Letter To The Honorable Barney Frank, Chairman, House Financial Services Committee

Letter

Hensarling and Bachus Request Financial Services Hearing on TARP Oversight

Congressman Jeb Hensarling (TX-05), Ranking Member on the Financial Services Subcommittee on Financial Institutions and Consumer Credit and former member of the Congressional Oversight Panel for TARP, and Full Committee Ranking Member Spencer Bachus (AL-06) sent the following letter to House Financial Services Committee Chairman Barney Frank.

May 5, 2010

The Honorable Barney Frank, Chairman
House Financial Services Committee
2129 Rayburn House Office Building
Washington, DC 20515

Dear Chairman Frank:

We respectfully request that the House Financial Services Committee convene a full Committee hearing to examine the status of the Troubled Asset Relief Program (TARP) and outstanding taxpayer investments under TARP. While the Committee has recently examined specific issues related to TARP, it has been well over a year since the full Committee had a hearing related to comprehensive TARP oversight, and there have been a number of developments within the program that warrant the Committee's immediate attention. For example:

* On December 9 of last year, Secretary Geithner informed Congress of his decision to extend TARP despite multiple concerns about the lack of a credible exit strategy and the ultimate cost to taxpayers. The full Committee has not convened a hearing to examine these specific topics.

* On April 1, Treasury appointed two directors to the American International Group, Inc. (AIG) board of directors because AIG failed to pay dividends for four quarters on the AIG preferred stock held by Treasury. In addition, on April 20th Treasury announced that it had, for the first time, voted its approximately 7.7 billion shares of Citigroup.

* On April 21, Treasury announced that General Motors (GM) had repaid its TARP loan "in full," while GM CEO Ed Whitacre claimed taxpayers were repaid, " in full, with interest, ahead of schedule" despite the fact taxpayers still have over $40 billion sunk in the company.

The taxpayer has involuntarily invested billions of dollars in the TARP and deserves a full investigation into the current status of TARP investments. Given these recent developments, there are a number of noteworthy questions deserving consideration including:

* Have the Administration's plans to exit TARP changed? How will Secretary Geithner administer the program after its expiration on October 3, 2010? Which TARP programs are expected to inflict the greatest losses on taxpayers? How does the Administration plan to recover the taxpayer losses under the program?

* As a significant shareholder in Citigroup and AIG, how has Treasury managed potential conflicts of interest? Has Treasury's involvement in companies that received a TARP bailout contributed to a politicization of the economy?

* To date, the Administration's Home Affordable Modification Program (HAMP) has resulted in approximately 230,000 homeowners receiving permanent modifications to their mortgages, far short of the 3 to 4 million the Administration claimed it would help. Why does the Administration believe that the program has fallen short of its anticipated goals? What have been the most significant barriers to participation in the program? Are there safeguards in place to prevent irresponsible lenders and borrowers from participating in HAMP? Have the recently proposed revisions to the program (encouraging principal write downs) precipitated an increase in participation? Has the Administration studied how unemployment has impacted its mortgage modification efforts?

* Have Treasury and GM provided accurate information to the taxpayer in publicizing GM's loan repayment and the status of outstanding the taxpayer investment in GM? Have Treasury and GM made statements portraying GM as a profitable company? Did GM use TARP funds to repay their government loan? Does the Administration plan to include GM under its TARP recoupment plan to recover losses incurred by the program?

* Have the Congressional Oversight Panel for TARP and the Special Inspector General for TARP provided meaningful oversight of the program?

Congress must not abdicate its responsibility to continually monitor and examine the status of TARP. Thank you in advance for your consideration of this request. We look forward to your response.

Yours respectfully,

Jeb Hensarling Spencer Bachus
Member of Congress Member of Congress

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