Congressman Dennis Kucinich
WASHINGTON (JULY 21, 2009)
Domestic Policy Subcommittee Chair Announces New Probe of TARP
Representative Dennis Kucinich (D-OH), who has led the effort challenging the use of TARP funds through two administrations, today questioned whether or not “banks are parking a historic amount of taxpayers’ money in the Federal Reserve while the businesses and consumers across America are starved for credit” and whether the Federal Reserve is “paying banks not to make loans.”
Kucinich raised the question in a hearing this morning before the Government and Oversight Committee at which the Special Inspector General for TARP, Neil Barofsky, testified.
Kucinich cited today’s Fed news report on Bloomberg.com:
“Meanwhile, banks’ excess reserves at the Fed rose to a record $877.1 billion daily average in the two weeks ended May 20, from $2 billion a year earlier. Excess reserves — money available for lending that banks choose to leave with the Fed instead — averaged $743.9 billion in the first two weeks of this month.” – – Bloomberg.com
“If these reports are true, this raises significant questions about who the Fed is working for. There is record unemployment and businesses and consumers across American are starved for capital, if the Fed is paying higher interest rates on term deposits in order to induce banks to keep money at the Fed rather than lend, it would be an outrage,” Kucinich said.
Kucinich recounted for Barofsky the policy path which TARP followed when it was first presented to Congress:
“First Congress was told that TARP was for the purchase of toxic assets, to help keep people in their homes. Then the Bush Administration switched the program.
“Next Congress was told that the TARP funds were instead needed to bail out the banks, in the form of a direct capital infusion, to keep credit markets alive.
“If TARP isn’t about keeping people in their homes or providing credit to businesses, what is it for? I think the vast majority of Americans would be outraged to learn their tax dollars were facilitating hoarding at the Fed and increased profit making for banks,” Kucinich said.
Kucinich said that the Domestic Policy Subcommittee, which he chairs, will ask Fed Chairman Bernanke and Treasury Secretary Geithner to explain the program.
In March, the Domestic Policy Subcommittee held a hearing entitled, “Peeling Back the TARP: Exposing Treasury’s Failure to Monitor the Ways Financial Institutions are Using Taxpayer Funds Provided under the Troubled Assets Relief Program.”