After having done so much to create the current economic crisis,
you'd think House Financial Services Committee Chairman Barney
Frank would be a little more cautious in the future. But
no. He sees every new source of funds as a special interest
honeypot for use to further subsidize the housing market which
his policies had done so much to inflate.
Reports Byron York in the Washington Examiner:
Rep. Barney Frank, the chairman of the House Financial Services
Committee, has come up with a proposal to spend any TARP
profits before they can be returned to the taxpayers.
Last Friday, Frank introduced the "TARP for
Main Street Act of 2009," a bill that would take profits
from the program and immediately redirect them toward housing
proposals favored by Frank and some fellow Democrats.
In exchange for receiving TARP money, financial institutions
were required to hand over shares of preferred stock that paid
a dividend for the government. In theory, if a financial
institution paid the dividend faithfully, and then repaid the
TARP money, then the government would turn a profit. Last
month, the General Accountability Office (GAO) reported that,
through June 12, 2009, the government had received $6.2 billion
in dividend payments. The original TARP legislation
required that money made from the program "shall be paid into
the general fund of the Treasury for reduction of the public
debt."
Frank, however, wants to spend the money before it can be used
to pay down anything. First, the "TARP for Main Street"
proposal would take $1 billion "from dividends paid by
financial institutions that have received financial assistance
provided under...the Emergency Economic Stabilization Act" and
apply it to a trust fund that Frank has long wanted to create
for low-income rental housing. (The measure, unfunded,
was part of last year's bailout of Fannie Mae and Freddie
Mac.) Next, Frank would take $1.5 billion from TARP
dividends for a so-called "neighborhood stabilization"
fund. Republican critics have charged that both measures
might allow federal dollars to be distributed to activist
groups like the Association of Community Organizers for Reform
Now, or ACORN.
The "TARP for Main Street" bill would also spend $2 billion,
apparently from remaining TARP funds, to subsidize people who
are delinquent on their mortgages, and another $2 billion to
"stabilize multifamily properties that are in default or
foreclosure."
The U.S. is facing a deficit of nearly $2 trillion this year and
will average at least a billion dollars annually in red ink over
the next decade. And these estimates probably are far too
low. With all of the usual suspects--Fannie Mae, Freddie
Mac, Federal Housing Administration, Pension Benefit Guarantee
Corporation, FDIC, and more--facing growing losses and expecting
more federal bailouts, there is no end in sight to pressure for
increased federal outlays. Shouldn't Congress start
trimming somewhere, instead of constantly coming up with
new programs upon which to waste money Uncle Sam doesn't have?
