Senator Charles E. Schumer

FOR IMMEDIATE RELEASE: December 11, 2008

SENATE PASSES SCHUMER BACKED BILL TO STRENGTHEN OVERSIGHT OF BAILOUT FUNDS

WASHINGTON, D.C. – More than two months after Congress approved a $700 billion rescue plan, questions about the program’s oversight have remained. But today, the U.S. Senate passed legislation from a bipartisan group of senators that would strengthen government oversight of the Troubled Assets Relief Program (TARP) plan approved by Congress in October. The bill would put in place provisions to better monitor how the $700 billion dollars are spent by increasing the power and authority of the Special Inspector General created to oversee the program.

The legislation was introduced by U.S. Senators Claire McCaskill (D-MO), Chuck Grassley (R-IA), Susan Collins (R-ME), Joseph Lieberman (I-CT), Olympia Snowe (R-ME), Christopher Dodd (D-CT), Jim Bunning (R-KY), and Charles Schumer (D-NY). The senators are working with the House of Representatives to get the bill passed before Congress adjourns for the year.

The financial rescue plan was written based on the plan spelled out by the Treasury Department at the time, to buy up troubled, toxic assets. Now that the Treasury plan has changed, the authority of the Special Inspector General needs to be broadened. The McCaskill-Grassley bill will provide the necessary fixes to ensure there is strong oversight in place.

The legislation:

Makes clear Special IG has authority over ALL actions taken under the relief plan.
Gives IG the authority to hire auditors quickly by granting him temporary hiring authority.
Requires the Treasury Secretary to explain to Congress why any IG recommendations are not implemented.
Requires that the IG issue a report in July of 2009 to Congress analyzing how the program’s funds have been spent to date. The report will also be made public and posted on the Internet within 24 hours of its release.
Makes the funds for the Office of the Special Inspector General available immediately to allow IG to set up his office.

“We just approved the watchdog to monitor this rescue plan, but it won’t mean much if he doesn’t have the resources and authority he needs to do the job. This measure will improve oversight of the taxpayers’ money and make sure the firms receiving government funds follow the strict guidelines as Congress intended,” Schumer said.

“Let me be clear. The taxpayer money that is being used is not a ‘bail out’, but a crucial investment. The American people entrusted Congress with their money and we are loaning and investing it in order to keep our economy afloat. Bottom line – we need to make sure we get this money back and the only way we can do that is with strong oversight on how this money is spent. This bill gives the inspector general the authority he needs to make that happen,” McCaskill said.

“This legislation builds on what we learned from our experience in creating a Special IG to oversee Iraq reconstruction efforts. It makes sure this Special IG, who will oversee the $700 billion effort to stabilize the economy, has the authority he needs to maximize effective oversight of what goes on. The stakes are high, and the taxpayer investment is massive, so the more formidable the watchdog, the better,” said Grassley.

“As a member of the Senate Finance Committee, it became abundantly clear at the Committee’s hearing on Special Inspector General Barofsky’s nomination that, given of the enormity of the program, the highest level of transparency and accountability would be essential,” Snowe said. “And just last week, the Government Accountability Office reported there is insufficient oversight of the TARP program. That is why this legislation introduced by Senator McCaskill -- which closely tracks a bill I introduced in late November – is essential to strengthening the inspector general’s authority to safeguard taxpayer dollars,” said Snowe. “This legislation will allow the Inspector General unlimited access in auditing funds under the TARP program to ensure funds are being properly utilized. In particular I am gratified the bill contains a provision to require a study of whether banks are utilizing the funds they have received to spur additional lending.”

“This legislation will ensure that the Special Inspector General for the bailout has the necessary authority to scrutinize this massive rescue effort closely. The bill would make it easier for him to hire the staff he needs quickly and it underscores our intention to have the IG examine every aspect of this unprecedented recovery program,” Lieberman said.

“The American public deserves to know that there is a strong authority in place to oversee implementation of the $700 billion financial rescue bill. That is why I advocated for oversight and accountability provisions in the original bill, and why I have joined Senator McCaskill and a bipartisan group of my colleagues in cosponsoring this legislation. This bill will further strengthen the Special IG’s authority, create greater transparency, and expand its oversight to ensure that taxpayer dollars are protected,” Collins said.

“This bill will enable Special Inspector General Barofsky to organize his staff and commence his oversight responsibilities as soon as possible. In light of the hundreds of billions of taxpayer dollars that are already on the line and the legitimate concerns raised by the GAO, I believe this legislation is vital to the Special Inspector General’s ability to ensure the integrity of the financial rescue law,” Dodd said.

“I am glad the Senate has acted to ensure that Neil Barofsky has the full authority he needs as Inspector General for TARP to look into any mishandling of the bailout funds by Treasury,” said Bunning. “I have said all along that the bailout would not work the way Secretary Paulson and Federal Reserve Chairman Ben Bernanke originally sold the plan to Congress. And since it became law they have completely changed course in the way they are using the program to bail out their buddies on Wall Street. I don’t believe for one minute that Secretary Paulson has been straight with the American people in his handling of TARP. With the confirmation of Neil Barofsky and the passage of this legislation we now have someone in place with the necessary tools to hold Secretary Paulson’s feet to the fire as well as anyone who succeeds him.”

###

Resource Center