January 22, 2009
On Wednesday the House passed H.R. 384: TARP Reform and Accountability Act. This legislation amends the Troubled Asset Relief Program (TARP) established as part of the Emergency Economic Stabilization Act of 2008. The measure is designed to increase accountability and transparency over the use of the designated funds as well as provide more relief for homeowners facing foreclosure.
Congressman Mike Capuano proposed a number of provisions to H.R. 384 which passed in the House on Wednesday. Specifically, language was added clarifying that one to four unit family homes are included in the definition of "residential properties", making them eligible for participation in the foreclosure mitigation program. Renters also receive some protection with the inclusion of a measure that prevents any entity taking over a foreclosed home from evicting tenants for 90 days.
"This gives renters facing the loss of their residence through no fault of their own some additional time to find alternative arrangements," stated Congressman Capuano.
Language changing the membership of the Financial Stability Oversight Board to include members who are not currently federal employees or appointees was included as well as language giving this Board the authority to overturn policy decisions of the Treasury Secretary on TARP by a 2/3 vote.
"This will give the Oversight Board more autonomy when it comes to overseeing the TARP Program and provide an additional layer of assurance that taxpayer funds are being spent wisely," stated Congressman Mike Capuano, a member of the House Financial Services Committee.
Additional language would set a floor of at least 15% for warrant provisions for all institutions receiving TARP funds, which sets an even playing field regardless of an institution's size. A "warrant" ensures that the federal government is able to buy stock in a company at a specified price so that taxpayers will benefit from any future growth of these companies.
Congressman Capuano also worked with his colleagues to include language for strict rules on compensating executives of TARP recipient institutions, including prohibiting golden parachutes, curbing the reward of risky behavior, and allowing the recovery of bonuses based on false earnings. These measures were also applied earlier to automakers receiving government funds. In addition, language was added prohibiting recipient institutions to merge unless federal regulators determined it would reduce risk to taxpayers or that the merger could have occurred without the use of TARP funds.
"The amount of money that the government has invested in the TARP program is substantial and our overall goal of unfreezing the credit market and stabilizing the economy must be realized. If entities receiving these funds are using them in ways that do not directly provide economic relief, they should not be able to continue using the funds. Now that the Senate has voted to allow the use of the second $350, it is more important than ever to place conditions on its use," stated Congressman Capuano.
H.R. 384 now moves to the Senate for consideration.
Contact: Alison M. Mills (617) 621-6208