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[Congressional Record Volume 155, Number 1 (Tuesday, January 6, 2009)]
[Senate]
[Pages S88-S89]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN:
  S. 116. A bill to require the Secretary of the Treasury to allocate 
$10,000,000,000 of Troubled Asset Relief Program funds to local 
governments that have suffered significant losses due to highly-rated 
investments in failed financial institutions; to the Committee on 
Banking, Housing, and Urban Affairs.
  Mrs. FEINSTEIN. MR. President, I rise today to introduce legislation 
that will provide relief to local governments that have suffered losses 
due to highly-rated investments with failed financial institutions, 
such as Lehman Brothers and Washington Mutual.
  The TARP Assistance for Local Governments Act would require the 
Treasury Secretary to provide $10 billion in TARP funds to local 
governments that suffered losses due to investments in failed financial 
institutions; and limit relief to local governments with investments in 
failed financial institutions that were highly rated, as determined by 
the Treasury Secretary.
  This legislation is necessary because local governments are in 
jeopardy of losing up to $10 billion as a result of these investments.
  In California 28 cities and counties could lose nearly $300 million.
  These investments include basic operational funds which cities and 
counties rely upon to function.
  For many cities and counties that are already struggling with budget 
shortfalls, the consequences of these losses are severe.
  Public safety, education, public health, infrastructure, and transit 
will be compromised.
  Communities large and small are significantly impacted.
  These are examples from my State that demonstrate the gravity of this 
situation.
  This list was included in a December 22 letter to Secretary Paulson, 
and to date, I have not received a response. San Mateo County sustained 
a loss of $30 million, which will require the county to abandon plans 
for a new and urgently needed county jail. The current jail will 
continue to operate in overcrowded conditions, far beyond the rating of 
the facility. The result will be unsafe working conditions for the 
corrections personnel and the likelihood that convicted criminals will 
be released into the community early and in large numbers.
  The City of Shafter, a small community of 15,000 in the San Joaquin 
Valley, sustained a loss of $300,000, or nearly 4 percent of its annual 
budget. The City will be forced to make across-the-board cuts in all 
services, including police and fire.
  Monterey County is facing a $30 million loss. Amid numerous other 
cuts, hardest hit will be programs targeting gang activities, including 
a special task force and the construction of new adult and juvenile 
corrections facilities to manage these criminals.
  The San Mateo County Transportation Authority sustained a loss of 
more than $25 million, which will mean delays and higher costs for 
major projects that will reduce emissions and traffic, specifically the 
electrification of the Caltrain Peninsula Commuter Rail Service. 
Similarly, cuts in highway and roads projects will put more people on 
the local roads for longer times at a major cost in compromised air 
quality.
  The City of Culver City has lost $1 million. This will result in a 
substantial reduction in planned street repairs and higher liability 
exposure from accidents, greater environmental degradation from storm 
water drain off, and worsened traffic congestion in a region of the 
U.S. ranked as one of the worst for traffic.
  The Hillsborough City School District lost over $924,000. Projects to 
create more classrooms for increased enrollment will not take place, 
increasing class sizes. Combined with other budget cuts from the State, 
all the District's programs are threatened.
  The Vallejo Sanitation and Flood Control District, which provides 
sanitary sewer and storm water services to the City of Vallejo, 
population 119,600, and nearby areas of Solano County, sustained losses 
of $4.5 million in Lehman Brothers investments and $1.46 million in 
Washington Mutual investments. The result is that aging infrastructure 
essential to the health of this community will not be replaced. The 
City of Vallejo recently declared Chapter 9 Municipal bankruptcy.
  Sacramento County sustained an increase in costs of $8 million 
related to an interest rate swap agreement with Lehman. This increase 
means fewer funds for sheriff's patrol and investigations and probation 
supervision, resulting in an increased risk to the safety of the 
community and reductions in social safety net services, at a time of 
increased community need.
  The City of Folsom lost $700,000, which has caused the City to 
indefinitely postpone staffing and equipping a new fire station.
  The San Mateo County Community College District sustained a loss of 
$25 million in voter-approved bond funds. As a result, the District 
will be forced to abandon a program to build more classrooms, and, 
therefore, turn away thousands of potential students, many of them 
unemployed adults seeking job training.
  The economic rescue legislation included a provision to require the 
Secretary of the Treasury to consider the impact of these losses on 
local governments when disbursing TARP funds.
  But, to date, the Secretary has not exercised his authority to assist 
local governments with such funds.
  The TARP Assistance for Local Governments Act of 2009 will change 
this, and ensure that communities remain solvent and taxpayers are 
protected.
  Given the urgency of this situation, we can no longer afford to wait.
  I hope that my colleagues will join me in supporting this important 
legislation.

[[Page S89]]

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