WASHINGTON - Senator Chuck Grassley, along with Senator Ron Wyden, this week filed an amendment to the banking reform bill that would make it even harder for individual senators to secretly obstruct the legislative process.  Grassley and Wyden have led the fight to eliminate secret holds, and in 2007, a modified version of their proposal was included in the Honest Leadership and Open Government Act.  The amendment offered to the banking reform bill is the same as legislation the Senators introduced on April 27.

"Secret holds have been a staple of the Senate for years, and there's no question that both Democrats and Republicans are responsible for the current abuses," said Grassley.  "The previous version of our legislation was so watered down in the final version that I stated at the time it was bound to be abused and ignored.  Many of our colleagues have finally taken notice, and have been sharing their thoughts on the Senate floor.  I welcome their involvement and I hope they'll work with us to get this real reform done and make holds transparent and accountable."

The amendment, and legislation, would eliminate a Senator's ability to indefinitely hold legislation in secret by requiring Senators to submit their holds to leadership in writing and to publically disclose all holds within two days whether or not the bill or nomination has been brought to the floor for consideration.  Leadership will only honor holds that they have in writing and that comply with the two day rule.

The current provision requires Senators to disclose their holds after six days, but the holding period has proven too long to be effective.  This requirement is triggered only when the bill is brought to the floor for consideration, so it's possible for Senators to indefinitely block legislation from reaching the floor without ever disclosing their actions.

Grassley has a long-standing practice of making all his holds public by placing a formal statement announcing and explaining the rationale for the hold in the Congressional Record.

Here is a copy of the prepared text of Grassley's floor statement after the ethics bill was signed into law, containing the requirements for disclosing holds.

 

Prepared Floor Statement of Senator Chuck Grassley

Secret Holds

Wednesday, September 19, 2007

Mr. President,

The Ethics Bill has now been signed into law and, as my colleagues are aware, it contains new requirements for "holds."  Senators may be wondering what exactly is required and how it will all work.  Well, as a co-author of the original measure, I have to tell you that I don't know.  The provisions have been rewritten.  I'm not even sure by whom because it was a closed process and Republicans were not invited to participate.  Now I'm trying to understand how these provisions will work.  Let me give a little background.

I have been working for some time, along with Senator Wyden, to end the practice of secret holds though a rules change or standing order.  I don't believe there is any legitimate reason why a single senator should be able to anonymously block a bill or nomination.  If a senator has the guts to place a hold, they ought to have the guts to say who they are and why they have a hold.  If there is a legitimate reason for a hold, then senators should have no fear of it being public.  I'm not talking hypothetically either.  I'm speaking from experience.  I have voluntarily practiced public holds for a decade or more and have had absolutely no cause to regret it.

Through the years, there have been several times where the leaders of the two parties have agreed to work with Senator Wyden and myself to address this issue, albeit in a way different than we proposed.  I have approached these opportunities with optimism only to be disappointed.  In 1999, at the start of the 106th Congress, Majority Leader Lott and Minority Leader Daschle sent a Dear Colleague to all senators outlining a new policy that any senators placing a hold must notify the sponsor of the legislation and the committee of jurisdiction.  It went on to state that written notification of holds should be provided to the respective Leader, and staff holds would not be honored unless accompanied by a written notification.  This policy was quickly forgotten or ignored by senators.

Then, recognizing that the previous Dear Colleague letter was not effective, Leaders Frist and Daschle sent another Dear Colleague in 2003 that purported to have an enforcement mechanism.  The new policy required notification of the legislation's sponsor, IF, and only if, a member of their party, as well as notification of the senior party member on the committee of jurisdiction.  In other words, this new policy required less disclosure than the previous policy since it only affected holds by members of the same party.  Nevertheless, the Leaders promised that if the disclosure was not made, they would disclose the hold.  It also reiterated that staff holds would not be honored unless accompanied by written notification.  That policy had more holes in it than Swiss cheese.  I'm not sure anyone understood the policy, and it had no effect that I can tell on improving transparency.

No longer willing to settle for half-measures that don't end secret holds once and for all, last Congress, Senator Wyden and I offered our standing order to require full public disclosure of all holds as an amendment to the Lobbying Reform Bill.  It was a well thought out measure that was drafted with the help and support of Senators Lott and Byrd, using their insights and knowledge of Senate procedure as former Majority Leaders.  Our standing order passed the Senate by a vote of 84-13.  While that bill did not become law, it became the starting point for the Ethics Bill passed by the Senate this year.  I thought that the Leaders had finally accepted that we would have full disclosure of holds.  In fact, our secret holds provisions remained intact in the version of the Ethics Bill that originally passed by the Senate earlier this year.  Then, even though the secret holds provisions related only to the Senate, and had already passed the Senate, they were rewritten behind closed doors by members of the majority party.  Once again, I feel like half-measures have been substituted for real reform.

Under the rewritten provisions, a senator will only have to disclose a hold "following the objection to a unanimous consent to proceeding to, and, or passage of, a measure or matter on their behalf."  Obviously in this case the hold would already have existed well before any objection.  In fact, most holds never get to this stage because the threat of the hold prevents a unanimous consent request from being made in the first place.  This is particularly true if the senator placing the hold is a member of the majority party.  In that case, the Majority Leader would simply not ask unanimous consent knowing that a member of his party has a hold.

For instance, it is not clear to me what would happen if the Minority Leader asked unanimous consent to proceed to a bill and the Majority Leader objected on his own behalf to protect his prerogative to set the agenda, but also having the effect of honoring the hold of another member of the Majority Leader's caucus.  Or, what if the Majority Leader asks unanimous consent to proceed to a bill, and the Minority Leader objects, but does not specify on whose behalf, even though a member of the minority party has a hold.  Would the minority senator with the hold then be required to disclose the hold?

I asked the office of the Parliamentarian for an opinion about how the new provisions would work in such instances, but with no legislative history for the changes to the Wyden-Grassley measure, the intent of the rewritten provisions was not evident.  Therefore, I wrote to the Senate Rules Committee to provide insight into the intent of the rewritten provisions.  The response referred me to a Section by Section Analysis of the bill in the Congressional Record that essentially restates the provisions, but sheds no light on my specific questions.  Perhaps that's because the answer is a little embarrassing.  Depending on how the new provisions are interpreted, in the first instance I mentioned, it is possible that holds by members of the majority party will never be made public.  In the second instance, a literal interpretation of the provision might indicate that either Leader could choose to keep a hold by a member of their party secret so long as they do not specify publicly that their objection is on behalf of another senator.

The Rules Committee letter claims that the changes were intended to make the provision "workable."  I don't see how the new provisions are any more workable than the original.  On the contrary, they are not only unworkable, but undermine transparency.

Under the changes, not only is disclosure of holds only required after a formal objection has been made to a unanimous consent request, but senators have a full six session days to make their disclosure.  What's more, a new provision was added specifying that holds lasting up to six days may remain secret forever.  What's the justification for that?  Six days is more than enough time to kill a bill at the end of the session.  And we are saying that it is OK for senators to do that in secret?  There are other changes that are puzzling to me.  For instance, our original measure required holds to be submitted in writing in order to be honored to prevent staff from placing holds without the knowledge of the senator.  However, in the rewrite, senators now must give written notice to the respective Leader of their "intent to object" only AFTER the Leader has ALREADY objected on the senator's behalf.  That is not only unworkable, it's absurd.

Mr. President, I have stated repeatedly and emphatically that, as a matter relating to Senate procedure, it would be completely illegitimate to alter in any way the original Senate-passed measure requiring FULL disclosure of holds.  The U.S. Constitution makes clear that, "Each House may determine the Rules of its Proceedings..."  The hold is a unique feature of the Senate, arising out of its own rules and practices with no equivalent in the House of Representatives.  As such, there is no legitimate reason why this provision, having already passed the Senate, should be altered in any way.  Nevertheless, it was altered in a very substantial way.  In fact, it was altered in a way that I fear will allow secrecy to continue in this institution.  Clearly, the so called "Honest Leadership and Open Government Act" was handled by the majority party in a way that is anything but.  Mr. President, I have been frustrated so far in my attempts to find answers about how the rewritten provisions will be applied, but we'll find out soon enough.  I can assure you that I will not give up until I am satisfied that the public's business is being done in public.

 

-30-

WASHINGTON --- Senator Chuck Grassley is working to make greater transparency at the Federal Reserve part of the financial regulation bill under consideration this week in the U.S. Senate.

"During the last two and a-half years, the Fed has gone well beyond what was viewed as its historical authority, and it's happened without any transparency and resulted in very little accountability," Grassley said.  "The Fed's extraordinary power outside of monetary policy should be subject to the light of day.  Trillions of tax dollars have been provided to financial institutions and corporations, and the public has a right to know who has taken the money and how it's been spent."

With Senator Byron Dorgan of North Dakota, Grassley has filed an amendment to the banking bill that would require the Federal Reserve to release information about its emergency lending program.  The Federal Reserve is appealing a March ruling by a federal court that required this action.

Grassley has cosponsored a separate amendment with Senator Bernie Sanders of Vermont to allow the investigative arm of Congress - the Government Accountability Office, or GAO - to audit the Federal Reserve.  It's based on legislation introduced last year and would require that a GAO audit be delivered to Congress within the year.

A year ago, Grassley won passage of an amendment he offered to the housing bill that gave the GAO the authority, for the first time, to access information from the Federal Reserve about its stabilization efforts with certain entities.  Grassley said the pending amendment to the banking bill allows independent investigators to review all of the Fed's actions where tax dollars were given to failing private-sector entities.

-30-

As Congress moves to rein in Wall Street, measure will eliminate banks' double-dipping

WASHINGTON, D.C. - Today, Senator Tom Harkin (D-IA) introduced an amendment to help consumers facing rising fees at Automated Teller Machines (ATMs).  The amendment came as the Senate began debate on the financial reform bill.

"In recent years, Congress has acted to protect consumers by setting appropriate limits on the types of fees that financial institutions can charge consumers. However, one area that lacks these sensible restrictions is the fees charged to consumers for using Automated Teller Machines (ATMs).  Consumers are being charged ATM fees that are well in excess of the cost of providing services, in some instances, as much as $5 per withdrawal.  These fees are outrageous, are anti-consumer, and they need to be reigned in," said Harkin.

Senator Harkin's amendment would require the new Consumer Financial Protection Bureau to ensure that fees charged to consumers at ATMs bear a reasonable relation to the cost of processing the transaction. The best data available suggests that the cost of processing a transaction is no more than 36 cents today. For this reason, the amendment also sets a reasonable upper limit of 50 cents per transaction - ensuring that banks can continue to offer this service while protecting consumers from unfair fees.

"Under the current structure, banks charge consumers fees for using ATMs while also collecting fees from other banks.  This amendment restricts the double-dipping that benefits banks and costs consumers," said Harkin.  "Our mission in financial reform is to level the playing field for the average Joe.  My amendment goes to the heart of that mission, ensuring consumers are no longer victimized by unfair fees."

Prior to 1996 some card networks actually prohibited financial institutions from charging consumers a fee for using an ATM.  Instead, the costs associated with ATM transactions were paid between banks and the processing networks. However, those restrictions were removed in 1996, and the Federal Reserve now estimates that nationwide, consumers pay an average of $2.66 to use ATMs.

The amendment is particularly relevant to Harkin's home state of Iowa.  Prior to 2002, Iowans did not pay fees for using ATMs.  But in 2002, this law was pre-empted by federal banking regulators, who have since not put any restrictions on the amount of fees that banks can charge.

The amendment is cosponsored by Senators Schumer and Sanders and is supported by the U.S. Public Interest Research Group, the Consumer Federation of America, Consumer Action, Consumers Union and the National Consumer Law Center on behalf of its low-income clients.

WASHINGTON, D.C. - May 4, 2010 - Senator Tom Harkin (D-IA) today issued the following statement as the United States Senate began debate on a financial services reform bill.  Consideration of the measure comes after Senate Republicans obstructed the bill for a full week by voting three times to block the bill from coming up for debate.

"Over the last decade, our economy has fundamentally failed to serve the hard-working families on Main Street, while Wall Street has rewarded itself with multi-million dollar bonuses.  For far too long, their mentality has been 'heads we win and tails the whole nation loses.'  Well, the nation lost.  Those giant institutions and their allies are now claiming they learned their lesson and asking that we trust them.  But we must not risk the nation's economic health again. 

"Millions of taxpayers have seen their retirement savings washed away, their homes foreclosed and many small businesses have had to close their doors.  According to a study by the Pew Charitable Trusts, the financial meltdown and recession have cost the average American family $100,000 in lost wealth and income.

"The financial regulatory reform bill is a strong proposal that will help make our financial system work for all Americans - not just Wall Street.  These reforms will help to put our economy back on solid ground by creating a stable financial sector by helping families and business owners, rather than speculating and gambling with taxpayer money.  It will also provide protection for consumers and will restore a fair playing field for community banks in Iowa. 

"Specifically, the legislation includes a number of provisions that will help make sure we never find ourselves in this situation again.  Among others, it includes the creation of a systemic risk overseer to provide comprehensive oversight to our financial sector; much higher capital standards on the largest financial institutions; strong regulation that would restore transparency and integrity to the derivatives market; the creation of a resolution process akin to bankruptcy that will wind-down the largest financial institutions without the use of taxpayer funds; consolidation of banking regulators to prevent institutions from shopping for the weakest regulation; and a consumer protection bureau devoted to protecting consumers from unfair and abusive practices.

"As this debate moves forward, I will work to ensure that this legislation is not watered down with special carve-outs or weakened in ways that will make taxpayer bailouts more likely in the future.  I will also work to further strengthen the measure by providing additional consumer protections from excessive bank and credit card charges.  Iowans deserve strong reform that protects consumer and holds big banks accountable for their actions, and I will work to make sure that Congress delivers that reform."

Statement of Senator Chuck Grassley

Hearing of the Committee on Finance

The President's Proposed Fee on Financial Institutions Regarding TARP:  Part 2
Tuesday, May 4, 2010

I want to thank two Iowans who will be testifying on our second panel today.  They are John Sorensen, the president and CEO of the Iowa Bankers Association, and Pat Baird, the chairman of AEGON USA and the last chairman of the American Council of Life Insurers.

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. The President's top tax official, the Assistant Secretary for Tax Policy, admitted that the President's proposal is actually an excise tax, and not a 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 completely agree that taxpayers should be paid back every penny of TARP losses. 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.  Let me repeat that, any money raised from a TARP tax would have to be used to pay down the deficit in order to pay back taxpayers.

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 just more tax-and-spend big government, while the taxpayers foot the bill for Washington's out-of-control spending.  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.

These are the same pay-go rules that say expiring spending provisions don't need to be paid for, but expiring tax provisions do need to be paid for.  That's inconsistent, until you realize that it leads to more taxing and more spending, which results in bigger government.

I hope that Secretary Geithner will assure us that the President means what he says about repaying taxpayers, and that the President will veto any TARP tax that simply spends the TARP tax money without paying down the deficit.

In looking at the President's TARP tax proposal, which I understand the President has already felt the need to change, I find it 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.

Also, Fannie and Freddie are not subject to the tax.  And hedge funds, like John Paulson's that is involved in the recent Goldman scandal, are not subject to the President's proposed tax.  Meanwhile, companies that did not take any TARP money are subject to the proposed tax. Also, companies that weren't eligible to take any TARP money are subject to the proposed tax. So, it's a questionable design that has been proposed by the President.

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. I ask unanimous consent that the CBO letter, and a letter from the Independent Community Bankers Association in opposition to the TARP tax be printed in the record.

One of the purposes stated by the President was to reduce risky behavior by financial institutions.  However, CBO stated in their letter to me that the TARP tax "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."

One area I'm concerned about is the effect of the tax on small business lending.  CBO stated in their letter to me that it will reduce small business lending.  This comes at a time when the President and my friends on the other side of the aisle are trying to increase the tax rates on small businesses at the end of this year.

The nonpartisan Joint Committee on Taxation has written that 47 percent of all flow-through business income will be hit with the President's proposed tax rate hikes.  This hits small businesses especially hard, because most small businesses are operated as flow-through entities.  I have yet to hear Administration officials even acknowledge this fact.  Instead, Administration officials choose to use the misleading talking point that the tax increases will only affect 2 or 3 percent of small businesses.  I look forward to hearing the testimony of Secretary Geithner and the other witnesses on the President's proposed TARP tax.

###

Momentum Builds to Reach Program's Goal of 15,000 Jobs

CHICAGO - May 3, 2010. Governor Pat Quinn today announced that 349 employers across the state have agreed to employ more than 2,825 workers through the Quinn Administration's Put Illinois to Work (PIW) employment program, which was launched only a week ago.

At that time, Governor Quinn unveiled the PIW program, an anti-poverty effort designed to develop a healthy workforce by putting unemployed and underemployed Illinois residents to work. Put Illinois to Work is expected to create more than 15,000 jobs.

"The response by employers and workers has been tremendous, and the momentum is building toward creating more good-paying jobs that can support families and communities," said Governor Quinn. "Already, 349 employers across Illinois have signed on to Put Illinois to Work and committed to employing 2,825 people. I encourage businesses and residents across the state to visit PutIllinoistoWork.Illinois.gov and fill out an application."

Through Put Illinois to Work, eligible Illinois residents will be placed in subsidized employment positions with participating worksites for up to six months, learning valuable skills and supporting their families. The program will help stimulate Illinois' ailing economy and develop a healthy workforce by providing meaningful work experience for participants.

The Put Illinois to Work program was recently profiled in a story appearing last Sunday in the New York Times, which noted the program is designed to deal with the current economic emergency by allowing employers to create jobs for members of low-income families and single mothers immediately throughout the state.

Private, public and non-profit businesses are encouraged to sign on with Put Illinois to Work. Eligible participants will be matched to subsidized employment opportunities with these worksites in hopes that they might transition into an unsubsidized position at the program's conclusion.

Put Illinois to Work is a collaborative effort of the Illinois Department of Human Services (IDHS), the Illinois Department of Commerce and Economic Opportunity (DCEO) and Heartland Human Care Services (HHCS). Funding is provided through the Temporary Assistance for Needy Families (TANF) Emergency Contingency Fund (ECF), which was created by the American Recovery and Reinvestment Act of 2009 (ARRA).

Eligible worksites and participants must meet program criteria and agree to adhere to specific programmatic requirements. Participants must be age 18-21, or 18 and older and the parent (custodial or non-custodial) of a minor child. All participants must have a household income below 200 percent of the Federal Poverty Level ($2,428 per month for a family of two) and be legally present and authorized to work.

For eligibility criteria and additional information on Put Illinois to Work, visit www.PutIllinoistoWork.Illinois.gov.

###

GLENVIEW, IL - April 29, 2010. Governor Pat Quinn today announced an approximately $4 million investment package to assist Astellas Pharma US, Inc in establishing their new corporate headquarters for the Americas in Glenview. The state's business package will leverage $140 million in private investment and will create 150 new jobs, further strengthening the economy of Northeast Illinois.

"I am pleased Astellas selected Illinois for its new headquarters for the Americas," said Governor Quinn, who attended the company's groundbreaking ceremony. "This major investment will create new jobs and generate economic activity throughout the region. At the same time, this decision highlights Illinois role as a Midwestern leader in the life sciences business and its emergence as a vital base of operation for the biopharmaceutical industry's future growth."

Construction of the new headquarters is scheduled to be completed in the spring of 2012. It will include two six-story buildings totaling 425,000 square feet. The buildings and site will emphasize sustainability and the complex is designed to achieve LEED Gold certification. The company's current Deerfield-based employees will be relocating to the new headquarters.

"At Astellas, we measure success not only by bringing innovative and effective pharmaceuticals to patients and physicians, but also by our contributions to local communities and protection of the environment," said Seigo Kashii, President and CEO of Astellas Pharma US, Inc. "Today we are fulfilling our vision for continued growth through our groundbreaking for a new corporate headquarters."

The state's investment package, administered by the Department of Commerce and Economic Opportunity (DCEO), will consist of Economic Development for a Growing Economy (EDGE) corporate income tax credits, which are based on job creation, and Employer Training Investment Program (ETIP) job training funds that will help enhance the skills of its workforce.

"In order for our economy to continue growing, we must continue making strategic investments on the local level that will create jobs and support long-term sustainable growth," said DCEO Director Warren Ribley. "Our investment in Astellas will pay dividends for this region and the state."

Astellas' expansion will also support Illinois' growing life sciences industry. Illinois' biopharmaceutical industry, which is supported by the state's highly-regarded federal labs and top-notch research universities, directly employs more than 40,000 people and supports more than 112,000 indirect and induced jobs.
###

We would like to announce the promotion of Geoff Pearson to Business Development Manager for Ryder Transportation.

Geoff is a graduate of Illinois State University with a Bachelor of Arts Degree. Geoff will be covering the eastern Iowa market. Geoff started his career at Ryder as a Rental Manager Trainee in 2006 and most recently held the position of Rental Account Manager. Geoff has been in the Iowa market since 2007, and will be selling Ryder Transportation solutions for business to business opportunities effective May 1st.

Ryder specializes in a wide range of fleet management services, including full service truck leasing; commercial truck lease financing combined with programmed maintenance, onsite and programmed fleet maintenance, truck rental and a comprehensive network of fuel services.

For more information, contact Geoff at the Ryder location in Davenport, Iowa at 563-386-8000.

In the wake of the West Virginia coal mining disaster that killed 29 miners, the blast on a Louisiana oil rig off the Gulf of Mexico that most likely killed 11 workers and so many other work related tragedies, we are painfully reminded that we must pay more attention to the safety of American workers.  Every day folks across Iowa go to work in factories and at facilities that are quite simply, dangerous workplaces. 

As the son of an Iowa coal miner, I feel for these workers and their families, on a very personal level.  My thoughts and prayers are with the families and coworkers of those killed, injured or missing because of these awful tragedies.  One of the best ways we can honor their memory is to renew our efforts to protect workers' lives and improve safety and health in our country's coal mines and other dangerous workplaces.

This past week in Washington, I held a hearing on the very subject of what Congress needs to do to improve worker safety and create a culture of compliance at mines and other dangerous workplaces.  Our Senate hearing was held on April 27, the eve of Worker's Memorial Day - a day that is set aside to remember the thousands of brave men and women who die on the job in our country each year. 

Certainly, the history of the American workplace suggests that when we focus our efforts, we have the ability to make great strides to improve safety and health.  Since passage of the Coal Mine Health and Safety Act and Occupational Safety and Health Act four decades ago, countless lives have been saved and the number of workplace accidents has been dramatically reduced.  Yet we still have a long way to go.

In addition to putting real teeth in our safety and health laws, we have to make sure that our federal agencies have the enforcement tools they need to identify mines and non-mine workplaces with the worst safety records in the country and hold these repeat offenders accountable.  We have provisions in our laws that are supposed to target repeat offenders, but these special rules are often rendered ineffective - either weakened through mistaken interpretation, or undermined by employers who will go to great lengths to game the system.  This broken system must be fixed.

As we move forward, I plan to do everything I can in Congress to ensure that Iowa's - and our nation's - sons and daughters, moms and dads, brothers and sisters all come home safe from a hard day's work.  We should not rest until these recent work related tragedies are a chapter in the history books, and we no longer have any need to observe a day of mourning for American workers killed on the job.

###
 

WASHINGTON - April 28, 2010 - Senator Chuck Grassley today continued to peel back the layers of taxpayer obligations behind last week's claim and fanfare about General Motors repaying its multi-billion dollar loan from the Troubled Asset Relief Program, the $700 billion taxpayer-funded bailout.

Last week, Grassley asked the Treasury Secretary why the administration had allowed GM to use money from an escrow account at Treasury to repay this loan, allowing "an elaborate TARP money shuffle."

In a floor speech this afternoon, Grassley said the response he received today from the Treasury Department confirmed that taxpayers funded the loan repayment by way of cash that GM has because the federal government originally loaned that cash to GM, and then the federal government agreed to forgive some of GM's debt during bankruptcy in exchange for stock in the company, the value of which is uncertain.

"The bottom line is that the repayment was made on the dime of taxpayers across America, and it's misleading to say that GM repaid its TARP loans 'in full, with interest, ahead of schedule, because more customers are buying' GM cars," Grassley said.  "Taxpayers remain on the hook, thanks to the failed deal cut by the government to try to save GM from bankruptcy.  Now, GM has pulled an additional $6.6 billion out of the escrow account but has left unpaid a $2.5 billion, nine-percent loan to the union health benefit fund."

Here is the April 19, 2010, request from GM to the Treasury Department asking for the distribution to GM of the entire amount of the reserve funds. 

Grassley said the American people deserve straightforward information about what's happening with TARP and the tax dollars being used by the Treasury Department to manage what the government has taken over from the private sector.  "The situation hasn't been described in a candid way, and that's added insult to injury after more than a year of bailouts and record-level deficit spending."

Grassley has conducted oversight of the Treasury Department's management of TARP and gone to bat for the Special Inspector General for TARP when the administration has put up barriers to the Inspector General determining where the money has gone.  The Iowa senator has criticized the lack of transparency with how TARP funds have been used and, last fall, he cosponsored legislation to end the program.

The Special Inspector General for TARP was created at the urging of Grassley and Senator Max Baucus of Montana, and when the Treasury Department changed the focus of the program less than a month after it began, Grassley worked with Senator Claire McCaskill of Missouri to retool the Inspector General's authority and empower the office to adequately scrutinize TARP spending and management.

Here is the text of Grassley's remarks today.

Floor Statement of U.S. Senator Chuck Grassley

GM and TARP

Wednesday, April 28, 2010

Mr. President.  Last Thursday, I wrote Secretary Geithner asking why the Treasury Department allowed General Motors to use TARP money from a Treasury escrow account to repay its multi-billion dollar TARP taxpayer loan.  This afternoon, I received a response from Treasury.  I'd like to say a few words about the reply and the questions that remain unanswered.  Last week, Treasury and GM announced with press releases and nationwide TV commercials that GM had repaid its TARP loans "in full, with interest, ahead of schedule, because more customers are buying [GM vehicles]."

However, the hype does not match the reality.  Taxpayers have not been repaid in full?far from it.  Many billions of TARP dollars remain invested by Treasury in GM, and much of it will never be repaid.  The Congressional Budget Office estimates that taxpayers will lose around $30 billion on GM.  In addition, the payment that occurred last week did not come from revenue GM earned by selling cars, despite what was claimed.  Instead, Treasury allowed GM to use funds in a separate escrow account to pay its TARP debt.  The Treasury Department's response to me today makes a point of saying that GM "owns" the money in the escrow account, as if that somehow justifies all the hoopla about GM's so-called "repayment."

Well, let's look at how GM came to "own" those escrow funds in the first place.  The escrow funds were part of the TARP money Treasury paid for GM stock coming out of the bankruptcy.  The money was supposed to be used by GM for expenses, as Treasury concedes.  Treasury had the power to approve or disapprove GM's use of the money to repay the TARP taxpayer loan.  Treasury approved, and GM pretended it was paying the loan back from revenue because business had improved.  Business may have improved, but that's not how they paid the loan.  Taking TARP money out of one account to pay back TARP loans in another account is not at all the same as paying off a loan with earnings, as GM's TV commercials imply they have done.  That is why I called it "an elaborate TARP money shuffle" and nothing in Treasury's reply today changes that.

The public would know nothing about the TARP escrow money being the source of the supposed repayment from simply watching GM's TV commercials or reading Treasury's press release.  Treasury's letter today says all these details are public knowledge and nothing new.  Well, that may be technically correct, but it wasn't clearly communicated that way to the average citizen.  Most Americans don't pore through SEC filings and Special Inspector General's reports.

The GM commercial also did not mention that GM could have used the TARP escrow funds to repay a $2.5 billion, nine-percent loan it received from its union health plan as part of the bankruptcy process.  The union loan runs until 2017.  The TARP loan was at seven percent and ran until 2015.  What sort of money manager would advise you to pay off a lower interest loan before a higher interest loan?  GM and Treasury have still not explained that, and I have asked the TARP watchdog, Special Inspector Neil Barofsky, to get to the bottom of it.  And to make matters worse, Treasury has admitted that it let GM take an additional $6.6 billion of TARP dollars out of the escrow fund last week with no strings attached.  That money, too, could have been used to repay the high interest union loan.

There are reports that GM also applied to the Department of Energy for a $10 billion, five-percent loan to retool its plants to meet fuel economy standards.  GM seems to be using government money to pay back government money, and then asking for more government money at a lower interest rate.  It sounds like a plan to refinance GM's government debt with more taxpayer money--not pay it back.

GM had to ask permission from Treasury to use the taxpayers' stock investment to pay off the taxpayers' loan. Treasury's response to my letter says that "Treasury retained approval rights over GMs use of funds from the escrow account in order to protect the taxpayer."  Well, why didn't they protect the taxpayer then?  Why would Treasury allow GM to use its equity investment to pay off the loan when it means giving up the legal right to a seven percent rate of return for the taxpayers in exchange for essentially nothing?  Since the taxpayer has an equity stake in the company, it's true that future growth of GM could theoretically make taxpayers whole, but taxpayers already had that equity interest before this latest transaction and didn't get any more equity as a result of the transaction.

Another key question is why would GM orchestrate a major media campaign to make the public think this all represents some big accomplishment by GM when the truth is that the taxpayers are still on the hook for billions that we may never recover?  Using the taxpayers' stock investment in GM to reduce its debt to the taxpayers is not the same as repaying that debt from money actually earned by selling cars.  Treasury's reply today does not explain why it approved this transaction.  Maybe it's a step in the right direction, maybe not.  But, instead of misleading the American people, we should be clear and up front about what happened here.

Pages