WASHINGTON   –  U.S. Rep. Jo Ann Emerson (MO-08) today gave voice to the concerns of her constituents about federal spending on various Treasury programs, particularly the $700 billion Troubled Asset Relief Program (TARP).   Today’s hearing of the Subcommittee on Financial Services Appropriations, on which Emerson serves as Ranking Member, featured the testimony of U.S. Treasury Secretary Timothy Geithner.

Emerson, who voted for an initial authorization for the TARP, ultimately opposed the release of $350 billion to the program in February of 2009.

“I have long been very disappointed in the TARP for a number of reasons,” Emerson said.  “Most importantly, the TARP has not been used for the purposes Congress was told were going to be its primary responsibilities.  A program to acquire and rehabilitate troubled assets will not be put into effect for another five or six weeks at the earliest, but Congress was led to believe that would happen right away.  Instead, the Administration has used the TARP to acquire a government stake, in the form of preferred stock, in private companies.  Now there is even talk of converting that preferred stock into common, voting stock, so the federal government can play an even stronger role on the corporate boards of major American companies.  I think that arrangement far oversteps the boundaries of appropriate Treasury regulation in the private sector.”

Emerson also raised concerns that the Treasury has not allocated more resources to discover fraud that led to the financial collapse, nor does the TARP appear to intend to deposit repayments to the TARP in the U.S. Treasury.

“When a huge bank or financial firm repays the money it has borrowed from the TARP, that money ought to go back into the taxpayers’ Treasury.  Instead, the TARP is taking it and lending it to more and more sectors of the economy, and it looks as though this program will continue to recycle its funding until the very last moment federal law allows it.”

Life insurance companies and community banks have been cited as the next economic sectors to be targeted by TARP preferred lending programs.

“And finally, the Treasury needs to meet its enforcement obligations as a federal agency to discover fraud in the mortgage and financial markets and to punish any wrongdoing it finds there.  I can’t think of anyone who has been called to account for the thousands of fraudulent, no-documentation loans which were written – mostly in over-inflated housing markets on the coasts – which have led to the collapse of the American financial sector.  These are fundamental trust issues between Americans and their lenders, and we need to work harder to restore their faith by creating a safe, fair and stable lending system.”

Emerson is also critical of payments by AIG to foreign banks in France, Germany, Britain and Switzerland with federal funds acquired from the U.S. Treasury during the insurance giant’s bailout.