Congress Adds Powers To The Special Inspector General for TARP

On April 24, 2009 President Obama signed an amendment to the Economic Stabilization Act of 2008 adding specific powers to those given in the Act to the Special Inspector General for the Toxic Asset Recovery Program (“SIGTARP”).

 In his April 21, 2009 report to Congress, SIGTARP Neil Barofsky reported two particular criticisms of the Treasury Department’s handling of TARP: (1) that Treasury regarded SIGTARP’s proposed inquiry to TARP recipients on their use of TARP funds as impossible, impractical or a waste of time; and (2) that Treasury was not sufficiently responding to a dozen SIGTARP recommendations, including the issuance of regulations concerning limitations on executive compensation.  Treasury had twice taken the position in writing that the executive compensation limitations did not apply to TARP Term Asset-Backed Securities Loan Facilities Program (“TALF”) participants.  

Three days after the SIGTARP report, Congress and the President responded in Public Law 111-15 with amendments to the Stabilization Act by expanding the SIGTARP’s powers to include:

• Specific authority for SIGTARP to audit the use of TARP funds by each recipient and to report his findings to the Congress by September 1, 2009;
• Direction to the Treasury Secretary to “take action to address deficiencies identified” by the SIGTARP and to certify that action to Congress.

This Congressional and White House action confirms both the strong support the SIGTARP has from Congress, and his power to broaden his jurisdiction and powers to the extent he thinks appropriate in overseeing the TARP program.