Senators Bunning, Vitter ask Fed for answers

Washington Examiner ^ | 12/4/09 | Barbara Hollingsworth

[FromLori]

In a Dec. 2 letter to New York Fed chair Dennis Hughes, Senators Jim Bunning, R-KY, and David Vitter, R-LA, asked him to explain the workings of the little-known Term Asset-Backed Lending Facility (TALF), which was authorized by the Federal Reserve Board in November 2008. The Fed got $20 billion in TARP funds to back $40 billion of TALF loans made to stimulate the economy.

But "there are troubling questions raised by [the] selection of certain participants in the program," the letter said, including Loop Capital, a major donor to the Democratic Party.

Noting that taxpayers are much more at risk than private investors, TARP Special Inspector General Neil Barofsky said that TALF is "an ideal opportunity to money-laundering organizations." An analysis by Americans for Limited Government (www.GetLiberty.org) concluded that because of TALF’s commitments, the Fed may be unable to reduce the money supply, possibly leading to runaway inflation.

"Senators Vitter and Bunning are to be praised for their commitment to ensuring that taxpayers' money is not mishandled by the Federal Reserve in response to the financial crisis," said ALG president Bill Wilson, who calls TALF “a bailout-welfare fund for powerful political elites.”