[Congressional Record (Bound Edition), Volume 155 (2009), Part 12]
[Senate]
[Pages 15802-15803]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   TARP RECIPIENT OWNERSHIP TRUST ACT

  Mr. WARNER. Mr. President, I rise today to discuss bipartisan 
legislation that I am cosponsoring with my colleague Senator Corker 
concerning the Federal Government's recently acquired ownership stake 
in a number of private companies.
  I think we all know the taxpayers have been on a roller coaster ride 
for the past 9 months, and from their perspective, each twist and turn 
has left us more deeply invested in troubled markets and oftentimes 
troubled companies. Americans are concerned about getting their money 
back and want to keep politics out of how we manage these investments 
we have had to make over the last few months.
  Last week, Senator Corker and I introduced S. 1280, the TARP 
Recipient Ownership Trust Act. What will this bill do? Three very 
simple things. First, it will remove politics from our management of 
taxpayer investments in private companies. Second, it will ensure these 
investments are managed in order to maximize taxpayer returns. Third, 
it will allow us to plan for removing the government from the private 
sector by setting a date certain for selling these investments.
  To achieve these goals, Senator Corker and I are proposing that if 
the government owns more than 20 percent of a private company we place 
that ownership stake in an independent trust. This trust would be run 
with a fiduciary duty for taxpayers by three independent directors 
appointed by the President. These directors would agree to perform this 
work for free as a service to the country and in doing so would give 
the American taxpayers what they deserve: the upside of the massive 
investments they have provided over the past 9 months. The trust 
wouldn't be an open-ended ownership in these companies; the trust would 
have to sell all of these assets by the end of 2011, though they could 
ask for a brief extension if it were, again, in the interest of the 
taxpayers' return. In this way, taxpayers can know we won't own stock 
in these companies for the next 20 years. In practice, this means that 
taxpayer ownership of AIG, Citigroup, and General Motors would be 
managed in order to maximize the return on these taxpayer investments.
  We have all seen how political and contentious the TARP program is 
becoming. I know back when we voted on this matter earlier this year 
how controversial it was. I still think it was unfortunate that we got 
into this circumstance but fortunately the right thing to do. While 
there are a lot of challenges about how we got into this program, if we 
did look around--actually, Steven Pearlstein of the Washington Post 
pointed out in an article recently that if 9 months ago, if 6 months 
ago, or even 3 months ago, back in the middle of March when the stock 
market was at its all-time low in terms of reacting to this crisis, any 
economist would have said by the end of June, would you be willing to 
look at a circumstance where the market was up 25, 30 percent--although 
it was a little bit down today--if many of the banks we had invested 
TARP funds in were actually trying to repay those TARP funds, and if we 
had seen the housing market, at least in many communities, start to 
stabilize, would we view that as a good outcome. Well, that is 
basically where we are. While we have enormous problems, we are seeing 
some progress. But one needs only to look at the number of TARP-related 
amendments that have been filed in the Senate in these past months. As 
a matter of fact, the leader was speaking today about the number of 
TARP amendments that could potentially be on the travel bill that we 
will have before us to know that this has become a lightning rod.
  Some of the reasons for this concern are truly relevant and they are 
because the American people don't know when and how the TARP program is 
supposed to end. The American people, unfortunately, who invested in 
individual companies--some of the companies that now we have invested 
in--don't know how much we as the public will get back, or whether we, 
as the public investment, will politically interfere with the 
management of these companies. That is, again, why we need to implement 
this legislation Senator Corker and I have laid out that will put these 
ownership shares in this independent fiduciary trust.
  I don't support cutting off TARP right now or limiting the tools it 
currently provides the administration, including the limited reuse of 
money that is repaid to the government. TARP already has a sunset date 
after which more funds cannot be spent, and since markets are not back 
to normal, even though there is improvement, we shouldn't prevent the 
use of the tools we currently have. But we do need to set parameters 
for managing our investments and winding them down in order to take the 
politics out of this program.
  American taxpayers deserve to have their investments managed in order 
to maximize their returns. That is what the trust will do, and I hope 
we will consider using this model for other investments as well.
  This trust will also help us take some of the politics out of the 
TARP program, and that is why I am proud of this legislation as 
bipartisan and led by my friend from Tennessee, Senator Corker. I hope 
my colleagues will join in supporting this bipartisan legislation, S. 
1280, the TARP Recipient Ownership Trust Act. While this measure won't 
resolve all of our concerns surrounding TARP, I hope it can serve as a 
model to maximize the taxpayer returns on their investment.
  Let me also take one additional moment to speak about another 
investment-related matter. Under the leadership of Senator Jack Reed 
from Rhode Island, when the initial investments and the initial TARP 
plan were put together, Senator Reed, I think appropriately, said if we 
invest in banks in addition to getting a traditional return, we, the 
public, who are taking these risks ought to see some upside potential 
for taking the risks in terms of warrants. Luckily, the Congress went 
along with that and we did receive warrants from a number of the banks 
we invested in. I personally am very happy to see that a number of 
these banks are starting to repay the investments the public made. 
However, there remains the question: What are we going to do with the 
warrants? Senator Reed and I have asked Secretary Geithner a number of 
times, and we hope he would also consider placing these warrants into 
some type of independent trust as well so that, again, we, the 
taxpayers, can receive the upside of these investments.
  We took the risks with these banks during these troubled times. I am 
happy to see these banks return these funds. However, for the banks to 
buy back or sell back these warrants at what I believe today is still a 
discounted price would not allow us, the taxpayers, to maximize our 
investments. So, again, I hope Secretary

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Geithner responds to the requests that Senator Reed and I have made in 
making sure that these warrants are appropriately put into the same 
type of independent fiduciary trusts that I am proposing for the 
private investments we have made under TARP.
  I yield the floor.
  Mr. CORNYN. Mr. President, I ask unanimous consent to speak for up to 
15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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