury shall establish a procedure whereby— (1)any amounts received by the Secretary for repayment of financial assistance or for payment of any interest on the receipt of such financial assistance by an entity that has received financial assistance under the TARP or any program enacted by the Secretary under the authorities granted to the Secretary under this Act, including the Capital Purchase Program, are deposited in the General Fund of the Treasury; and (2)the Secretary— (A)dedicates any such amounts so received for the sole purpose of debt reduction; and (B)is prohibited from using such amounts as an offset for other spending increases or revenue reductions.

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