On January 15, 2009, the Senate is expected to vote on S.J.Res.5, a Joint Resolution Relating to the Disapproval of Obligations Under the Emergency Economic Stabilization Act of 2008. The resolution would prevent the release of the second tranche of Troubled Asset Relief Program funds, previously authorized under the Emergency Economic Stabilization Act of 2008. President Bush, in consultation with President-elect Obama – who will ultimately control their use – requested these funds as a next step in the effort to stabilize the U.S. financial system and reopen lines of credit for consumers and small businesses.
In response to the increasing instability in the credit markets last fall, the Emergency Economic Stabilization Act (“EESA”) established the Troubled Assets Relief Program (“TARP”). Under TARP, the Secretary of the Treasury is authorized to act to restore liquidity and stability to the financial system of the United States. Specifically, Treasury is allowed to buy up to $700 billion in troubled assets from financial institutions in order to ease the pressures in the credit markets in the short-term, as well as to strengthen the financial system in the long-term to prevent a similar crisis in the future.
EESA authorized funds for this purpose on a graduated scale. A first tranche of $350 billion was available in October 2008. In order to access the remaining $350 billion, the law requires the President to submit a certification of need to the Congress and a written report to Congress detailing the Secretary’s plan to exercise this additional authority. President Bush, in consultation with and at the request of President-elect Obama, requested the second tranche of funds on January 12, 2009.
This request triggered a 15-day period during which the Senate and House may enact, under special parliamentary procedures, a joint resolution disapproving this request. On January 12, 2009, Senator Vitter introduced S.J.Res.5 to disapprove the President’s request.
President-elect Obama has indicated that he believes that for TARP to be successful, it must come with guarantees of transparency, oversight, and accountability. Consequently, representatives from the incoming Obama Administration have consulted with Members of Congress concerning appropriate conditions to reform the administration and accountability of the TARP. Dr. Larry Summers has sent two letters detailing the incoming Administration’s plans for overhauling the TARP.
S.J.Res.5 would prevent the Secretary of the Treasury from accessing the second tranche of the $700 billion authorized by EESA. The resolution conforms to the content requirements specified in the Section 115(c)(2) of EESA.
On January 12, 2009, President Bush transmitted to Congress a report detailing a plan to exercise the authority under 115(a)(3) of the Emergency Economic Stabilization Act (P.L. 110-343) to access the second half of the TARP funds. This report triggered a 15-day period during which the Congress may enact a joint resolution disapproving the authorization of the remaining TARP funds. The Congress must vote on the resolution by the sixth day of this 15-day period. If the resolution of disapproval is defeated, the funds would be available to the Administration at the end of the 15-day period. On January 13, 2009, Senator Vitter introduced S.J.Res.5 in the Senate.
Pursuant to special “fast-track” procedures provided for in Section 115(e) of the EESA, S.J.Res.5 was placed on Senate Legislative Calendar under General Orders (Calendar No. 16).
Representative Fox introduced a related resolution (H.J.Res.3) in the House on January 6, 2009.
The request for the remaining TARP funds was made by President Bush and is supported by President-elect Obama.
Congressional Research Service, The Emergency Economic Stabilization Act and Recent Financial Turmoil: Issues and Analysis (January 13, 2009), available here.
Congressional Research Service, Fast Track Procedures to Disapprove Additional Funds under the Emergency Economic Stabilization Act (January 14, 2009), available here.
Senate Democratic Communications Center, Remaining TARP Funds Needed to Ease Credit Markets and Mitigate Foreclosures (January 15, 2009), available here.