[Congressional Record Volume 155, Number 12 (Wednesday, January 21, 2009)]
[Extensions of Remarks]
[Pages E119-E120]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               TARP REFORM AND ACCOUNTABILITY ACT OF 2009

                                 ______
                                 

                               speech of

                             HON. PAUL RYAN

                              of wisconsin

                    in the house of representatives

                      Wednesday, January 14, 2009

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 384) to 
     reform the Troubled Assets Relief Program of the Secretary of 
     the Treasury and ensure accountability under such Program, 
     and for other purposes:

  Mr. RYAN of Wisconsin. Mr. Chair, the Emergency Economic 
Stabilization Act of 2008, passed last October, not only granted the 
Treasury the authority to use $350 billion in public funds to prevent a 
collapse of the financial system, but it also greatly expanded the 
Federal Reserve's policy toolkit in addressing the crisis through a 
somewhat obscure, but important, provision of the legislation. The bill 
authorized the Fed to begin paying interest on the reserves that 
commercial banks hold with the central bank. This ability has 
essentially allowed the Fed to establish a ``floor'' for the federal 
funds rate, the main lever of its economy-wide monetary policy stance, 
even while it greatly expands the provision of liquidity to various 
segments of the financial markets to address the crisis. To this end, 
the Fed has been increasing the asset side of its balance sheet through 
a variety of lending facilities and asset purchases. The scope of its 
lending has also been amplified by frequently invoking emergency powers 
under the Federal Reserve Act's ``unusual and exigent circumstances'' 
clause, which it has used to justify lending to important, non-
depository financial institutions.
  The Fed has made it clear that it will continue to expand its balance 
sheet to make sure that credit is available to consumers and small 
businesses and the integrity of the overall financial system is 
preserved. In recent months, for instance, the Fed has established new 
and innovative lending facilities intended to boost the flow of funding 
to the commercial paper market and key asset-backed security markets, 
it has committed itself to purchasing billions of mortgage-backed 
securities in order to keep mortgage rates low for the health of the 
housing market, and it has continued to play a key role in providing 
assistance to systemically important financial institutions. These 
actions on the part of the central bank have, in fact, come very close 
to replicating the original intent of the TARP program. And these 
actions, along with the deployment of the initial $350 billion of TARP 
funding, have shown signs of being effective--the economy is still in a 
precarious state, but a systemic, and catastrophic, collapse of our 
financial and credit markets has been avoided.
  My fear is that the second $350 billion in TARP funding will go far 
beyond the original mission of preserving overall financial market 
stability, and instead will be used to fund a heavy-handed, neo-
industrial policy. Various industries have already marshaled their 
lobbyists for a claim on these public dollars. And

[[Page E120]]

with our Federal budget expected to reach historic levels this year, we 
cannot risk more public funds to be squandered.
  In light of the Fed's vastly expanded policy options for addressing 
key sources of market turmoil going forward and their relative 
effectiveness--combined with the very real risk that more TARP funding 
will be used for an industrial policy--I am voting against the release 
of the second half of TARP funds. Although I am concerned about the Fed 
moving into new and expanded policy territory, that concern is temperer 
by the fact that the Fed is relatively insulated from politics and 
lobbyists and is more singularly focused on the stability and health of 
the financial system, which was my foremost reason for approving the 
original TARP funding last October.

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