Any Bailout Profits Go to Pay Down Debt, Not 'Directly' to Taxpayers, Says House Financial Services Chairman Frank

October 29, 2008 - 2:16 PM
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(CNSNews.com) – If the $700 billion financial bailout is “managed correctly,” said Democratic presidential candidate Barack Obama in early October, “every penny … will go directly back to the American people.”
 
But that’s not what the bailout bill says, and House Financial Services Chairman Barney Frank (D-Mass.) explained to CNSNews.com that any profits from the bailout over time will go to the U.S. Treasury to pay down the federal debt.
 
Any revenue from the bailout, “goes into the Treasury,” said Frank, who added that “paying down the debt does benefit the federal government -- it does benefit the taxpayers.” But it does not go directly back to the taxpayers.

Section 106(d) of the $700 billion bailout bill, entitled “Transfer to the Treasury,” says that “(all) revenues of, and proceeds from the sale of troubled assets purchased under this Act . . . shall be paid into the general fund of the Treasury for reduction of the public debt.”

However, on the Senate floor on Oct. 1, Obama, in support of the bailout said:  “If this is managed correctly, and that is an important ‘if,’ we will hopefully get most of our money back, and possibly even turn a profit on the government's investment -- every penny of which will go directly back to the American people.”

According to the Congressional Research Service, foreign investors hold a majority of the United States’s national debt:  53.1 percent. A majority (69.7 percent) of those investors are foreign governments.

“Because foreigners hold the debt, should we refuse to pay them?” said Frank. “No, I don’t think we should refuse to pay them.”
 
“Do I favor paying off the federal debt? Yes,” said Frank.