Special Report:
The Financial Services Bailout

With a financial services bailout bill slated for a vote in the House of Representatives as early as the afternoon of Monday, September 29, this special report focuses only on that legislation.

A bill has not been introduced, but a copy of the bill language has been posted on the WashingtonWatch.com blog.

An estimate produced by WashingtonWatch.com puts the spending in this legislation at about $6,500 per U.S. family, or a little over $2,000 per person.

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Troubled Asset Relief Program

The central feature of the bill is the creation of a Troubled Asset Relief Program, or “TARP,” in Section 101. The TARP would exist to “purchase, and to make and fund commitments to purchase, troubled assets from any financial institution, on such terms and conditions as are determined by the Secretary . . . .”

Rules about the operation of the TARP and oversight of it are found in other sections that follow Section 101.

The Secretary of the Treasury would be authorized to spend up to $700 billion on this program.

Congressional Controls?

While the legislation has a great deal more oversight than earlier proposals, spending would likely reach the full $700 billion permitted in the bill.

The major impediment to spending all the money is in Section 115, which is called “Graduated Authorization to Purchase.”

It would immediately grant the Treasury Secretary authority to spend $250 billion. At any time, the President could send a certification to Congress and the spending authority would rise $100 billion more. After that certification, the President would have only to submit a plan to spend yet more and the Secretary’s authority would rise to the full $700 billion.

Only if Congress introduced and passed legislation to stop further spending would it be capped at $350 billion. Congress would almost certainly not pass such legislation, and even if it did the President could veto it, requiring a nearly-impossible-to-reach supermajority in both houses to stop the spending.

What Can You Do?

Given the size and importance of this legislation, this is a good time to contact your Member of Congress and express your opinion. The Capitol switchboard number is 202-225-3121.

You can expect that there will be many calls to Capitol Hill this week. Be patient with the switchboard operators and with the congressional staff in your representative’s office.

Ask that your opinion be shared with your Member of Congress, and tell the person you speak with that you will be watching to see how your representative votes.

In early November, of course, you can register your opinion of your representative by voting in the election.

Again, be polite at all times. Discourtesy to congressional staff will almost guarantee that your views will not be shared with your Member of Congress.