Bill Seeks a Fair Return on the Taxpayer-Funded Bank BailoutJuly 21, 2009 - by Donny Shaw
Mike Lillis points out a recently introduced bill designed to ensure that the public gets a fair return on the money they have put up to bail out the financial system.
H.R. 3232 – PROFIT Act of 2009 – To amend the Emergency Economic Stabilization Act of 2008 to require certain warrants held by the Secretary of the Treasury to be sold at public auction upon the repayment of the associated assistance provided under the Troubled Asset Relief Program.
So far, the Treasury has priced the warrants they have sold back to TARP banks privately and secretly at discounted rates that return only about 66 cents on the dollar to taxpayers, according to a recent Congressional Oversight Program report. These warrants were included in the TARP bailout in order to protect taxpayers, yet the way Treasury is handling their reselling amounts to another bank subsidy.
The PROFIT Act, which is sponsored by Rep. Mary Jo Kilroy [D, OH-15] and co-sponsored by six Democrats, would force the Treasury to sell the warrants back to the banks on an open market and, thus, at a fairer price. “The banks and Treasury are negotiating the repayment of this debt behind closed doors instead of allowing trading in the open market, Kilroy said in a statement. "We do not know if the current process is producing the benefits we are owed and a market-based approach would remove the secrecy and special interests and maximize the return on the taxpayers’ investment.”
The bill has been referred to the House Financial Services Committee, which is chaired by Rep. Barney Frank [D, MA-4]. No word yet on whether or not the bill will get a hearing or a vote.