Special to The Progress

WASHINGTON, D.C. — Jeb Hensarling, who represents Cherokee County in the House of Representatives, on Thursday was appointed to serve on the Congressional Oversight Panel, a five-member organization established to provide oversight for the $700 billion Troubled Asset Recovery Program, or TARP, created in October.   

“It appears that 80 percent of the funds that are currently available under the TARP have already been committed, and it is essential that proper oversight begin immediately for the millions of taxpayers across the country whose hard earned dollars are paying for it,” Hensarling said in a press release.

“I did not support the original Emergency Economic Stabilization Act, though I recognize that we have a legitimate crisis — as opposed to those that occasionally get manufactured in Washington,” he said. “Along with many other conservatives, I preferred a secured loan model to tackle the financial crisis and a suspension of the capital gains tax to allow capital to flow into the market. Unfortunately, our ideas did not carry the day.

“Now that it is the law of the land, I will work to ensure that the TARP is transparent to the taxpayers that fund it and will operate with much-needed oversight and accountability so that it is able to work,” Hensarling said. “$700 billion is a lot of money, and I haven’t found anybody who doesn’t want a piece of it. I will work to ensure that the Obama administration uses a merit-based system to determine how TARP funds are used, and that recipients are chosen by how they impact our macro economy and not a politically driven process of picking winners and losers. Taxpayer protection and accountability must always be paramount. 

Hensarling serves on the House Financial Services Committee and was a leading critic of the original program to buy illiquid assets from financial institutions. He, along, with other conservatives, proposed alternatives to TARP that included a program based on the FDIC insurance we now have for bank deposits. Additionally, alternatives included a suspension of capital gains taxes, repatriation infusion, temporary revision of mark-to-market accounting rules, among others proposals.

According to Section 125 of the Emergency Economic Stabilization Act of 2008, the panel shall review the current state of the financial markets and the regulatory system, and submit “regular reports” to Congress on the use by the Secretary of authority under the act, including the use of contracting authority and the administration of the program; the impact of purchases made under the act on financial markets and financial institutions; the extent to which information made available on transactions has contributed to market transparency; and the effectiveness of foreclosure mitigation efforts and the effectiveness of the program from the standpoint of minimizing long-term costs to the taxpayers and maximizing the benefits for taxpayers.  

The Congressional Oversight Panel’s first regular report is due to Congress within 30 days after the Treasury Secretary’s first exercise of TARP authority and the panel will report every 30 days thereafter. 

Hensarling noted the importance of the panel’s report due by Jan. 20, 2009, that will, in part, analyze the current financial regulatory system and its effectiveness at overseeing market participants. 

“We have an opportunity in the 111th Congress to put politics aside and have a genuine debate about how we improve the American free enterprise system, which despite its current challenges, remains the envy of the world,” Hensarling said. “The January report, for better or worse, will make a major contribution to that debate and I look forward to participating in that process.”