WASHINGTON - A majority of Republicans in the U.S. Senate on Friday called on the Obama administration to let the authority to tap a $700 billion financial bailout fund expire at the end of the year as scheduled.
In a letter to U.S. Treasury Secretary Timothy Geithner, 39 of the Senate's 40 Republicans and one Democrat said an extension of the Troubled Asset Relief Program (TARP) was not necessary.
While we understand that our economy is still recovering, we believe it can function without added TARP funding, the letter said. Additionally, the cost to the taxpayer if TARP authority was extended could be substantial.
Geithner last week told a congressionally appointed panel overseeing the bailout fund that no decision had been made on whether to seek approval to extend the bailout program past its scheduled expiry at the end of the year.
Congress approved the $700 billion fund in October last year as the financial crisis deepened after the collapse of investment bank Lehman Brothers.
The fund has been used to strengthen the capital positions of hundreds of banks, to prop up insurer American International Group and U.S. automakers, and to encourage mortgage servicers to modify loans for homeowners facing foreclosure.
The aggressive rescue efforts have deepened the U.S. government's involvement in the financial sector and made taxpayers major shareholders in some of the nation's largest financial institutions.
This direct investment certainly was not the intention of Congress in passing this legislation, the lawmakers said, pointing out that Congress specifically rejected legislation to provide federal funds to aid car manufacturers.
The Senators said the unused funds and any TARP repayments should go toward reducing the federal debt.
Under the law, the authority would expire on December 31, unless Geithner submits a written certification to Congress providing a justification for why an extension is needed.
(Reporting by Tim Ahmann and Ayesha Rascoe; editing by Mohammad Zargham)