Republicans say Obama loan program is first step toward TARP slush fund

Jon Ward
The Daily Caller
2/3/2010

Republicans accused President Obama on Tuesday of taking a step toward using the $700 billion Wall Street bailout as a slush fund, a possibility many worried about when the Troubled Asset Relief Program was first created during the economic panic of 2008.

“Our TARP should not be a piggy bank. It was intended to stabilize the financial system. It has stabilized the financial system. As it is paid back with interest it should go to reduce the debt,” Sen. Judd Gregg, New Hampshire Republican and ranking member on the Senate Budget Committee, said in a brief interview.

Obama traveled to New Hampshire to promote his idea, a proposal to move $30 billion out of TARP and loan it to community banks, in order to spur lending to small businesses. Obama only touched on the idea during the town hall, but it drew fire from Republican lawmakers in Washington as well as some Democrats.

The president’s idea, which requires legislative action by Congress, would remove the $30 billion from the pot of money that is scheduled to be paid back to the $12. 4 trillion national debt this fall, when TARP is scheduled to expire. A White House official confirmed to The Daily Caller that the money would no longer go toward paying down the debt if the president’s idea became law.

“They can do that?” asked Sen. Mark Pryor, Arkansas Democrat.

A White House release said that the reason for moving the money out of TARP would be to “encourage broader participation by banks, as they would not face TARP restrictions.” Many of the largest recipients of TARP funds have paid back their loans with interest, seeking to avoid government dictates on executive pay or other matters.

Pryor said that using TARP money for such a purpose likely went outside the bounds of “truth in budgeting.”

“If we’re going to spend more money let’s be more transparent about that,” he said. “I think the American people want us to be clearer and more transparent about what we’re doing with their taxpayer dollars.”

The idea had some defenders among the Democratic caucus, however.

The article continues at The Daily Caller.

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