Washington, D.C. – Congressman Pete Sessions (TX-32) today sent a letter to Treasury Secretary Tim Geithner, expressing concern about the Administration’s reported plans to consider converting the government’s preferred stock in banks under the Troubled Asset Relief Program (TARP) into common equity shares.
“Converting preferred shares into common equity signals a drastic shift towards a government strategy of long-term ownership and involvement in some of our nation’s largest banks,” said Sessions. “Millions of Americans are rightly outraged at the mismanagement of TARP and the reckless use of their tax dollars, and I believe that taxpayers are increasingly uneasy with the federal government’s growing involvement in the financial markets.”
“Enabling the government to play an increasingly activist role in banks’ day-to-day operations and management raises serious questions of policies leading to de facto bank nationalization,” continued Sessions, “and deeper investments in banks’ capital structure places taxpayer dollars at greater risk of being lost in the event of institutional insolvency.”
Since TARP was implemented last fall, the Treasury Department has purchased stock worth hundreds of billions of dollars in some of our nation’s largest financial institutions. Originally designed to temporarily shore up our nation’s banks to prevent economic collapse, TARP has also been used to mitigate mortgage foreclosures, prop up automakers, and fund a number of ad hoc financial “interests.”
In February, Sessions joined other House Republican Leaders in sending a letter to Secretary Geithner, requesting answers on the use of TARP funds and an exit strategy from government bailouts. To date, Secretary Geithner has failed to respond to this congressional inquiry.
“This Administration is not above oversight and accountability. The American people deserve answers for the use of their tax dollars and an exit strategy from taxpayer-funded bailouts, including how their investment in TARP will be returned. That is why I will continue fighting for transparency and accountability on behalf of hard-working Americans who deserve much better from their government,” Sessions concluded.