On January 21, 2009, the House adopted Barney Frank’s TARP Reform and Accountability Act of 2009, which would impose conditions on the use of remaining TARP funds. However, the Senate has already voted to release the remaining TARP funds (without conditions) and is believed unlikely to consider this legislation. As a result, the legislation is non-binding, but theoretically expresses the will of the people. As a result, Barney Frank believes that the passage of the measure will give Congress additional flexibility of the Obama administration does not follow through on the conditions provided for in the Reform Act. The text of the bill, as adopted by the House, can be obtained from the Government Printing Office.
The final bill is largely unchanged from Frank’s initial proposal, however some amendments were approved by the House. The approved amendments:
- clarify that the requirements on the use of TARP funds would NOT apply to financial institutions that have applied to participate under the existing TARP Capital program;
- strike the provision requiring divestiture of private planes;
- require the Treasury to provide a fully searchable database of TARP recipients;
- state that it is “the sense of Congress” that any institution receiving assistance should not initiate (or continue) foreclosure proceedings with respect to any principal homeowner mortgage until a comprehensive foreclosure mitigation plan has been implemented; and
- prohibit recipients of TARP funds from entering into agreements with any foreign company for the provision of customer service functions.
Again, these conditions are unlikely to become law, but may provide guidance as to how Obama’s Treasury department will proceed. The passage of the Reform Act also shows that the House intends to make permanent the increase in FDIC deposit insurance to $250,000 per depositor.