House Financial Services Committee
2129 Rayburn House Office Building
Washington, D.C. 20515
November 17, 2009
Dear Chairman Frank, Ranking Member Bachus, and Members of the Committee,
As members of Americans for Financial Reform, a coalition of nearly 200 consumer, employee, investor, community and civil rights groups, we write you today to convey the coalition’s strong support for the amendment to H.R. 3996, the Financial Stability Improvement Act of 2009, offered by Representative Brad Sherman.
Rep. Sherman’s amendment would require an affirmative vote of both houses of Congress to approve any authorization of the expenditure of taxpayer dollars to finance the Systemic Resolution Fund. One of the overriding objectives of AFR is to ensuring that taxpayers are never again asked to provide direct or indirect financing for the nation’s largest and riskiest financial institutions. There should be no recourse to taxpayers when financial institutions are, whether through bad luck or bad practices, are on the brink of failure. The Sherman amendment provides a critical safeguard against seeking taxpayer financing for such a purpose by limiting the amount of taxpayer funds authorized by a future Congress by an affirmative vote.
The Troubled Asset Relief Program statute demonstrates the need for affirmative Congressional approval. TARP provided that the second half of the $700 billion government payout be subject to a Congressional Resolution of Disapproval. On January 22, 2009, the House voted 270 to 155 to disapprove this second half. However, the Senate voted against the Resolution of Disapproval, so the second half of the funds was immediately available to the Executive Branch.
We agree with Congressman Sherman that any significant use of public funds should occur only if both houses adopt a Resolution of Approval of a specified dollar amount. The Constitution vests Congress with the authority to spend for the general welfare of the United States. Congress should not delegate this authority to any executive branch agency, particularly not during times of economic uncertainty. These are times when the deliberative nature of Congress is a virtue, not a vice.
We strongly support the Sherman Amendment.