Press Release

For Immediate Release
June 8, 2009

Contact: Joe Brettell
(202) 225-3484

Hensarling: Terminate TARP

WASHINGTON — Congressman Jeb Hensarling, the lone sitting Member of Congress on the Congressional Oversight Panel for the Troubled Asset Relief Program released the following statement regarding his legislation to terminate the TARP in six months:

“The economic justification for TARP’s creation and taxpayer assistance to financial institutions no longer exists. It’s clear to me that the original goals for TARP – primarily financial stability and taxpayer protection – are no longer the aim of the program. It is increasingly being used instead to promote the economic, social and political agendas of the administration.

“Through the stress tests regulators have assured us of financial market stability going forward – there is a defined capital hole and there is adequate unused TARP capital for this shortfall. In addition, banks are again raising capital in the private markets, which can serve to reduce the capital shortfall identified by the stress tests. If banks are unable to raise capital, there is adequate unused TARP capital for this shortfall. 

“As a result, my legislation puts a firm end point in place for TARP – December 31, 2009– the stress test results and the remaining unallocated TARP authority allow me to conclude that TARP does not need to be extended.
 
“Members of Congress were told that TARP was an emergency measure, and should another economic emergency occur, the 111th Congress can take action. Furthermore, the Federal Reserve still retains its 13(3) unusual and exigent circumstances power, should they be needed.”
 
Key components of the Congressman Hensarling’s Legislation –
 
·        Sets December 31, 2009 as a firm end date for TARP
·        Banks that were stress tested can repay if they passed the stress test or complied with the requisite capital raises, consistent with the conditions set by the Treasury and Federal Reserve.
·        Any bank that attempts to repay and is rejected must be told in writing how the bank can repay successfully.
·        Guarantees well capitalized banks that have paid their TARP CPP dividends the right to repay the government.
·        After a bank fully repays the TARP monies they owe, the Secretary of the Treasury must liquidate any remaining warrants.
·        All preferred shares can be repurchased at the same price and private banks can repurchase the exercised warrant preferred shares at their pre-exercise price, if the private bank repays on or before September 30, 2009.
·        As banks repay TARP funds, the TARP spending authority is notched down accordingly dollar for dollar.


###