Last week, a bipartisan group of Representatives introduced legislation (H.R. 3594) that would set forth a specific exit strategy for the Troubled Asset Relief Program (TARP). Sponsored by the Ranking Republican on the House Financial Services Committee, Rep. Spencer Bachus (R-AL), the bill is cosponsored by the Chairman of the Financial Services Committee’s Subcommittee on Capital Markets, Rep. Paul Kanjorski (D-PA), along with several other Financial Services Committee Members and House Minority Leader John Boehner (R-OH).
H.R. 3594 is known as the TARP Recipient Ownership Trust Act, and it seeks to allay widespread concern that the Treasury Department has not specified how the federal government will wind down its multi-billion dollar involvement in TARP-recipient companies. Under Rep. Bachus’ legislation, an independent trust would manage the federal government's investment in firms where its interest is more than 15 percent. This trust would be managed by three independent trustees, all of whom would operate as fiduciaries on behalf of taxpayers, and who would be responsible for divesting the government's interest by December 24, 2011.
Similar legislation was introduced in the Senate earlier this year, and is pending consideration by the Banking, Housing and Urban Affairs Committee. The bill – S. 1280 – also has bipartisan support, and would apply to companies in which the government ownership stake is more than 20 percent.