Southwest Missouri Congressman Roy Blunt defends his part in drafting the $700 billion package to rescue the country’s financial system in late 2008. His role has become an issue in the United States Senate race.

Blunt has been harshly criticized by Democrat Robin Carnahan for his part in crafting the legislation approved by Congress and signed into law by President Bush in the fall of 2008. Blunt helped majority Democrats lure Republicans to back the proposal, after some tweaking.

“Splitting the thing in half, because I thought President Bush asked for too much money and only giving them the first 250 (billion) in that vote, another 100 if they asked for it,” Blunt says. “Every economist thinks that that stopped the economic downfall.”

Congress approved the Emergency Economic Stabilization Act in late 2008. President Bush signed it into law October 3rd. That act established the $700 billion Troubled Asset Relief Program, which became known as TARP. Untangling how TARP has been used can prove troublesome, especially since it hasn’t been used as first envisioned.

A collapse of the housing market in a few states shook the financial markets. Congress originally intended TARP to buy up so-called “toxic assets” from bank balance sheets, to rid the banks of the mortgage-related assets that had become dead weight. That didn’t happen. Treasury Secretary Hank Paulson made it official in November, announcing that TARP funds wouldn’t be used to help banks dump those assets, but would be used it as a loan fund.

Meanwhile, banks had begun accessing TARP funds. According to a Federal Reserve Bank timeline of the financial crisis, nine large financial institutions announced they would borrow $125 billion of the initial $250 billion made available by the Treasury Department in mid-October of that year. Small banks also tapped the fund. Then, in December Treasury authorized loans of up to $13.4 billion for General Motors and $4 billion for Chrysler from TARP.

The Bush Administration pushed for the stabilization act in consultation with the in-coming Obama Administration. $350 billion in TARP funding was transferred to the Obama Administration in January of 2009.

Blunt asserts TARP initially kept the economy afloat. He says if Carnahan wants to criticize TARP, she should criticize fellow Democrat, President Obama.

“So it was the kind of responsible thing the government should do as opposed to what this president did with the second half, which was give it to car companies, use it as what appears to be an on-going fund that he can use whenever he wanted to and I voted against that,” Blunt says.

A report recently released by the research firm Keefe, Bruyette, & Woods discloses that, so far, 61 banks have repaid their debt, with interest, netting the federal government $13 billion. $65 billion in TARP funds remain outstanding. $2 billion will not be returned.

AUDIO: Brent Martin reports [1:30 MP3]

AUDIO: Congressman Roy Blunt answers questions about TARP [3:30 MP3]