What: All Issues : Government Checks on Corporate Power : S 896. (Housing loans modification) Vitter of Louisiana amendment that would allow funds to be recovered as part of the housing loan program, once the recipient meets certain requirements/On agreeing to the amendment (2009 senate Roll Call 176)
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S 896. (Housing loans modification) Vitter of Louisiana amendment that would allow funds to be recovered as part of the housing loan program, once the recipient meets certain requirements/On agreeing to the amendment
senate Roll Call 176     May 04, 2009
Progressive Position:
Nay
Progressive Result:
Win
Qualifies as polarizing?
Yes
Is this vote crucial?
No

This vote was on an amendment by David Vitter, R-La., that would have stipulated that any bank that had accepted bailout money can repay that money with interest, and then exit the bailout program (known as TARP) whenever it chooses, as long as it meets certain criteria related to solvency. The amendment was offered to a bill that would ease application and eligibility requirements for a $300 billion foreclosure prevention program enacted to help blunt the impact of the economic downturn.

“The TARP program was designed to stabilize shaky banks. So if a bank wants to give back the money, with interest, as long as it meets all of the safety and soundness criteria—every one in sight—it should be able to do that,” Vitter said.  “You would think this would be beyond debate. Unfortunately, it is not and, unfortunately, several folks, starting with the Secretary of the Treasury, Timothy Geithner, are refusing to let this happen. In fact, Secretary Geithner has been very clear that this isn’t simply up to those banks; it is up to their new senior partner, the Federal Government. It is sort of like when the mob comes in as your partner in a business; you lose complete control and you cannot decide that it is not time for them to buy you out. After that happens, no, no, no, it is no longer your decision.”

Chris Dodd, D-Conn., said Vitter is correct that how financially solvent is an important criteria to consider when determining when banks should repay their debt, but that solvency isn’t the only criteria.  Dodd said it’s important to ensure that the banks’ financial policies also are sound, to avoid a repeat of the current economic fiasco.

“We have major lending institutions, which I could make a case both in Citi and Bank of America, that are well capitalized but, frankly, they have other issues they are grappling with beyond being well capitalized,” Dodd said.  “Their problems could migrate very quickly to the larger financial problems with which we are trying to deal.”

By a vote of 39-53, the amendment was rejected.  All but four Republicans present voted for the amendment.  All but six Democrats present voted against the amendment.  The end result is that the measure went forward without language that would have allowed banks to repay bailout money when they chose, as long as they met solvency requirements.

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