Ten of the nation’s largest banks have been granted permission to repay $68 billion in Troubled Asset Relief Program (TARP) funds.

Congresswoman Jo Ann Emerson, who represents Missouri’s 8th District, believes that these repaid TARP funds should go directly towards paying down the national debt.

Emerson warns that it is too early to tell if the TARP repayments are a sign of returning financial health for banking institutions. “One reason the money is being repaid is that there are so many strings attached to it by the (Obama) Administration that no one anticipated, not even those of us in Congress nor the banks,” she says. She also fears that access to credit still looms as a problem.  On a positive note, she mentions that concerns over liquidity have subsided.

Emerson has co-sponsored legislation which would guarantee that TARP repayments would go directly towards paying off the national debt. Eliminating the recycling of funds would end “the idea that a company in trouble can come to the federal government with its hand out and say, ‘You know, I am so big and I am so important that I deserve this special access to taxpayer funds,’” Emerson says.

She is concerned that TARP monies are not being used for its original purpose, which is the purchase of troubled assets. “But the federal government is using it for all kinds of things that are totally unrelated to troubled assets,” She says. “For example, buying preferred shares of stocks, for shoring up banks and insurance companies with more capital, and for these side projects, if you will, that really don’t have anything to do with the purpose of the fund. If we were using the money for what it was originally intended to do, we could have a different discussion, perhaps.”

When asked when it is time to admit that further federal investment in feeble institutions such as Citigroup may not be worth it, Emerson feels that it should not be the government’s decision in the first place. Looking at the big picture, though, “there are protections in the TARP that make sure that taxpayer money will be the first to be repaid in any bankruptcy,” she says. “As far as Citigroup goes, nobody is talking about that, and we want to ensure that no one thinks that we are.”

“When you’re looking at the fiscal health of our nation, our indebtedness, our reckless spending – those are far bigger problem than whether Citigroup keeps its door open, in my opinion.”

Emerson is strongly opposed to the idea of converting the government’s preferred non-voting stock in several financial institutions into common stock. She calls the idea “ridiculous” and believes that the federal government should never have the option to vote in a share-holder’s meeting. She feels that the private sector should be protected from government intrusion. At the same time the government should maintain a strong enforcement role which keeps private companies honest. “If you start to blur that line with things like shareholder voting rights for the government then I believe we are asking for big trouble. We’re clouding the interests of a government which should be responsible first to the people.”

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