[Congressional Record (Bound Edition), Volume 155 (2009), Part 9]
[House]
[Page 12173]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        REPAYMENT OF TARP FUNDS

  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
California (Mr. Sherman) for 5 minutes.
  Mr. SHERMAN. Mr. Speaker, my speech builds on two themes.
  The first is the continuing effort of administrations of both 
political parties to turn Congress into a mere advisory body. One of 
the more effective ways of doing this is to embrace those statutory 
sections that they like and to ignore those statutory sections that 
they don't like.
  The second theme is, it's not illegal if Wall Street wants it.
  Now let us illustrate these two themes on the TARP legislation, the 
legislation that provided $700 billion to bail out Wall Street and 
provided the Secretary of the Treasury with enormous authority and 
discretion as to how that money would be used.
  Now I thought $700 billion was more than enough. For many reasons I 
voted against this bill. But there was at least one code section in the 
bill that seemed to make sense, and that was a provision that stated 
clearly and unequivocally that whatever money came back from whatever 
investments were made by the Secretary of the Treasury would go to the 
general fund, would pay down the national debt, would go into the same 
fund that our money went into on April 15 when we mailed in our tax 
returns.
  And that's why section 106(d) of the bill that created the act states 
very simply, ``Revenues of, and proceeds from the sale of troubled 
assets purchased under this Act, or from the sale, exercise, or 
surrender of warrants or senior debt instruments acquired under section 
113''--and here are the key words--``shall be paid into the general 
fund of the Treasury for the reduction of the public debt.''
  How is this code section relevant? How does it fit into the overall 
statute? Well, the statute envisions the idea that the Secretary of the 
Treasury would use our $700 billion to purchase certain investment 
assets defined in the bill as troubled assets, and then at some 
subsequent point those assets would be sold. Whatever money we got from 
that sale or from the redemption, when we traded in those assets, 
whatever we got would go into the general fund.
  It is being widely accepted in the press, in Washington and on Wall 
Street that whatever the Secretary of the Treasury gets back from the 
banks will instead be part of some revolving fund from which the 
Secretary of the Treasury may make additional bailouts in addition to 
the first $700 billion of expenditures.
  Well, the statute is very clear to the contrary. Whatever is returned 
to the Treasury goes into the general fund.
  Now one thing to keep in mind is this statute uses the term 
``troubled assets'' so that the Secretary of the Treasury might say, 
well, what we're selling is the preferred stock that Secretary Paulson 
originally invested in. These aren't troubled assets. They're happy 
assets, and therefore, section 106(d) would not apply.
  This is a complete misreading of the statute because if you turn to 
section 3(9)(B) of the statute, ``troubled assets'' is defined as, 
``any other financial instrument that the Secretary, after consultation 
with the Chairman of the Board of Governors of the Federal Reserve 
System, determines the purchase of which is necessary to promote 
financial market stability, but only upon transmittal of such 
determination, in writing, to the appropriate committees of Congress.''
  The preferred stock that we are about to sell or that the companies 
are about to repurchase from us is exactly this kind of troubled asset. 
It was purchased by the Secretary of the Treasury after a determination 
that doing so was necessary to promote financial stability, and to make 
it very clear that they were relying on section 3(9)(B), which defines 
troubled assets, the Secretary of the Treasury sent the appropriate 
committees a written determination.
  So when we bought the assets, they were defined by the Treasury 
Department as being troubled assets. They are clearly subject to this 
code section.
  But one more thing, if for some reason the preferred stock wasn't 
within the ambit of the definition of troubled assets when it was 
purchased, then the purchase was illegal to begin with because the only 
code section in the bailout bill that allows for that purchase is 
section 101(a)(1), which authorizes only the purchase of troubled 
assets.
  Make sure when we get back the money, it's not a revolving fund, that 
it goes into the general Treasury to pay off the national debt.

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