TARP For Main Street?

You know the dealer, the dealer is a man
With the love grass in his hand
Oh but the pusher is a monster
Good God, he's not a natural man
The dealer for a nickel
Lord, will sell you lots of sweet dreams
Ah, but the pusher ruin your body
Lord, he'll leave your, he'll leave your mind to scream
- The Pusher, Steppenwolf 1968

When the president announced last month that some financial institutions would be permitted to repay Troubled Asset Relief Program (TARP) monies, he also said that the program had turned a profit for the government. Indeed, the General Accountability Office (GAO) stated that the government had received $6.2 billion in dividends. Great news, you might say; that money will be useful toward paying down the nations massive debt. Well, not so fast.

Rep. Barney Frank, the chairman of the House Financial Services Committee, wants to snatch up that money before the taxpayers know what hit them. While the TARP program was originally designed as an emergency measure to stop financial collapse in the banking industry, Mr. Frank now wants to start bailing out individuals. The full committee will hold a hearing on a bill - H.R. 3068, TARP for Main Street Act of 2009 - that will "use amounts made available under the Troubled Assets Relief Program of the Secretary of the Treasury for relief for homeowners and neighborhoods."

Mr. Frank wants to take $1 billion from dividends paid by financial institutions to the federal government and put it into a trust fund for low-income rental housing. Next, he wants another $1.5 billion from TARP dividends for a "neighborhood stabilization" fund. How this money would be distributed is unknown, but some speculate that it would be through "community organizing" groups. Anyone for an ACORN? This is the redistribution of wealth that Obama spoke of to Joe the Plumber during the campaign.

According to Barney Frank, we need to "help" unemployed people who are struggling to save their homes. However, his "give a man a fish" approach will only stifle the incentive for those folks to find a job. Steppenwolf had it right; "God damn the pusher man".

Fortunately, there is a counter bill in the senate - the Stop TARP Asset Recycling (STAR) Act - co-sponsored by Orrin Hatch (R-Utah) and Blanche Lincoln (D-Ark.) According to Mr. Hatch's website:

The Stop TARP Asset Recycling (STAR) Act would require any TARP funds returned to the U.S. Department of the Treasury to be placed in the general fund in order to pay down the nation’s debt. Current law is unclear whether returned funds could be recycled into TARP and used to expand federal investment in the private sector.

One would think that after the Democrats' hand-wringing over the Bush deficits, this bill would be a no-brainer slam dunk. It would also seem obvious that allowing Barney Frank to keep meddling in the housing sector would be a recipe for disaster.

Blanche Lincoln said it best:

“TARP was never meant to be a permanent program, but rather an emergency initiative designed to stabilize our financial markets and bring greater confidence to investors and business. It is only appropriate for that program to be phased out as expeditiously as possible.”

Let's hope that her point of view prevails.

Sphere: Related Content