Senator Chuck Grassley issued the comment below about his vote with a bipartisan group of senators to continue debate on S.3217, the Financial Stability Bill.

Background Information:

Grassley has offered a number of amendments aimed at increasing transparency and accountability in the bureaucracy and industry, including the Federal Reserve, the Securities and Exchange Commission, credit-rating agencies and Congress itself.  He won passage of his amendment to establish for employees of credit-rating agencies the same whistleblower protections he secured for corporate employees after Enron, and the Senate approved an amendment he cosponsored to remove the conflicts of interest that compromise assessments by credit-rating agencies.  Grassley also won passage of his amendment to strengthen the hand of Inspectors General throughout the federal bureaucracy to fight fraud, abuse and mismanagement.  Grassley's IG amendment was adopted by a vote of 75 to 21, and responded to language in the Dodd bill which would have undermined the independence of Inspectors General at five federal agencies dealing with the financial system.

Grassley Comment:

"There was opposition from Republicans and Democrats to shutting down debate because there are important amendments that should be considered but that could have been shut out by this procedural move.  For example, there was an amendment to protect small businesses from unfair overreach by the new bureaucracy created in this bill.  There's an amendment to make big banks pay for the new consumer agency, rather than taxpayers.  There's an amendment to protect private consumer information.  There's an amendment to make sure ATM fees are proportional to the cost of the service.  There's an amendment to make the hedge-fund registration requirement more effective.  There's an amendment to keep taxpayers from being played in a new derivatives market should cap-and-trade climate legislation be pushed through Congress by the current majority.  It wasn't responsible to shut down this bill at this time given the stakes for consumers and taxpayers and everything that's been learned about the lack of accountability with regulators and industry leading up to the financial crisis of 2008."

DES MOINES, Iowa, May 17, 2010 – The representative group for the Iowans who employ more people and generate more jobs today named a new state director. In selecting Kristin Kunert, the National Federation of Independent Business has chosen someone who brings to the job that vital blend of skills all associations need in this modern era, according to Dave Brasher, NFIB's regional state public policy director.

"The speed at which information travels in our hyper-communicative age, and the much greater transparency and public accountability of official proceedings, have required a variety of talents from people representing associations such as ours," said Brasher, "and I'm delighted we found them all in Kristin Kunert. She brings a mix of legal, policy, lobbying, and communications experience that will supremely aid our members."

Prior to joining NFIB, Kunert had been director of government relations for the Iowa Telecommunications Association for three years. Along her professional path, she has been an assistant general counsel for West Bank and a research analyst for the Iowa House Republican Caucus.

A native Iowan, Kunert was born in Dubuque. After graduating from the University of Iowa in 1997 with a double major in journalism and English, she took a job with the Temerlin/McClain advertising agency in Dallas and worked numerous states for one of its major clients, American Airlines.

After returning home, Kunert attended Drake University to study law and graduated with her J.D. Degree in 2004 and passed the Iowa Bar Association that same year. Kunert's husband, Mitch, is also an attorney, and together with their two children make their home in Ankeny.

For NFIB/Iowa she will direct its lobbying, public affairs, and political operations, as well as member requests.

It's no wonder public opinion towards the federal government is sinking to historic lows. Consider the disingenuous public relations strategy undertaken by General Motors (GM) and the Treasury Department. With great fanfare, the U.S. automaker boasted that it was paying back billions of tax dollars to Uncle Sam thanks to an upswing in car sales.

Upon closer review, however, the repayment announcement is overshadowed by the fact that the Treasury Department allowed GM to dip into another taxpayer-financed pot of money to repay $7 billion of its taxpayer-backed government loan.

It's obvious why the car company and Treasury Department would be eager to claim tax dollars were being paid back "in full" and earlier than scheduled.  However, it's regrettable the very public announcement essentially misled the American public by glossing over very relevant details.

Taxpayers still own 61 percent (paid for with $41 billion tax dollars) of General Motors' common stock. It's highly likely the taxpaying public won't rejoice in an estimate by the nonpartisan Congressional Budget Office. It says taxpayers stand to lose around $30 billion on the General Motors bailout when it's all said and done.

The idea that Washington can solve every problem with a government program is rooted in a misguided borrow-and-spend mentality.

Holding the federal government accountable, tracking tax dollars and keeping the people's business open and accessible to public scrutiny are central to my congressional oversight.  As Chairman or Ranking Member of the tax-writing Senate Finance Committee, I've led efforts to shut down offshore corporate tax loopholes; investigate the eligibility and compliance of non-profit organizations relative to their tax-exempt status; disclose financial relationships between the pharmaceutical industry and researchers who provide expertise that influences health decisions; and, most recently, scrutinize the trillions of tax dollars that Washington has pumped into the private sector.

As Congress debates financial regulatory reform, I worked to advance bipartisan legislation that would bring more transparency and accountability to the Federal Reserve. The Fed controls the supply of money in the U.S. economy. Last year the Federal Reserve took unprecedented action to stabilize banks at risk of failing. The American public has a right to know who has taken the money and how it has been spent. Allowing the independent investigative arm of Congress, the Government Accountability Office, to audit the Federal Reserve's emergency lending program would give lawmakers and taxpayers another tool to protect tax dollars.  I also cosponsored legislation to reform the way credit-rating agency evaluations are handled in order to help bring about the independent assessment investors deserve.  It's a matter of market integrity.

In these times of economic uncertainty, the American public is facing an even bigger burden of public debt. Washington is marching towards an all-time-high spending benchmark, reaching 25 percent of the nation's gross domestic product. Now, the nonpartisan Congressional Budget Office, or CBO, said health care reform will cost $115 billion more than projected.  That makes the deficit reduction that was promised impossible.  Despite the President's promise that health care reform would not add one dime to the deficit, when costs for Social Security and the new long-term care CLASS Act program in the bill are factored in, the real result is that the bill signed into law adds $90 billion to the deficit.

A bigger government has a bigger appetite for more and more taxes. Without a major shift, the current path of reckless deficit spending and unsustainable public entitlements will keep future generations of Americans working longer than ever before just to fulfill their tax obligations let alone maintain a certain standard of living.

Friday, May 14, 2010

 

I want to make crystal clear that taxpayers should be paid back every penny of TARP losses.  The statute that created TARP said that the President is supposed to propose a plan in 2013 to repay taxpayers for any losses from TARP.  However, earlier this year, three years before he was supposed to under the statute, the President proposed what he called a Financial Crisis Responsibility Fee.

Obviously, in 2013 we will have a much better estimate of projected TARP losses than we have now in 2010.  The President said that one of the purposes of the TARP tax is to repay taxpayers for any losses from TARP.  I want to make sure this actually happens, and that it's not just empty rhetoric.  Any losses that result from TARP will increase the deficit, which has ballooned under President Obama.  Therefore, to pay back taxpayers for any TARP losses, any money raised from the TARP tax would have to be used to pay down the deficit.  If a TARP tax is imposed and the money is simply spent, that doesn't repay taxpayers one cent for any TARP losses.  It's like getting a raise and saying you're going to pay down your credit card with the extra money, but then choosing to spend the money instead of paying down the credit card.

It shouldn't be any surprise to learn that your credit card balance didn't go down.  Saying you're going to pay down your credit card -- in this case, the deficit -- doesn't do any good.  You have to actually do it.  I've heard that some of my friends on the other side of the aisle are already looking to use the money raised from a TARP tax to spend it under their arbitrary pay-go rules.

When I tried to get a commitment from Secretary Geithner on this point, he wouldn't give me one.  That's disappointing.  However, I was encouraged that it sounds like the Chairman of the Ways and Means Committee and I see the TARP tax the same way.  Martin Vaughan wrote a May 5 Dow Jones Newswires column titled, "House Panel Chairman: Bank Tax Plan Not Ready For Prime Time."  The column states, "Levin signaled he doesn't favor pairing the bank tax with legislation already pending in Congress, such as the financial overhaul bill or a separate bill to extend expired tax breaks.  First, he said, the tax should be used for deficit reduction and not to pay for new spending.  'At this point, I don't think the bank tax is ready to be a pay-for,' Levin said."

In looking at the President's TARP tax proposal, which I understand the President has already felt the need to change, it's interesting that GM and Chrysler, which are responsible for about 30 billion of projected losses in TARP, are not subject to the President's proposed tax.  Secretary Geithner said that GM and Chrysler were simply victims of the financial crisis, and therefore shouldn't be subject to the President's tax.  However, Ford didn't take any TARP money and survived just fine.  In addition, with GM and Chrysler responsible for such large amounts of TARP losses, it seems only fair that they should be subject to the TARP tax to pay back some of those losses.  GM and Chrysler were both invited by Chairman Baucus and me to testify at this hearing and make their case regarding why they shouldn't be subject to the tax, and both declined.  Their silence is deafening.

Also, Fannie and Freddie are not subject to the tax.  We'll explore whether that makes sense at today's hearing.  And hedge funds are not subject to the President's proposed tax. Meanwhile, companies that did not take any TARP money are subject to the proposed tax.

The President's proposed tax is so lacking in details that members of Congress that are being asked to support it are having a very difficult time figuring out how it would apply and who is subject to the tax.   When I asked CBO to tell me who would bear the burden of the TARP tax, they said that one of the groups that would bear the burden of the tax would be consumers.  CBO stated in their letter to me that the President's tax will reduce small business lending.  Under the new version of the tax proposed by the President, small business loans would be considered the riskiest assets held by the banks, and therefore subject to the highest taxes.  Considering the 9.9 percent unemployment rate, the trouble small businesses are having getting credit, and the proposed tax hikes on small business, I am very concerned with that aspect of the proposal.

One of the purposes for the tax stated by the President is to reduce risky behavior by financial institutions.  However, CBO stated in their letter to me that the TARP tax, quote, "would not have a significant impact on the stability of financial institutions or significantly alter the risk that government outlays will be needed to cover future losses."  That's not just me saying it, that's the nonpartisan CBO saying it. If the United States imposes a TARP tax and other countries don't, it will make our financial institutions less competitive than their foreign competitors.  Of the G-20 countries, Australia, Canada, Japan, Russia, and Brazil are opposed to a bank tax, and South Africa doesn't want its banks taxed.  I look forward to hearing the testimony from the witnesses today.