[Congressional Record Volume 155, Number 87 (Thursday, June 11, 2009)]
[Senate]
[Pages S6549-S6550]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. THUNE (for himself, Mr. Coburn, Mr. Inhofe, Mr. Vitter, 
        Mr. Johanns, Mr. Cornyn, Mr. Kyl, Mr. McConnell, Mr. Barrasso, 
        and Mr. Ensign):
  S. 1242. A bill to prohibit the Federal Government from holding 
ownership interests, and for other purposes; to the Committee on 
Banking, Housing, and Urban Affairs.
  Mr. THUNE. Mr. President, over the past 15 months, the Federal 
Government has taken unprecedented actions to stabilize the U.S. 
economy. Unfortunately, these actions include the Federal Government 
acquiring direct ownership stakes in private companies, which exposes 
the American taxpayer to significant liabilities and creates a 
dangerous conflict of interest between the Federal Government and the 
private sector.
  Thanks to the fact that the government has intervened in all these 
private companies, we now have about 500 banks, we have auto 
manufacturers, financial institutions, and insurance companies that the 
government now has an ownership interest in. President Obama has become 
a de facto CEO managing large segments of our economy, and Congress is 
now acting as a 535-Member board of directors.
  I think it is fair to say when you combine business with politics, it 
inevitably leads to harmful conflicts of interest--which we are already 
beginning to see--because political decisions get substituted for 
business decisions.
  As everyone in this Chamber knows all too well, government control of 
private business hampers investments. It hampers innovation, job 
creation. It diminishes the entrepreneurial spirit on which our economy 
is based.
  Having the Federal Government call the shots for private industry is 
plain bad for business. It is bad for the economy, and it is bad for 
the American taxpayer.
  So today I am introducing a piece of legislation, S. 1242, which 
gives the Federal Government an exit plan, a way of exiting the scene 
from the ownership that the Federal Government now has in all these 
various private companies in our economy. It essentially has four basic 
provisions.
  The first provision is that upon enactment of the legislation, the 
Treasury Department may not purchase any additional ownership stake of 
private entities, such as warrants, preferred stock, or common stock 
purchased through the TARP program.
  The second provision is this: The legislation would require the 
Treasury to sell any ownership stake of a private entity by July 1, 
2010. Any revenue that comes in from the sale of those TARP assets 
would have to be used for debt reduction.
  The third provision of the bill is that if the Treasury Secretary 
determines the assets are undervalued and there is a reasonable 
expectation that the assets will increase to their original purchase 
value, the Secretary may hold the assets for up to 1 additional year.
  Finally, the fourth provision of the bill is that beyond July 1 of 
2011, the Treasury Secretary may not hold any direct ownership of 
private companies unless Congress grants additional authority.
  Essentially, what we are doing is saying that all this ownership 
interest the Federal Government now has acquired in all these private 
companies would have to be wound down, if you will, divested, by that 
July 1 deadline in the year 2010. If the Treasury Department determines 
that, in fact, doing so would impair the ability of the Treasury to 
recover the full value of those assets or if those assets are expected 
to appreciate, there is an additional year, up to a year of 
flexibility--essentially a waiver--from the July 1, 2010, deadline that 
would extend it to July 1, 2011. So it buys an additional year. But it 
does put a time certain out there, a deadline, if you will, by which 
the Federal Government has to dispose of and divest itself of all these 
ownership interests it has in our private economy.
  The other issue I think is important is it prevents the Federal 
Government from acquiring an ownership stake going into the future. As 
I said before, any funds that are returned to the Treasury as a result 
of these assets being sold would have to be used for debt reduction. 
They cannot be recycled; they cannot be reused; they cannot go into 
some fund that is going to be used for additional acquisition of 
private sector assets.
  I think the reason why this is important is if you look at what 
Secretary Geithner has said, he has indicated before that their 
intention is that when

[[Page S6550]]

some of these funds come back into the Treasury--and we saw this 
recently with banks that agreed to pay this money back--they are going 
to reuse it. I don't believe that is what was intended in the first 
place. I don't think this was at any point designed to become a slush 
fund that could be used for the acquisition of other assets; it was 
designed to be used--at least initially, the way it was presented--for 
the purchase of toxic assets, illiquid assets on the balance sheets of 
many of our financial institutions. It quickly evolved into something 
else. It became a fund that was used to acquire an equity stake, equity 
interest in many of these companies. So I don't think that was the 
purpose for which it was intended.
  I think a lot of people who made votes assumed at the time it 
wouldn't be used to buy toxic assets. It ended up being used to buy an 
ownership interest in these companies, and I think, again, the American 
people are uncomfortable with the notion of the Federal Government 
owning a big share of our private economy. I also do not think it was 
intended in the first place to be used to buy the assets of other types 
of industries--essentially, to do industrial policy, as some people 
have referred to it--to acquire assets of auto manufacturers, for 
example; it was designed specifically for the financial services 
industry.
  There is no real exit strategy out there. In fact, Secretary Geithner 
was asked in front of the Senate Banking Committee a couple weeks ago 
about whether there was a plan to dispose of some of these assets, and 
he said there isn't a plan; it is not necessary at this point.
  Well, I think we need to have an exit strategy. Everybody talks about 
an exit strategy. The President needs an exit strategy in Iraq. It 
seems to me we need to have an exit strategy that would allow the 
American taxpayer to recover funds they have been investing through the 
TARP program in all these various companies that would get the Federal 
Government out of the way of these companies and out of the day-to-day 
decisionmaking and management of these companies. My bill would 
prohibit that as well, in addition to some of these other provisions I 
mentioned.
  It would prohibit or bar the Federal Government from dictating to 
these companies with respect to hiring decisions when it comes to 
senior executives, when it comes to boards of directors, when it comes 
to where to relocate or locate or close certain plants. Those are 
decisions that should not be made by politicians in Washington. They 
should not be made by bureaucrats in Washington, DC. They ought to be 
business decisions and not political decisions.
  The bill, as I said, is very straightforward.
  There are a number of folks who have commented on, made observations 
about what is happening in the economy right now, and this sort of 
proliferation of companies in which the Federal Government now has an 
ownership share. I wish to read for my colleagues some of what has been 
said by folks who I think know a lot about the private economy and 
whether it is a good idea to have the Federal Government owning and 
controlling as much as they do currently of some of these companies. If 
you look at the various percentages, they are significant. Of course, 
we know most recently General Motors, a $50 billion investment there 
gets the taxpayer ownership interest to about 60 percent; Chrysler, 
about 12 percent; Citibank, about 36 percent, and you can go down the 
list of all these various private companies in which the government now 
has an ownership interest.
  There was an editorial in the Kansas City Star that said that:

       What's worrisome is that while the administration said it 
     isn't interested in running car companies, it has said little 
     on an exit strategy.

  It went on to say:

       Any government bailout of private industry should be 
     temporary and as brief as possible.

  Anne Mulcahy, chief executive of Xerox--I am sure I just butchered 
the name--said recently:

       I think all of us understand the need for the government to 
     intervene and to take the actions they did, but I also think 
     there's a need for an exit plan.

  Jim Owens, who is the chief executive at Caterpillar, said:

       I think that's fundamentally unhealthy. The Federal 
     Government needs to be in and out.

  Google's Eric Schmidt noted that the U.S. stimulus package was 
designed to cover a 2-year period. He said:

       It's very important that government get out of business and 
     let business do its thing. The most important thing to 
     remember, I think, is that jobs, wealth, are created in the 
     private sector. That's about capitalism.

  In a Wall Street Journal opinion piece, Paul Ingrassia argues:

       . . . must have a clear exit timetable for the government 
     to sell its shares for both Chrysler and GM and get the 
     companies back in the hands of private investors. Mr. Obama 
     has an exit strategy for Iraq; he needs one for Detroit, too.

  So there are a lot of people who have a lot of experience when it 
comes to running companies who have concluded that the government does, 
in fact, need an exit strategy. I think, as I said before, it is fair 
to say that one doesn't exist today, and when Secretary Geithner 
testified in front of the Senate Banking Committee a couple weeks back 
he admitted as much, that there isn't an exit plan.
  What my bill does is it gives us an exit plan. It gives us an exit 
plan with a deadline, with a little flexibility in the deadline, some 
ability to provide a waiver for the Treasury Department that would 
allow for an additional year, if necessary; if those assets the 
government holds are considered to be assets that could appreciate over 
time and, therefore, yield a higher return for the Federal Government 
but, at some point, we have to say enough is enough. We have to put an 
end to this practice we have gotten involved with, this precedent we 
have now created of having the Federal Government own more and more of 
our private economy.
  I would argue, again, that is not good for business, it is not good 
for the economy, it is not good for job creation; it stifles the 
entrepreneurial spirit which has built this country and made it great, 
and I don't think it does anything to create jobs and get our economy 
back on track.
  I hope we will have an opportunity to debate this. It seems to me at 
least that in the days ahead there will be various bills that will be 
debated on the floor of the Senate that would give us a chance to 
debate this issue. I intend to offer this, if I can't get some interest 
in moving it as a freestanding bill, as an amendment to other vehicles 
that might be moving through the Senate in the days and the weeks and 
the months ahead. But I do think it is important. I think it is 
important to the American taxpayer. I think it is important to the 
American economy. I think it is important to American business that the 
Federal Government have an exit strategy. We have a plan whereby we can 
move and get away from this practice we have undertaken now with great 
regularity and great frequency of acquiring even more and more 
interests in American business.
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