The 60 Second Update with
Congressman Jeb Hensarling
1. TARP is reportedly profitable, so why should we end it?
When our financial markets suddenly froze in September, there was an emergency and the government rightfully took action. While I co-authored an alternative that would have been more effective and less injurious to our economy, TARP eventually became law. I opposed TARP because 1) it would not be used for its intended purpose of financial market stability; 2) political considerations would help drive decision-making; and 3) it would produce a never ending cycle of corporate bailouts that would ultimately harm our free enterprise system and impose huge debts on future generations. My fears have proven well-founded.
TARP has never lived up to its advertising. On day one it changed from a “toxic asset” purchase program into an equity investment vehicle in our nation’s largest banks. It morphed even further and more dangerously last December when funds now totaling over $80 billion were first used to bail out non-financial institutions, in this case Chrysler and General Motors. While no industry and no individual are immune from pain in this economy, TARP is now being used to pick winners and losers among us – something it was never meant to do and something that will harm our economy. In sum, TARP has transformed into a $700 billion revolving slush fund that is being used to promote the Administration’s political, social and economic agenda—with the taxpayers’ money. It’s time to terminate TARP.
Congressman Hensarling is the Vice Ranking Member of the House Budget Committee and the Ranking Member of the House Financial Services Subcommittee. He represents the 5th District of Texas.