Senator James Inhofe has called for legislation requiring congressional approval of any further spending of the $700 billion bailout money. Language in the bailout bill, as passed, has given Secretary Paulson sole discretion over how the money is spent—with zero oversight. As I've reported before, the bill says he cannot be investigated, nor even officially asked where the money is going. He has said he won't tell congress who is getting the money.
KFOR U.S. Sen. Jim
Inhofe said Saturday that Congress was not told the truth about the
bailout of the nation's financial system and should take back what is
left of the $700 billion "blank check'' it gave the Bush
administration. "It could be to his friends. It could be to anybody else. We don't know. There is no way of knowing.''
"It is just outrageous that the American people don't know that Congress doesn't know how much money he (Treasury Secretary Henry Paulson) has given away to anyone,'' the Oklahoma Republican told the Tulsa World.
U.S. Sen. Jim Inhofe said Saturday that Congress was not told the truth about the bailout of the nation's financial system and should take back what is left of the $700 billion "blank check'' it gave the Bush administration.
"It could be to his friends. It could be to anybody else. We don't know. There is no way of knowing.''
What Paulson has said is that he has changed course 180 degrees and will not be buying bad mortgage debt, but will instead be directly purchasing equity stakes in major financial institutions. Inhofe contends, and rightly so, that this indicates that even Paulson believes that the plan, as originally conceived, can not work.
November 15, 2008
WASHINGTON, D.C. - U.S. Senator Jim Inhofe (R-Okla.), in a letter to his Senate colleagues, laid out his plan to push for legislation that will require Secretary Paulson's plan for the remaining $350 billion in authorized Troubled Asset Relief Program funds to be ratified by an affirmative vote in the U.S. Congress. In the letter, Senator Inhofe writes that the lame duck session provides Congress a tremendous opportunity to change course. Below is the text of the letter.
I write to inform you of the actions I will be taking during the lame duck session of Congress regarding the funding status of the Troubled Asset Relief Program (TARP). Given the recent news about Secretary Paulson's execution of the TARP program, I firmly believe action is required by Congress. I plan to push for legislation that will require Secretary Paulson's plan for the remaining $350 billion in authorized TARP funds to be ratified by an affirmative vote in the U.S. Congress.
In my statement opposing the Paulson Plan last month, I laid out two primary reasons why I voted ‘no.' The first is that I wasn't convinced that asset-purchase program was the right way to do this, and the second is that it would lead to increased lobbying for handouts and bailouts by any industry facing financial trouble.
I stated at the time that my vote was against the Paulson plan - not against taking extraordinary action to provide necessary confidence to financial markets. I stated that "The Paulson plan would have Washington take $700 billion worth of toxic Wall Street assets from financial firms' balance sheets and put them on the balance sheet of the federal government.... I'm not confident in its success."
The critics were right. On October 14th, in a significant shift, Treasury outlined a plan to directly purchase equity stakes in of major financial institutions. The Wall Street Journal noted that "critics...say Treasury should have formulated a comprehensive plan earlier in the crisis." This past week, Secretary Paulson announced that he has completed a remarkable about face, as summarized by November 13th Investor's Business Daily front page headline, which read, "In Major Reversal, Treasury Won't Buy Bad Mortgage Debt." This is a complete reversal. Why did Paulson reverse course? Thursday's Los Angeles Times provides the answer. "Treasury Secretary Henry M. Paulson's decision to abandon plans to buy troubled bank assets shows that he has come to two conclusions about what was once the chief focus of the government's $700-billion bailout: The first is that it wouldn't work."
I know many of you have serious concerns about how Secretary Paulson has executed the financial rescue program and I share them with you. Congress abdicated its Constitutional responsibility by signing a truly blank check over to the Treasury Secretary. However, the lame duck session of Congress offers us a tremendous opportunity to change course. We should take it.
During the lame duck session, I will be taking the following actions. First and foremost, if Secretary Paulson submits his plan to Congress in order to access the remaining $350 billion while we are in session, a doubtful prospect, I plan to immediately introduce the disapproval resolution pursuant to Section 115 of the EESA and push for its enactment. I will also introduce and actively pursue enactment of legislation to do two things: First, it will amend Section 115 of the Emergency Economic Stabilization Act of 2008 (EESA) to require an affirmative vote on the part of Congress to approve Treasury's plan for the remaining $350 billion, instead of the current statutory process which gives Secretary Paulson far too much latitude. Second, it will require a freeze on any remaining funds of the first $350 billion. It is imperative that we not allow that amount of money to be added to a deficit approaching $1 trillion this year without any input from the legislative branch.
Secretary Paulson stated in a CNBC interview at 2:00pm on Friday, November 14th that "the financial markets have been stabilized." If that is the case, it is Congress's duty to have a say in what happens with the remaining authorized amount of $350 billion. It is clear that it was a mistake to sign a blank check to one man for such a tremendous amount of money. Though there are still significant challenges in financial markets, it appears that the threat of a catastrophic financial crisis, which was the justification for the grant of such sweeping authority, has subsided. Perhaps the additional $350 billion should not be added to the deficit. Congress should have a debate.
I appreciate your time and attention to this matter and look forward to working with you in the coming week.
Senator Jim Inhofe