PRESS CONFERENCE WITH SENATE REPUBLICANS
SUBJECT: TROUBLED ASSETS RELIEF PROGRAM
PARTICIPANTS: SENATOR DAVID VITTER (R-LA); SENATOR JIM DEMINT (R-SC); SENATOR JEFF SESSIONS (R-AL); SENATOR TOM COBURN (R-OK)
SEN. VITTER: Good afternoon. I'm David Vitter from Louisiana. And I'm honored to be joined by colleagues who have joined me in introducing the resolution of disapproval of the second half of the TARP funds. We're here to talk about that today.
I think all of us have strong, strong objections on moving forward with a program which hasn't worked, in our opinion, in the first half, and is so riddled with questions and problems moving forward. For me, it really comes down to five key issues.
First of all, in terms of what the program was supposed to do, pumping up the economy and increasing credit on the street, for consumers and businesses, that hasn't happened.
There isn't significant improvement in credit on the street for consumers and businesses. So the fundamental rationale for the program has to be called into question.
Secondly the whole program changes week to week. Just a couple of weeks after Congress originally approved it, over my objections and others' objections, the Treasury secretary said, oh, everything I outlined the last several weeks is out the window; it won't work; we're moving on to Plan B.
Since then, Plan B has been changed and modified. And now of course with the new administration, there are much more dramatic changes that are suggested. And we really don't know what the program is anymore.
Third and related to that, because of all this, TARP has really devolved into a slush fund for the administration to do whatever it wants to, given the circumstances any week.
And perhaps the best proof of that is the auto bailout. After arguing for weeks that TARP funds were not intended for anything like the auto bailout, the Bush administration in fact used it for that.
Fourth, there is no real accountability or transparency. It has been embarrassing and really mind-boggling, the lack of transparency and accountability; report after report from the GAO and others saying that Treasury can't even precisely identify how they've spent funds to date.
And fifth, this is a really unprecedented intervention in our economy. It's not simply the federal government taking a leading role, setting monetary policy, which it does regularly, setting fiscal policy. It's the government becoming actively involved in individual businesses, picking winners and losers, making those board room decisions, becoming the dominant partner in many cases in individual businesses. And that, I think, is deeply troubling to a lot of Americans.
Those are the reasons I introduced the resolution of disapproval. Those are the reasons I think Congress should pass it. Certainly, we have economic challenges, but we can deal with those proactively in other ways, whether that's through the stimulus package debate or other measures.
Now I'd like to introduce Jim Inhofe of Oklahoma. Jim?
SEN. JIM INHOFE (R-OK): Thank you.
Well, first of all, I agree with the statements that were made by Senator Vitter. My interest in this, the activities, in the very beginning was that we had Secretary Paulson who made commitments, he made promises as to what he was going to do with a huge amount of money. He's talking -- thinking about $700 billion. If you divide the number of families that file tax returns by -- into 700 billion (dollars), it's $5,000 a family. So it's a huge thing, and nobody seemed to care that much about it.
All we had is one man's word as to what was going to be done with that money, and he broke his word. So it wasn't -- as Senator Vitter said, it wasn't done as he wanted.
I introduced way back in October a bill -- trying to get on the floor prior to the end of the last session -- that would set up the system so that they would have to come -- whether the president was Bush or Obama -- have to come in, say what they're going to do with the money. Then we would vote on it, just like we do in the budget process. I was unable to do it. And quite frankly, then S. 64 was the effort in the new Congress, and we were unable to get it on the floor and get it discussed.
So that having been behind us now, the only course to take now is a resolution of disapproval. It would have to be disapproved by both houses. I'm not naive enough to think that if that did happen -- that the new incoming President Obama would most likely veto it, and only need to have 34 people to sustain a veto.
So I think in that respect it's a fait accompli. But I do think we should do everything we could to preserve our system of accountability, which is definitely not there in this process.
SEN. SESSIONS: Thank you, David. And Jim, I appreciate your comments. And David, I think you've given a good overview of the difficulties that we are in.
Fundamentally, the president-elect is now assuming responsibility for this second tranche of money and really for the entire agenda. I felt President Bush made an error. I think it's a unusual thing and doesn't indicate to me clarity of thought for him to say that he knows he's violating the free market to somehow save the free market. That's a argument I don't think stands real scrutiny.
We were, as my senior colleague Senator Shelby said, panicked by the administration when they moved this forward. It's certainly forgivable, I think, when senators felt like we had to do something, faced with the kind of apocalyptic warnings that Secretary Paulson presented. And so we passed that. But now we've had a number of months to see how well it's worked, which -- I think most people say not very well. Some say not at all. And what are we going to do in the future?
Basically we're at the point of approving a plan for the future that gives maximum flexibility, as Secretary Paulson said, to the secretary of Treasury, to spend the money, and the president, like they want to. That's what they want. I think that is bad.
I do believe, had they proposed when they came forward that the money would be used to buy stock in a series of private corporations, on behalf of the taxpayers, that would have been very coolly received. In fact, one House member asked about it, and it was rejected. He -- by Paulson. He said he wasn't going to buy stock. But within a few days we were buying stock, hundreds -- over a hundred billion dollars, in an insurance company that competes with the other insurance companies in America.
So I guess I would just say we have failed to date to see a rigorous oversight of this spending. I do believe that the program was flawed from the beginning.
It's not being improved. It's contrary to the free-market principles of our country. It's going to cost -- being scored now -- about 240 billion (dollars). We don't know for sure whether that would be accurate or not. But that's a big hit to our debt. And, in the long run, deficits matter.
SEN. : Well, Congress has cut the lines to our constitutional moorings, and we're just drifting around at this point -- and even ignoring the laws that we write, such as this Troubled Asset law, 750 billion (dollars) -- specifically said how it was to be used. We not only are ignoring the Constitution, we're ignoring our own laws.
One of our goals here today is to enlist the help of the American people. We've seen so many times in the last couple of years when angry Americans call their congressmen and senators and tell them to stop, and not to do that -- not to do what's coming on this bill here.
I think we do have a chance to stop it. There are a number of congressmen and senators who are on the fence. They've heard from their constituents during the holidays that they're tired of bailouts. They know we're in economic trouble, but they don't want to see the government print more money, or borrow more money, and throw it around in ways we can't even anticipate.
So it's our goal to stop this bill, and I think with the American people's help, we can do it.
SEN. VITTER: Any questions for any of us?
Q Do you have -- do any of you intend to attend the meeting that Lawrence Summers and (off mike) -- have to brief Republican senators this afternoon?
SEN. VITTER: Yes, I'm trying to make the meeting.
SEN. : I hope to, yes.
SEN. : Yes.
Q Any chance that would sway your opinion -- (off mike) -- they lay out, maybe, a -- an extremely detailed plan?
SEN. VITTER: Well, the problem with an extremely detailed plan is it's another promise. We've heard all these promises before. In terms of the first half of TARP, all those promises were out the window almost as quickly as the actual Troubled Asset Relief Program model.
SEN. SESSIONS: Could I just say -- to follow up on some of the other comments -- this was the largest single authorization to the executive branch to spend money at one time in the history of the Republic -- 700 billion (dollars). The entire Iraq war's cost 500 billion (dollars).
We would never -- we wouldn't expend a billion dollars, normally, a hundred million dollars, $10 million, without telling the executive branch how it's to be spent. So promises and expectations, even if they're in more detail, really do not assuage our responsibility as Congress to make sure the money is spent in an appropriate and lawful way. Just to give blank checks is really dangerous and an abdication of our congressional responsibility, I think.
Q Senator Vitter, if you've heard the promises before and you don't want to take anyone's word for it, why not -- there is a legislative effort going on in the House, maybe not the one that you would prefer. But why not latch on to that and negotiate and try to convince the leadership here to legislate and get some rules on paper?
SEN. VITTER: Well, I'd be open to any proposal, any new proposal, legislation parameters, et cetera. But unless we pass this motion of disapproval, the second half of TARP will go forward with no parameters and no boundaries. That is in the original law.
We must have a vote. We either vote yes or we vote no. And so if the motion of disapproval does not pass, that effort is dead in the water, because the second half will have just been approved with no conditions and no parameters. And once any administration gets that, it's not going to agree to any restrictions.
So I guess what I'm saying is, passing this resolution of disapproval is an absolute necessary prerequisite for any of those efforts to move forward in a meaningful way.
Q Have you spoken to those who voted against it originally, especially the Democrats?
SEN. VITTER: We're reaching out to all folks. And I'm very hopeful we're going to have some of those folks. I'm very hopeful we're going to have some folks who voted for it originally. In fact, I know we'll have some of those. So we're reaching out to all those folks. I don't have any definite vote count. But we're certainly reaching out to all those folks.
Q Senator Inhofe just said this was a fait accompli. I mean, do you disagree with that?
SEN. VITTER: Well, clearly our effort is uphill. I wouldn't go further than that. But I think what he was referring to specifically is that a resolution of disapproval would probably be vetoed. So then the bar, you know, for us, is set even higher. So it's a challenge. I wouldn't disagree with that. But I wouldn't go further than that either.
Q Do you know, at this point, when the vote is going to be held? Have any of you been contacted by members of the transition?
SEN. VITTER: I haven't been personally contacted by the transition. I expect the Senate vote to be held at the end of this week.
Q (Off mike.)
SEN. VITTER: Thursday or Friday. It's not clearer than that.
Q Didn't Geithner help to design TARP?
And I'm wondering, on your side, is there any concern about the -- (off mike)? And second of all, to what extent does that undercut the concern about the president -- (off mike)?
SEN. VITTER: Well, you know, I'd have concerns about anybody who helped design TARP because of the problems I see in TARP that I outlined a minute ago. I'd just leave it at that.
In terms of the stimulus, I really think TARP has devolved into this catch-all, as I said. And I really think, as a practical matter, including when you look at the Larry Summers letter, some of the things the Obama administration may want to do with TARP, it's better to -- more accurate to think of it as an add-on to the stimulus versus a really separate financial bailout, as it was first proposed. I think it's become this catch-all, and I really think it's becoming that.
Now, we should just debate the stimulus. We should act on something new rather than give any administration -- I'd be completely opposed to it under a continuing Bush administration -- a carte blanche to do whatever it wants under the sun, which is what it's become.
Anybody want to add to that?
Q How about Geithner's tax problems, that part of the question? Do you have any issues with that?
SEN. VITTER: I don't know enough about the details of that to comment on that yet. But John Barrasso has joined us, so let --
SEN. : Just a quick statement from John, and we'll continue to answer questions.
SENATOR JOHN BARRASSO (R-WY): Well, I just wanted to join my colleagues today to support their effort to say that this is something that we should not do, should not release the next $350 billion.
Senator Enzi and I have put out a press statement to the press in Wyoming. We have voted against the bailout plan initially, continue to oppose this; feel that the accountability that we asked for was not there in the spending of the first $350 billion, that the oversight was not there, the transparency was not there.
You know, in Wyoming, our legislature started yesterday. Our governor is giving a state of the state speech today. The governor's a Democrat, the house and the senate are Republicans, and we live within our means every year in Wyoming. The constitution says we have to live within the means and it's time for Washington to learn that lesson, to balance its budget and to act responsibly. And to me, this next $350 billion is not a responsible use of taxpayers' money.
Q Getting back to Geithner, though, do any of you have strong feelings about his tax troubles? Is that a potential impediment to his being confirmed?
SEN. SESSIONS: Well, I think it's a very serious issue. The man who wants to be the top tax collector in America is going to be -- now not having paid $35,000 in taxes, apparently maybe even involving an illegal alien, is a serious matter.
I'm not -- I haven't -- it's new, just come out. I haven't formulated in my own mind -- but to say this is insignificant is not -- as one -- I heard one IRS agent apparently make the comment that that's -- you're fired if you're an IRS agent. And the Treasury secretary of course supervises IRS. So it's not a little matter.
SEN. : One -- I think we need to put this in context. One of the big issues in Washington now is just ignoring the rule of law. And when a nominee for a Cabinet secretary has clearly done that, not as an oversight but apparently intentionally, then it does become serious, because ignoring the rule of law is how the Bush administration took TARP funds designated for something else, clearly in the legislation had to be used for financial institutions, and used it a different way. That's a huge problem in a country that's built on the rule of law.
Q Would you vote no on confirmation?
SEN. : At this point, I probably would. We're still looking at how serious the situation is.
Q What about you, sir? Will you vote no?
STAFF: No more questions.
SEN. : I agree with the previous comments from colleagues, but I'm still looking at the exact details of that situation.
SEN. : Thanks.
SEN. : Thanks, everyone.