Press Conference With Senator Jim Demint; Senator David Vitter; Senator James Inhofe; Senator John Ensign

Press Conference

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SEN. DEMINT: Thanks for coming.

We're here today because the banking bailout is not working and the deal for taxpayers is getting worse every day.

Sixteen of the nineteen largest recipients of TARP funds made fewer loans in February than they did in October. This is pretty much a pattern out there and last week we saw about a million Americans all over the country came out for tea party rallies. They're fed up. They've had enough of government spending and bailouts and the increased debt that we're creating.

Then we hear the startling report from the special inspector yesterday that revealed the TARP the way it's set up is ripe for fraud and abuse and that the public-private partnerships outlined by President Obama greatly increase the risk to taxpayers.

This thing is not working out the way it was promised, and everything that was promised about it has been ignored, particularly buying toxic assets.

We will be offering several amendments today to the fraud bill to improve the situation with TARP. I will offer an amendment to prevent the government from buying common stock that can be used as a backdoor way to nationalize financial companies. Senator Vitter will offer an amendment to allow banks to repay TARP loans. Senator Inhofe will offer an amendment to make TARP recipients provide full disclosure of any expenditures not essential to restoring solvency and Senator Ensign will offer an amendment to implement the special inspector's recommendations.

So I want to turn it over right now to Senator Vitter.

SEN. VITTER: Thank you, Jim.

I'm David Vitter from Louisiana. I certainly agree with all of Jim's opening comments about the fundamental problems with the bailout program. I join Jim and others in opposing it in the beginning last September and certainly, and unfortunately, a lot of our worst fears have come to pass.

In this particular debate on the bill on the floor of the Senate right now, I will offer the particular amendment Jim mentioned, which is simply to allow banks that have taken TARP funds to repay that money if they meet all of the required capital requirements of the regulatory system and if they want to pay it back.

Amazingly, the Treasury is now saying, no, in many of those situations. No, we know better. No, even though you meet all of the capital and liquidity requirements in place, we know better and we're not going to allow you to get out of this deal with the big force of government as a senior partner.

I think that's absolutely outrageous for our private sector economy in general.

So, again, my amendment will be very simple and straightforward. It will say that a bank that has taken TARP money if they meet all of the normal capital liquidity requirements that regulators place on financial institutions of their situation, then they can pay the TARP money back with all the interests and penalties that are normally attended.

There has arisen a very specific issue regarding the repurchase of warrants from the government and that will not be required under my amendment. So Treasury cannot demand as they have been in some cases that the banks also buy back these warrants at very significant exorbitant prices because that has been a very key practical barrier to banks getting out of this deal.

I think as a practical matter, one of the most hopeful signs we see of getting out of this situation of more and more government intrusion and domination of financial services is the banks themselves backing out as they see the onerous new restrictions and rules being placed on them by government bureaucrats every day.

We certainly shouldn't be saying banks don't have the ability to do that and that government knows better.

SEN. INHOFE: Thank you. I think it is important to go back and remember what happened in October of last year. It is inconceivable that we could pass something that gave $700 billion to unelected bureaucrats to do with as they wanted with no oversight, with no accountability, but that's exactly what happened.

Now, in defense of many of my good conservative friends, we had Hank Paulson stand up and promise this was going to go to certain things such as buying damaged assets, and as it turned out, he didn't use any of it for that. We were lied to and I think it's something that we need now to get busy and make sure that we can minimize the damage that has been done as a result of this.

I tried to say back in October to help people understand how much $700 billion is, if you took all the families that filed tax returns and paid taxes and do your math, it's $5,000 a family. It's a huge thing. People didn't really get that. Well, now we find out a lot of these funds have gone to fringe organizations such as ACORN and other organizations, so I join my colleagues here and I think that Senator Ensign is going to talk a little bit about the IG report, which I was going to -- he'll be talking about that. But my amendment will get to a full disclosure of just what happened with this money. We want to know how many of these contributions were made to fringe organizations and they may say, well, that's intruding on the private sector. Well, it isn't -- if they receive money from the federal government, that ceases to be a private transaction and they have a public responsibility.

So we're going to try to get our amendment to the current fraud bill in addition to the others as perfectly compatible with the other two amendments.

SEN. ENSIGN: Well, thank you.

President Obama came in with a promise and so did Secretary Geithner that there was going to be even more transparency especially dealing with the TARP program, that this was going to be the era of open government and so that the American people will be able to judge whether their money was being used wisely and properly.

With the special inspector general's report that came out yesterday, with this new program of buying these toxic assets, they said that this is absolutely set up to have waste, fraud and abuse taking place within this program if the following recommendations weren't put into place. Well, my amendment that I'm drafting right now is going to require the recommendations from the special inspector general are put into place when the Treasury Department sets up this toxic asset buyback program and I think it's good government, it's what the American people have been asking for. It's what the Obama administration has been promising, and so we're going to test to find out whether or not the Democrats in the Senate believe the way that the president has been talking and actually instead of just talking, let's see if they'll put actions behind the rhetoric.

SEN. DEMINT: Questions? Yes, sir.

Q (Off mike.) stress test results -- (inaudible) -- are you all -- (inaudible) --

SEN. DEMINT: Well, obviously, we want to see the details and who it applies to. The idea in the beginning that we were looking at the too big to fail stress test now, we're talking about applying it to a number of other institutions.

It seems to be part of a pattern of government taking over and running our financial institutions. So many of us are concerned about that, and I think we need to stop that process as quickly as we can and that's why we have several amendments here today. If banks want to get out of this, they want to give the money back; we need to let them do that as soon as possible.

We can't allow the government to convert preferred shares to common shares, first of all, common shares are the first to fall if a bank goes under, so the taxpayer is more exposed, but it also is likely to put the government in a board room of many banks across the country, get them more involved with owning and managing banks.

This is not the concept of America at all. So we've got a few amendments to bring out the fact that this is not working, it has not been used the way we were promised it would be used. An independent study has said it's ripe for fraud. A few amendments could help to improve that significantly.

Q (Off mike.)

SEN. DEMINT: Do you want to talk about the amendment?

SEN. ENSIGN: Obviously, there's no hurry to do this bill, and we have the budget coming back -- to go to conference tomorrow. We'll have several amendments on referring the budget motions to construct on the budget tomorrow, and so I would guess that some of these amendments may be voted on next week if a majority decides to allow us to have these amendments.

The Senate has been working that way; we're hoping that it continues to work that way where it's an open process. These are certainly, if not germane, they're certainly relevant amendments to the process and we're talking about eliminating fraud and abuse and things like that and that's exactly what we're trying to do here especially dealing with the TARP funds.

SEN. INHOFE: I think that's a real good question. My personal feeling is that it would be very difficult for the leadership of the Senate not to allow at least to have a vote because by doing that they would be almost supporting the fraud and abuse.

Q (Off mike.)

SEN. ENSIGN: Once again, let's put actions behind rhetoric. President Obama came in, saying that we're going to look forward, not back. First of all, I think it was outrageous that they released some of the memos. These were top secret. The techniques that we were using was top secret. You had four former CIA directors all saying that it shouldn't have been done because top secret, the reason you classify something that's top secret is if the information gets out, it would do grave harm to the United States. When you have four former CIA directors saying that it should not be released, I think it's something that, obviously, says that it was a bad thing for them to release it.

Now, to go back and to look at prosecuting some in the Bush administration, first of all, I think also sends chills through the intelligence community or also people who are going to be advising whether it's this president or the next president, whoever it is. I think that it goes back to some of the fear, the pre-9/11 fear that was in our intelligence community and others in the United States and will make us less safe.

SEN. INHOFE: Let me say something about that, I'm the second ranking member on Armed Services and I have very strong feelings. I sat there and I watched Carl Levin and some of the rest of them. I believe for purely political reasons prior to the campaign -- wanting to investigate more and more and more, and right now, its been so overly investigated and every time we get into something like this, we are telling our potential adversaries out there on what we can and what we cannot do and they're laughing at us. I think it's outrageous that they'd bring it up again.

Q (Off mike) -- to fund more auditors at the state -- (inaudible) --

SEN. ENSIGN: Well, certainly, you know, when you're spending with interest over $1 trillion and I said a long time ago a trillion dollars is a terrible thing to waste. The fact that we want to make sure that, you know, the money is spent and spent properly actually to stimulate the economy. Many of us believe that it's not going to be used in ways to stimulate the economy. There's already stories out there and I don't care how many auditors that you hire, you have a lot of auditors in your profession that's going to be out there that's going to be reporting on stories.

When you have that massive amount of money going out that quickly, you're going to have a lot of abuses in this and it's one of the reasons that I believe that, you know, the money wasn't going the right place to really stimulate the economy and create jobs.

SEN. DEMINT: Thanks, everyone.

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