Oversight of the Troubled Asset Relief Program


The Emergency Economic Stabilization Act created the Troubled Asset Relief Program to administer up to $700 billion. Several oversight mechanisms are established by the bill, including the Congressional Oversight Panel, the Special Inspector General for TARP, the Financial Stability Oversight Board, and additional requirements for the Government Accountability Office and the Congressional Budget Office.

Financial Stability Oversight Board (FSOB)

The Financial Stability Oversight Board was created to review and make recommendations regarding the Treasury's actions. Its purpose is to review the operation of TARP, to make recommendations to the Treasury for improvements, and to watch for fraud and misrepresentation. The FSOB also has the power to ensure that the Treasury follows policies in accordance with the Act and the economic interest of the U.S. It is to meet on a monthly basis and report to Congress and the Oversight Panel quarterly.
The members of the board are:
The Congressional Oversight Panel
was mandated by Title 1, Section 125 of the TARP legislation as an "establishment in the legislative branch". The Congressional Oversight Panel was charged with the job of reviewing the state of the markets, current regulatory system, and the Treasury Department's management of the Troubled Asset Relief Program. The panel was required to report their findings to Congress every 30 days, counting from the first asset purchase made under the program. The panel was also required to submit a special report to Congress about regulatory reform on or before January 20, 2009. The Congressional Oversight Panel was initially scheduled cease to exist on December 31, 2009, though it was later renewed through early 2011.
The panel consisted of five outside experts appointed as follows:
  • One member chosen by the Speaker of the House
  • One member chosen by the minority leader of the House
  • One member chosen by the majority leader of the Senate
  • One member chosen by the minority leader of the Senate.
  • One member chosen by the Speaker of the House and the majority leader of the Senate, following consultation with the minority leaders of Congress
The first meeting of this board was held Wednesday, November 25, 2008, and elected Elizabeth Warren as the chairperson and Damon Silvers as deputy chairperson. As no assets had yet been purchased, it is not clear whether the requirement to report after 30 days from "first asset purchase" has been violated.
On December 8, 2009, the government's financial bailout program concluded in a year-end review that, despite flaws and lingering problems, the program “can be credited with stopping an economic panic.” Also on this date, Rep. Jeb Hensarling stepped down from the panel, submitting his letter of resignation. Hensarling was replaced by Mark McWatters, a Dallas lawyer and certified public accountant who has served as an advisor to Hensarling.
On October 1, 2010, Senator Ted Kaufman of Delaware was appointed by Majority Leader Reid to replace Warren on the panel, as Warren resigned to focus on her duties at the Consumer Financial Protection Bureau. Three days later, Kaufman was unanimously elected as the panel's second chairperson. Kaufman was succeeded in Congress by Senator Chris Coons on November 15, 2010, but he remained chairperson of the Congressional Oversight Panel until its dissolution in 2011.

Government Accountability Office (GAO)

The Comptroller General is required to monitor the performance of the program, and report findings to Congress every 60 days. The Comptroller General is also required to audit the program annually. The bill grants the Comptroller General access to all information, records, reports, data, etc. belonging to or in use by the program.
On December 2, 2008, GAO released their first report on the bailout. Neel Kashkari, the OFS chairman, said in a letter to GAO that the department agrees with the report's findings and most of its recommendations but questioned GAO's suggestion to require more reporting from banks, saying gathering specifics from individual banks might not be the best way to evaluate the program. House Speaker Nancy Pelosi called the report's findings "discouraging" and stated that the report shows the program "is not accountable to American taxpayers."

Special Inspector General for TARP (SIGTARP)

The EESA created the Office of the Special Inspector General for the Troubled Asset Relief Program, and the Special Inspector General is appointed by the President and confirmed by the U.S. Senate. The Special Inspector General's purpose is to monitor, audit, and investigate TARP-related activities, including those of the Treasury in the administration of the program, and report findings to Congress every quarter. Christy Goldsmith Romero was sworn-in as the current Special Inspector General on April 9, 2012, having been nominated by President Obama on February 1, 2012, and confirmed by the U.S. Senate on March 29, 2012.
Eric Thorson is the Inspector General of the US Department of the Treasury and was originally responsible for the oversight of the TARP but expressed concerns about the difficulty of properly overseeing the complex program in addition to his regular responsibilities. Thorson called oversight of TARP a "mess" and later clarified this to say "The word 'mess' was a description of the difficulty my office would have in providing the proper level of oversight of the TARP while handling its growing workload, including conducting audits of certain failed banks and thrifts at the same time that efforts are underway to nominate a special inspector general."
Neil Barofsky was nominated on November 14, 2008 by President George W. Bush to be the Special Inspector General. He was confirmed by the Senate on December 8, 2008, and was sworn into office on December 15, 2008. Barofsky stepped down from the post on March 30, 2011. Prior to assuming the position of Special Inspector General, Barofsky was a federal prosecutor in the United States Attorney's Office for the Southern District of New York for more than eight years. Barofsky received the Attorney General's John Marshall Award for his work on the Refco matter. Barofsky also led the investigation that resulted in the indictment of the top 50 leaders of the Revolutionary Armed Forces of Colombia on narcotics charges, a case described by the then Attorney General as the largest narcotics indictment filed in U.S. history.
Under the leadership of Barofsky, the Office of the Special Inspector General for the Troubled Asset Relief Program has quietly turned into a full-fledged financial law enforcement agency. It has 45 investigators who are empowered to carry guns and badges, and 27 vehicles with sirens and lights spread out in its branch offices across the United States. SIGTARP agents are empowered to make arrests. The agency is currently engaged in 142 ongoing criminal and civil investigations, and it has already recovered assets worth $151.8 million. By the summer of 2010, SIGTARP agents were participating in raids alongside other U.S. law enforcement agencies. They worked with FBI agents in a raid on Colonial Bank in Orlando, Florida in an investigation into possible TARP-related fraud.
In January 2012, Special Inspector General Romero said some $133 billion remained to be repaid by participants in the program, of which some at least is not likely ever to be repaid or recouped. That figure was offset partly by some $40.3 billion income and profits from repaid loans and investments; however new home-foreclosure bailout programs that could last as late as 2017 could also cost an additional $50 billion or more.
SIGTARP has been described as having a staff of 170, an annual budget of $41 million, and a substantial law-enforcement record. As of late 2013, SIGTARP had "pursued criminal charges against 107 senior bank officers, most of whom have been sentenced to prison."

TARP oversight reports

COP reports

  • Commercial Real Estate Losses and the Risk to Financial Stability, 02/11/10, http://cop.senate.gov/reports/library/report-021110-cop.cfm/
  • Exiting TARP and Unwinding Its Impact on the Financial Markets, 01/14/10, http://cop.senate.gov/reports/library/report-011410-cop.cfm
  • Taking Stock: What Has the Troubled Asset Relief Program Achieved?, 12/09/09, http://cop.senate.gov/reports/library/report-120909-cop.cfm/
  • Guarantees and Contingent Payments in TARP and Related Programs, 11/06/09, http://cop.senate.gov/reports/library/report-110609-cop.cfm/
  • An Assessment of Foreclosure Mitigation Efforts After Six Months, 10/09/09, http://cop.senate.gov/reports/library/report-100909-cop.cfm/
  • The Use of TARP Funds in Support and Reorganization of the Domestic Automotive Industry, 09/09/09, http://cop.senate.gov/reports/library/report-090909-cop.cfm/
  • The Continued Risk of Troubled Assets, 08/11/09, http://cop.senate.gov/reports/library/report-081109-cop.cfm/
  • Special Report on Farm Loan Restructuring, 07/21/09, http://cop.senate.gov/reports/library/report-072109-cop.cfm/
  • TARP Repayments, Including the Repurchase of Stock Warrants, 07/10/09, http://cop.senate.gov/reports/library/report-071009-cop.cfm/
  • Stress Testing and Shoring Up Bank Capital, 06/09/09, http://cop.senate.gov/reports/library/report-060909-cop.cfm/
  • Reviving Lending to Small Businesses and Families and the Impact of the TALF, 05/07/09, http://cop.senate.gov/reports/library/report-050709-cop.cfm/
  • Assessing Treasury's Strategy: Six Months of TARP, 04/07/09, http://cop.senate.gov/reports/library/report-040709-cop.cfm/
  • Foreclosure Crisis: Working Toward a Solution, 03/06/09, http://cop.senate.gov/reports/library/report-030609-cop.cfm/
  • February Oversight Report: Valuing Treasury's Acquisitions, 02/06/09, http://cop.senate.gov/reports/library/report-020609-cop.cfm/
  • Special Report on Regulatory Reform, 01/29/09, http://cop.senate.gov/reports/library/report-012909-cop.cfm/
  • Accountability for the Troubled Asset Relief Program, 01/09/09, http://cop.senate.gov/reports/library/report-010909-cop.cfm/
  • Questions About the $700 Billion Emergency Economic Stabilization Funds, 12/10/08, http://cop.senate.gov/reports/library/report-121008-cop.cfm/
Main COP Reports Website: http://cop.senate.gov/reports/