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Senator John Thune today offered an amendment (S.AMDT.1002) to the Fraud Enforcement and Recovery bill (S.386) that would require the Secretary of the Treasury to use taxpayer funds returned by financial institutions under the Troubled Assets Relief Program (TARP) to reduce the national debt. Several financial institutions that received TARP funding have returned or expressed an interest in returning billions in taxpayer funding.

"This amendment ensures that the funds returned by banks [and other financial institutions] are directed toward debt reduction rather than being redirected for other purposes by the Treasury Department," said Thune. "Congress is responsible for allocating taxpayer dollars and this amendment will prevent the Obama Administration from attempting to turn this money into a revolving slush fund. TARP was designed for the President to report back to Congress and seek approval for additional funding.

"If the President or the Treasury Secretary needs additional taxpayer dollars to assist with stabilizing the financial sector, they should present that plan to the American public and Congress to gain our approval. Instead of using TARP dollars to purchase troubled assets as Congress was told the money would be used for last year when the legislation was passed by the House and the Senate, the Treasury Department has created 12 separate programs that involve roughly $3 trillion in financial risk to the U.S. taxpayer. My straightforward amendment would basically ensure that as TARP money is recouped by the Treasury, it will be directed to debt reduction and not used for other purposes."

Recently, Secretary of the Treasury Timothy Geithner has indicated that he intends to spend these funds on additional TARP activities without Congressional approval. Yesterday, Senator Thune introduced similar language in the form of a standalone bill (S. 869).

Senator Thune's amendment would in no way rescind TARP funding, it ensures that when funds are returned to the Treasury in the future, they are directed toward debt reduction and are not used for other purposes.