House passes “TARP II”

December 11 , 2009

Today the House passed H.R. 4173, the so-called “Wall Street Reform and Consumer Protection Act of 2009” by a vote of 223-202. Many refer to the bill as “TARP II” because it includes a massive $150 billion “permanent bailout fund” with additional authority to borrow $50 billion from the U.S. Treasury. The Democrats’ bill generates a new resolution fund by levying assessments on large financial institutions. This would have the adverse consequence of further restricting credit to consumers and small businesses alike.

“It’s just wrong to create a tax-payer funded bailout regime as a vehicle to inject more government bureaucracy into the economy. That’s the last thing we need,” stated Congressman Sam Johnson (3rd Dist.—Texas), an ardent fiscal conservative. “Rather than letting firms that made risky bets fail, Democrats have chosen to prop up these institutions and support their creditors against losses. The best way for Congress to make sure that firms aren’t taking unnecessary risks is to leave the threat of bankruptcy in place.”

Also, this bill threatens to considerably expand the federal government’s regulation of the free market, and further limit the options consumers and businesses have for loans and other forms of credit.

For one, the bill establishes a new bureaucratic Financial Services Oversight Council chaired by the Treasury Secretary. The oversight council would be charged with applying stricter prudential standards for financial stability purposes. Unfortunately, “standards” is a relative term which can be broadly interpreted and applied to everything from regulation of compensation at financial institutions to rationing of credit which will undoubtedly stifle small business growth. In addition, it empowers a singular government entity, the Consumer Financial Protection Agency, to determine what financial products are deemed safe for individuals, instead of allowing consumers to choose which products best fit their needs.

“We have seen over and over that government intervention into the marketplace just doesn’t work. It baffles me that the Democrats think federal bureaucrats can run a business better from their offices in Washington than the individuals who show up to work every day,” stated Johnson.

Johnson represents portions of Dallas and Collin Counties.

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