John Thune

Posted: September 22nd 2009

From the Argus Leader:

Sen. John Thune is asking the Obama administration to get out of the business of taking over failing industries that have used federal aid to right themselves.

In a letter also signed by 38 other Senate Republicans, Thune urges Treasury Secretary Timothy Geithner to not renew the $700 billion Troubled Asset Relief Program (TARP) when it expires Dec. 31.

“TARP has been used by the federal government to acquire ownership stakes in banks, financial institutions, and automakers,” the letter states. “This direct investment certainly was not the intention of Congress in passing this legislation. In fact, Congress explicitly rejected legislation to provide federal funds to bail out car manufacturers.”

Thune said unused TARP funds should be used to reduce the federal deficit. Similarly, any TARP dollars being repaid by the banks should go to the deficit as well, he said.

“If Geithner decides to, he can extend the program at the end of the year, and he only needs to certify to Congress that he is doing it,” Thune said Monday evening. “This is the only opportunity for Congress to be heard on this.”

At least one South Dakota banker said he believes the money from TARP hasn’t been distributed fairly to banks. Jack Hopkins, president and chief executive officer of CorTrust, said TARP dollars have been used “for the too-big-to-fail banks, to keep them from failing.”

“But from a South Dakota perspective, the community banks that probably could have used those funds didn’t have access to them,” Hopkins said. “I have a lot of banker friends in areas that are stressed economically, and they have applied for TARP dollars but have been turned down.”

With many experts predicting economic recovery in coming months, the senators say the TARP funding is no longer needed to shore up the financial markets. And Thune worries that extending the program could result in the money being used for more than just helping ailing financial institutions.

“We don’t want this thing to become ... a slush fund for other purposes,” Thune said. “The Treasury Department has been a little bit unclear, and Geithner has been unclear, on how this money is going to be used.”

...

Among the recipients was insurance giant AIG, which had access to $182 billion in TARP funds between September 2008 and April 2009. ...

The Treasury Department said abandoning a program that has been successful would be unwise, given the fragile economic conditions.

“The administration must continue to provide support where it is still needed to rehabilitate disrupted markets that provide critical credit to households and businesses,” according to the agency. “It would be a mistake to withdraw abruptly from programs supporting these channels for new credit before a self-sustaining economic recovery has taken hold.”

Thune said what he’s proposing wouldn’t require institutions like AIG to repay their loans immediately.

“We’re basically saying, ‘We’re not going to extend the program so additional monies can be used for additional purposes,” he said.

Hopkins said he doesn’t want to see TARP extended.

“I think there is a disparity between large banks in trouble and those who are too small who could use the money,” Hopkins said. “I don’t think the TARP dollars are being distributed fairly. So I wouldn’t be thrilled about the idea of extending the program. I’d just as soon they use the dollars to reduce the deficit if they aren’t going to use them the way that was told to the general public.”

Though billions of TARP dollars remain unpaid, the program was used to finance the hugely popular “Cash for Clunkers” program, which gave consumers money to trade in old gas-guzzling cars for new, more efficient models.

Echoing a public sentiment that the government is spending too much too fast, Thune has sponsored a bill that would force the Obama administration to sell off its stake in private businesses.