Contact: Riki Parikh (Warner) (202) 224-2425
Monday, June 22, 2009
Warner, Corker Introduce Bipartisan Bill to Maximize Taxpayer Returns of TARP Investments
~ Bill creates private market trust for TARP investments, sets end date for gov’t ownership ~
Senator Mark R. Warner (D-VA) spoke on the Senate floor June 22 about bipartisan legislation he has introduced with Senator Bob Corker (R-TN) that will maximize returns of taxpayer investments into TARP (Troubled Asset Relief Program) assisted institutions. The bill provides for a responsible exit strategy from government ownership of TARP recipient companies, like AIG, Citigroup, and General Motors.
“American taxpayers deserve to have their investments managed in a way that rewards the enormous risk we took in helping these institutions,” said Senator Warner. “The bipartisan legislation that Senator Corker and I propose will set parameters so we can take these investments out of the federal government’s hands and ensure maximum returns.”
The TARP Recipient Ownership Trust Act of 2009 will move any government ownership stakes in private companies greater than 20 percent (which, by fall 2009, will include AIG, Citigroup, and General Motors) into a newly created Limited Liability Corporation (LLC).
The bill will require taxpayer ownership of TARP assisted institutions to be managed in the private sector by managers who have been successful in the private market in order to maximize the return on investments.
The trust that will be managed by three independent, nonpolitical trustees, appointed by the President, with the objective of looking at TARP recipient companies with fiduciary responsibility to the taxpayers.
The bill also directs the trustees to liquidate the government’s interests by December 24, 2011, but stipulates that if the trustees feel liquidation is not in the best interest of taxpayers, they can come back to Congress at that time with their alternative recommendation.
The text of his floor statement follows:
“Mr. President, I rise today to discuss bipartisan legislation I am cosponsoring with my colleague, Senator Corker, concerning the federal government’s recently acquired ownership stake of a number of private companies.
“Taxpayers have been on a roller coaster ride for the past nine months, and from their perspective, each twist and turn has left us more deeply invested in troubled markets and companies. Americans are concerned about getting their money back and want to keep politics out of how we manage these investments.
“S. 1280, the TARP Recipient Ownership Trust Act that was introduced last week by Senator Corker and I will:
1. Remove politics from our management of taxpayer investments into private companies;
2. Ensure that these investments are managed in order to maximize taxpayer returns; and
3. Allow us to plan for removing the government from the private sector by setting a date certain for selling these investments.
“To achieve these goals, Senator Corker and I are proposing that if the government owns more than 20% of a company, that we place that ownership state in an independent trust. This trust would be run with a fiduciary duty for taxpayers by three directors appointed by the President. These directors would agree to perform this work for free as a service to the country, and in doing so would give American taxpayers what they deserve: the upside of the massive investments they have provided over the past nine months. And the trust would have to sell all of these assets by the end of 2011, though they could ask for a brief extension if it was in the interest of taxpayers. In this way, taxpayers can know we won’t own stock in these companies for the next 20 years.
“In practice, this means that taxpayer ownership of AIG, Citigroup, and General Motors would be managed in order to maximize return on these taxpayer investments.
“Mr. President, we have all seen how political and contentious the TARP program has become. I personally think that it was necessary at the time to do it.
“Steven Pearlstein of the Washington Post was onto something in a recent piece where he pointed out that six or nine months ago very few would have predicted or did predict that we would be where we are today: the stock market is up nearly 40% from its lows, some banks are already repaying TARP money, there are some positive indicators in the housing markets, and job losses are at least slowing.
“We have a long way to go, but we are seeing some evidence of progress.
“However, one need only look at the number of TARP related amendments that have been filed in the Senate in the past month to know that the program is becoming a lightning rod. Some of the reasons for the concern it inspires are that:
· The American people don’t know when or how the TARP program is supposed to end, and
· The American people who invested in individual companies at a time when no one else would don’t know how much they will get back.
“I do not support cutting off the TARP program right now, or limiting the tools it currently provides to the Administration, including the limited reuse of money that is repaid to the government. TARP already has a sunset date after which more funds cannot be spent. Since our markets are not back to normal, even though there is improvement, we shouldn’t prevent the use of the tools we currently have.
“But we do need to set some parameters for managing our investments and winding them down in order to take the politics out of the program.
“American taxpayers deserve to have their investments managed in order to maximize their returns. That is what this trust will do and I hope we consider using this model for our other investments as well.
“This trust will also help us take some of the politics out of the TARP program, and that is why I am proud that this legislation is bipartisan, and led by my friend from Tennessee, Senator Corker.
“I hope my colleagues will join us in supporting this bipartisan legislation, S. 1280, the TARP Recipient Ownership Trust Act.
“While this measure won’t resolve all of our concerns surrounding the TARP, I hope it can serve as a model as we seek to maximize the taxpayer returns on their investments.”
