Legal Definitions - Dodd-Frank: Title XIII - Pay It Back Act

Definition: Title XIII, also known as the "Pay It Back Act," is a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It amends the Emergency Economic Stabilization Act of 2008 (EESA) by reducing the Secretary of the Treasury's authority to purchase distressed assets under the Troubled Asset Relief Program (TARP) from $700 billion to $475 billion. The Act also requires the Secretary to transfer certain funds to the Treasury's general fund for the sole purpose of reducing the federal budget deficit, and to provide Congress with bi-annual reports detailing such transfers.

Example: The Pay It Back Act limits the amount of money the Secretary of the Treasury can use to purchase distressed assets under the TARP program. This means that the government cannot spend more than $475 billion on buying troubled assets from financial institutions. The Act also requires the Secretary to transfer certain funds to the Treasury's general fund to reduce the federal budget deficit. For example, income received from the sale of securities purchased from Fannie Mae, Freddie Mac, and Federal Home Loan Banks must be transferred to the general fund.

Explanation: The example illustrates how the Pay It Back Act limits the government's spending on purchasing distressed assets and requires the Secretary to transfer certain funds to the Treasury's general fund to reduce the federal budget deficit. By doing so, the Act aims to balance the government's goals of stimulating and supporting the economy and housing industry, aiding the federal budget deficit, and preventing substantial tax increases.