Emergency Economic Stabilization Act: Preliminary Analysis of Oversight Provisions

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The Emergency Economic Stabilization Act of 2008 (EESA, Division A of H.R. 1424, P.L. 110-
343) permits the Secretary of the Treasury to purchase and insure “troubled assets” to provide
stability and prevent disruption in the economy and financial system. The act established two
organizations to provide broad oversight for the program—a Financial Stability Oversight Board
(FSOB) and a Congressional Oversight Panel (COP). The act also placed audit responsibilities for
the program with two individuals—a new Special Inspector General (IG) for the Troubled Asset
Relief Program (TARP), and the Comptroller General (CG) of the United States, who heads the
Government Accountability Office (GAO).
Several aspects of the FSOB do not appear to be clearly delineated in the act, including where the
FSOB is “established” within the federal government, whether it is covered by a variety of
general management laws, and how the FSOB is to be funded and staffed. The act is also unclear
regarding certain aspects of the Special IG for the TARP, including where the Office of the
Special IG is to be “established” or housed, how or when its authorized appropriation is to be
provided, and its specific investigative authorities.
The duties of both oversight panels and both audit organizations overlap in several key areas, and
some of the reporting requirements also overlap. Although 18 types of EESA reports are required,
none of them specifically require disclosure of how the funds are used by the recipients, and only
one report is required to be made to the public. The Special IG for the TARP and the initial
members of the COP were not named until mid-November 2008, and the Special IG was not
confirmed until December 8, 2008—more than two months after EESA was enacted. The nature
of the “troubled assets” being purchased have changed since EESA was enacted, perhaps
necessitating reassessment of the act’s oversight mechanisms. Finally, it is unclear what effect the
various oversight and audit mechanisms will have on the balance of power between Congress and
the executive branch. Congress gave itself expedited legislative procedures to disapprove actions
by the Secretary, but only after the first $350 billion has been obligated. If the President supports
the actions of the Secretary of the Treasury and vetoes a disapproval resolution, overcoming the
veto will require a two-thirds vote in both houses of Congress.
Both GAO and the COP raised concerns about the operation of the TARP in their initial reports,
and several Members of Congress have expressed concerns about the Department of the
Treasury’s operation of the program—even suggesting that the second $350 billion in TARP
funds should be denied unless the banks can show that the funds provided thus far are being used
for lending.
This report will be updated when additional information or perspectives become available
regarding the act’s oversight mechanisms.

Oversight and Audit Mechanisms...................................................................................................2
The Financial Stability Oversight Board and the Congressional Oversight Panel....................2
Placement Within the Government..................................................................................................3
Responsibilities ............................................................................................................................... 3
Access to Information.....................................................................................................................4
Membership ..................................................................................................................................... 4
Leader ship ....................................................................................................................................... 5
Pay for Members.............................................................................................................................5
Meetings /Quorum ................................................................................................................ ............ 5
St affi ng/Consul ta nts ........................................................................................................................ 6
Reports by the Entities....................................................................................................................6
Reports to the Entities.....................................................................................................................7
Funding ........................................................................................................................ .................... 7
Termination .................................................................................................................... ................. 8
The Special Inspector General for the TARP and the Comptroller General’s Role in
the Act....................................................................................................................................8
Placement Within the Government..................................................................................................8
Responsibilities ............................................................................................................................... 9
When Audits Begin.........................................................................................................................9
Access to Information...................................................................................................................10
Obligation of the TARP to Respond to Audits...............................................................................10
St affi ng/Contract ing ....................................................................................................................... 11
Reports........................................................................................................................ .................... 11
Funding ........................................................................................................................ ................... 11
Termination .................................................................................................................... ............... 12
Concluding Observations........................................................................................................12
Overlapping Responsibilities.........................................................................................................13
Possible Additions to Reporting Requirements.............................................................................14
A Delayed Start for the COP and the Special IG...........................................................................15
Possible Reassessment of Oversight Mechanisms........................................................................16
Certain Issues Are Unclear............................................................................................................18
Oversight and the Balance of Power.............................................................................................18
GAO’s First TARP Report.............................................................................................................19
COP’s First Report........................................................................................................................20

Table 1. Characteristics of the Financial Stability Oversight Board and the Congressional
Oversight Panel in the Emergency Economic Stabilization Act of 2008...................................20
Table 2. Responsibilities of the Comptroller General and the Special Inspector General
for the TARP in the Emergency Economic Stabilization Act of 2008........................................24
Author Contact Information..........................................................................................................26

ne of the purposes of the Emergency Economic Stabilization Act of 2008 (EESA,
Division A of H.R. 1424, P.L. 110-343) is to “immediately provide authority and facilities
that the Secretary of the Treasury can use to restore liquidity and stability to the financial ¹O

system of the United States.” Section 101 of the act (“Purchases of Troubled Assets”) authorizes
the Secretary of the Treasury to “establish the Troubled Asset Relief Program (or ‘TARP’) to
purchase, and to make and fund commitments to purchase, troubled assets from any financial
institution, on such terms and conditions as are determined by the Secretary, and in accordance
with this Act and the policies and procedures developed and published by the Secretary.” The
term “troubled assets” is defined in Section 3(9) of the act as
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The act requires the Secretary of the Treasury to implement the program through an Office of
Financial Stability within the department’s Office of Domestic Finance. The office is to be headed
by an Assistant Secretary appointed by the President with the advice and consent of the Senate,
although the law permits the Secretary to appoint an interim Assistant Secretary without Senate ²
confirmation.
The Secretary is authorized in Section 101(c) to take “such actions as the Secretary deems
necessary to carry out the authorities in this Act.” However, Section 101(d) requires the Secretary
to publish program guidelines within two business days after the first purchase of troubled ³
assets. Those guidelines are required to include mechanisms for purchasing troubled assets,
methods of pricing and valuing troubled assets, procedures for selecting asset managers, and
criteria for identifying troubled assets for purchase. Section 115 of the act initially permits the
Secretary to purchase up to $250 billion of troubled assets, and up to a total of $350 billion of ⁴
assets upon a written certification by the President that the Secretary needs additional authority.
Subsequently, if the President submits a written plan to Congress, and if Congress does not object
within 15 calendar days (through a joint resolution of disapproval described in subsection 115(c)),
the Secretary may purchase up to $700 billion in troubled assets.
Section 102 of the act (“Insurance of Troubled Assets”) states that if the Secretary establishes the
program authorized in Section 101, then the Secretary “shall establish a program to guarantee
troubled assets originated or issued prior to March 14, 2008, including mortgage-backed

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securities.” Specifically, the Secretary is authorized to guarantee the timely payment of up to

100% of the principal and interest related to the assets.

EESA established two organizations to provide broad oversight for the stability program—a
Financial Stability Oversight Board (FSOB) and a Congressional Oversight Panel (COP). The act
also placed audit responsibilities for the program with two individuals—a new Special Inspector
General (IG) for the TARP, and with the Comptroller General (CG) of the United States, who ⁵
heads the Government Accountability Office (GAO). Many of the audit and reporting
responsibilities delineated in the act specifically reference the actions required in Sections 101 ⁶
and 102 of the act to purchase troubled assets and to insure those assets.
Questions have been raised by some observers as to whether these oversight and audit ⁷
responsibilities are complimentary to one another, or are contradictory. This report provides a
preliminary comparison and analysis of the specific authorities and responsibilities of the FSOB
and the COP, and also compares and analyzes the roles and responsibilities of the Special IG and
the CG as described in the act.
As described in EESA, the FSOB and the COP are similar in some respects, but different in other
respects. Also, the act is unclear with regard to several key aspects of one or both of these entities.
The discussion below and in Table 1 at the end of this report compares the FSOB and the COP on
several relevant dimensions.

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The COP is described in Section 125(a) of the act as an “establishment of the legislative branch.”
In contrast, Section 104(a) of the act simply says that the FSOB is “established,” but does not
indicate whether the board is part of the executive or legislative branches. All five members of the
FSOB are from the executive branch (the Chairman of the Board of Governors of the Federal
Reserve System, the Secretary of the Treasury, the Director of the Federal Housing Finance
Agency, the Chairman of the Securities and Exchange Commission, and the Secretary of Housing
and Urban Development). Therefore, one could reasonably presume that the FSOB is an
executive branch entity.
Even if one makes that presumption, however, it is unclear whether the FSOB is intended to be a
subunit within the Department of the Treasury or some other agency, or whether the board is
intended to be a free-standing, independent entity. The organizational placement of the FSOB
may have a number of implications, including whether the board is covered by a variety of
statutory management and transparency requirements such as the Federal Records Act, the
Federal Advisory Committee Act, the Freedom of Information Act, the Government in the ⁸
Sunshine Act, and various human resources management and ethics requirements. Legislative
branch entities like the COP are generally not subject to these requirements.

The listed responsibilities of the FSOB (in Section 104(a) of the act) and the COB (in Sections
125(b) and (e) of the act) are similar both in general and with regard to particular elements. For
example, both entities are broadly responsible for reviewing the Secretary’s actions in carrying
out the requirements of the act, and both are specifically responsible for examining the effect of
those actions on home ownership, financial markets, and costs to the taxpayers. As discussed in
more detail later in this report, both are also required to report to Congress on their findings.
However, only the FSOB is charged with (1) making recommendations to the Secretary of the
Treasury regarding the use of his authorities under the act; and (2) reporting any suspected fraud,
misrepresentation, or malfeasance to the Special IG or the Attorney General of the United States.
On the other hand, only the COP is specifically (1) permitted to hold hearings, take testimony,
receive evidence, and administer oaths and affirmations to witnesses; and (2) required to report
on the extent to which the information on transactions has contributed to market transparency.
Also, if so authorized by the panel, any individual member or agent of the COP is authorized to
take action on behalf of the panel; no such individualization of authority is permitted by the
FSOB.

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Section 125(e)(3) of the act authorizes the COP to obtain whatever information it needs to carry
out its responsibilities from any federal department or agency, and the heads of those departments
or agencies are required to provide the information requested by the chairperson of the panel. As
noted previously, the COP is also permitted to take testimony and administer oaths and
affirmations to witnesses. The act provides the FSOB no similar right to information from federal
departments or agencies, and there does not appear to be any obligation on the part of those
departments or agencies to provide that information to the FSOB. Neither the FSOB nor the COP
have subpoena authority, and neither is authorized to request the Attorney General to compel ⁹
agencies to provide needed information.

As noted previously, Section 104(b) of the act states that the FSOB is comprised of the heads of
five executive branch departments or agencies: the Chairman of the Board of Governors of the
Federal Reserve System, the Secretary of the Treasury, the Director of the Federal Housing
Finance Agency, the Chairman of the Securities and Exchange Commission, and the Secretary of
Housing and Urban Development. Because the Secretary of the Treasury is also charged with
implementing the TARP, his role on the FSOB essentially requires him to oversee his own
actions. No provision is made for these agency heads to allow alternates to substitute for them.
Section 125(c) of the act is less directive regarding the members of the COP, merely specifying
how members are to be appointed (i.e., one each by the Speaker of the House of Representatives,
the minority leader of the House, the majority leader of the Senate, and the minority leader of the
Senate; and one by the Speaker and the majority leader of the Senate, after consultation with the
minority leaders in each house). The act does not require that members of the COP be from
Congress or even from the legislative branch, but it clearly contemplates Members of Congress as
potential members; Section 125(c)(3) specifies that members of the COP who are Members of
Congress or full-time officers or employees of the federal government will receive no additional
pay, allowances, or benefits. The act does not require that the members of the COP be appointed
by a certain date, although (as discussed below) the COP is required to submit its first “regular
report” within 30 days after the first exercise of the Secretary’s authority under Section 101(a) or

102 of the act, and is required to submit a “special report” on regulatory reform by January 20, ¹⁰

2009. On November 14, 2008, Democratic congressional leaders named the first three members ¹¹

of the panel, and Republican congressional leaders named the remaining two members on ¹²
November 19, 2008. However, one of the members named by Republican leaders withdrew

⁹^In^con^t^rast^,^t^h^{e l}^e^gi^sl^atⁱ^oⁿ^est^a^blⁱ^s^hⁱⁿ^g^t^h^e^P^rⁱ^v^ac^y^an^d^Ci^vi^l^Lⁱ^b^e^rtⁱ^e^{s Oversi}^gh^t^Bo^ard⁽¹²¹^S^t^at^.³⁵⁵^{) au}^t^h^o^rⁱ^{zes t}^h^e
^B^o^a^r^{d t}^o^r^e^q^u^e^s^{t the}^A^ttorⁿ^e^y^G^e^ne^r^a^{l to s}^u^b^poe^naⁱⁿ^f^o^r^m^a^{tion on}^its^be^ha^lf^.
¹⁰^A^s^note^d^e^a^r^lie^rⁱⁿ^this^r^e^por^t,^th^e^D^e^pa^r^t^m^e^{nt of}^the^T^r^e^a^s^ur^y^tr^aⁿ^s^f^e^r^r^e^{d the}^fⁱ^r^s^{t EESA}^-^r^e^la^te^{d f}^unds^to
^pa^rtic^ipa^tingⁱⁿ^stit^utio^ns^{on Oc}^to^be^{r 28}^{, 2}⁰⁰⁸^.
¹¹^Amⁱ^t^R.^P^a^l^e^y^,^“N.^Y^.^P^r^o^s^ecu^t^o^r^Pⁱ^cked^t^o^{Oversee Bai}^l^o^u^t^,^”^W^a^s^h^ingt^on^Pos^t^,^N^o^v^e^m^b^e^r^{15, 2}⁰⁰⁸^,^{p. D}¹^.
^D^e^m^o^c^r^a^tic^c^ong^r^e^s^sⁱ^ona^{l le}^a^d^e^r^s^r^e^por^te^d^l^y^s^e^lec^t^e^d^Rⁱ^c^h^a^r^{d H}^.^N^e^im^aⁿ^{, s}^upe^rⁱⁿ^t^e^ndeⁿ^t^of^ba^nk^sⁱⁿ^N^e^w^Y^o^r^k^;
^Eliz^a^b^e^t^{h W}^a^r^r^e^{n, a}^pr^of^e^s^s^o^r^a^t^H^a^r^v^a^r^{d Law}^Sc^hool;^aⁿ^d^D^a^m^{on Silv}^e^r^s^,^a^s^s^o^cⁱ^a^t^e^g^e^ne^r^a^{l c}^ouns^e^l^of^the^A^F^L^-^C^I^O^.
¹²^A^m^{it R}^.^P^a^le^y^,^“^S^eⁿ^a^t^or^s^Movⁱⁿ^g^Q^u^ic^k^l^y^{to I}ⁿ^s^t^a^{ll B}^a^il^{out W}^a^tc^hdog^,”^Wa^s^hⁱⁿ^g^t^on^Po^st^{, N}^o^v^e^m^b^e^r²⁰^{, 2}⁰⁰⁸^,^p.
^A^{10. T}^hos^e^na^m^e^d^w^e^r^e^Se^na^tor^J^udd^G^r^e^g^g^a^{nd R}^e^pr^e^s^eⁿ^ta^tiv^e^J^e^{b H}^e^ns^a^r^ling^.

from the panel less than two weeks later, citing scheduling difficulties.¹³ On December 17, 2008, ¹⁴
a replacement for this member was named.

Section 104(c) of the act specifies that the chairperson of the FSOB is elected by the members of
the board, but the act excludes the Secretary of the Treasury from having a vote in that election.
According to the interim Assistant Secretary for the Office of Financial Stability, on October 7,

2008, the members of the board selected the Chairman of the Board of Governors of the Federal ¹⁵

Reserve System to be chairman of the FSOB. In contrast, although a chairperson of the COP is
clearly contemplated by EESA (e.g., Section 125(c)(7) of the act authorizes the chairperson to
call meetings), the legislation does not indicate how that chairperson is to be selected. At the
panel’s first meeting on November 26, 2008, Elizabeth Warren was reportedly elected chairperson ¹⁶
of the COP.

The act is silent regarding pay for members of the FSOB, but presumably they would simply
receive their regular salaries as the heads of the five agencies. On the other hand, Section
125(c)(2) of the act states that each member of the COP shall be paid at the daily rate of basic pay
for level I of the Executive Schedule (the cabinet secretary level, which is $191,300 per year in
2008) for each day that the member is performing duties “vested in the Commission.” (The act
does not indicate what “commission” is referenced here, but the context suggest that the word
“panel” should have been used instead of “commission.”) As noted previously, members of the
COP who are Members of Congress or full-time federal officers or employees are not allowed to
receive additional pay, allowances, or benefits.

The COP is not required to meet at any specific time; Section 125(c)(7) of the act states that its
meetings are held at the call of the chairperson or a majority of its members. However, because
the COP is required to submit its first “regular report” within 30 days after the first troubled assets
are purchased or insured, meetings of the panel are likely before the report is submitted. Section
125(c)(5) specifies that four members of the COP constitute a quorum, although the act states that
a lesser number may hold hearings.

¹³^“G^re^gg^Wⁱ^t^h^d^r^aw^s^f^r^o^m^Re^f^o^r^m^P^aⁿ^e^l^;^M^c^Conⁿ^e^l^l^E^x^p^ect^ed^t^o^Na^m^e^S^u^ccesso^r,^”^B^N^A^Daⁱ^l^y^R^e^port^f^o^{r E}^xecu^tⁱ^ves^,
^D^e^c^e^m^b^e^r^{3, 20}^08,^p.^A^-^33.
¹⁴^“^S^un^un^{u N}^a^m^e^{d to B}^a^ilo^{ut O}^v^e^r^sⁱ^g^h^t^P^a^ne^l,”^S^t^ate^s^m^a^n.c^o^m^{, D}^e^c^e^m^b^e^r^17,²⁰⁰⁸^.
¹⁵^Se^e^inte^rim^Assistaⁿ^{t Se}^c^r^e^t^a^r^y^Ka^shk^a^{ri’s re}^m^a^rk^{s be}^f^o^re^the^Ins^titu^te^of^Inte^rna^tio^na^{l Ba}^nk^e^r^{s, a}^t
^http:^//w^w^w^.c^nbc^.c^om^/ⁱ^d/²⁷¹⁶⁰⁴⁴³^.
¹⁶^Dⁱ^aⁿ^a^B^H^e^nr^iq^ue^s^,^“^B^a^ilo^{ut M}^o^nitor^Se^e^s^L^a^ck^of^a^C^ohe^r^e^nt^P^l^aⁿ^,”^{New Yo}^{rk T}ⁱ^mes^,^Dece^m^b^{er 2}^,²⁰⁰⁸^,^avai^l^a^b^l^e
^a^t^http^://w^ww^.n^y^tⁱ^m^e^s^.c^o^m^/²⁰⁰⁸^/^12/^02/^busiⁿ^e^ss/02ta^r^p.h^t^m^l^.

Section 104(d) of the act requires the FSOB to meet two weeks after the first exercise of purchase
authority of the Secretary of the Treasury, and monthly thereafter. However, the act does not
mention what constitutes a quorum for FSOB action. According to the interim Assistant Secretary
for the Office of Financial Stability, the FSOB met on October 7—four days after the legislation
was enacted and before the exercise of any purchase authority. In addition to selecting the
Chairman of the Federal Reserve to be chairman of the FSOB, the members reportedly adopted ¹⁷
the board’s bylaws and reviewed the TARP’s initial work streams. The FSOB met again on ¹⁸
October 13, 2008, and on October 22, 2008. As of mid-November 2008, the FSOB had
reportedly met a total of four times, and the minutes of three of those meetings were posted on the ¹⁹
Department of the Treasury’s website.

The act does not mention whether and, if so, how the FSOB is to be staffed or paid, and does not
indicate whether it can hire experts or consultants. Nevertheless, the interim Assistant Secretary
for the Office of Financial Stability testified on October 23, 2008, that the FSOB had appointed ²⁰
staff to the Board, including an executive director, a general counsel, and a secretary.
In contrast, Section 125(d) of the act permits the COP to appoint and fix the pay of “any
personnel the Commission considers appropriate.” (Again, the context suggests that the word
“panel” should have been used instead of “commission.”) The COP is also permitted to procure
temporary and intermittent experts and consultants for up to one year, and use employees detailed
from any federal department or agency. No limits are specified on the number of employees,
consultants, or detailees that the COP may obtain, and no limits are specified regarding their ²¹
pay.

Section 104(g) of the act requires the FSOB to report to the “appropriate committees” of ²²
Congress at least quarterly regarding the implementation of its responsibilities, but the act does
not specifically indicate when those responsibilities begin. (For example, “quarterly” could mean
every three months starting on the date the act was signed into law, or starting on the date that the
Secretary of the Treasury begins exercising his authority under the act.) In contrast, Section
125(b)(1) of the act requires the COP to submit a “regular report” of the panel within 30 days

¹⁷^Ibid^{. Se}^e^h^ttp:^//www^.tre^a^s^ur^y^.^g^o^v^/initia^tiv^e^s^/e^e^s^a^/^doc^s/^Am^e^nde^d_^B^y^la^w^s^.pdf^f^o^{r a}^c^o^p^y^of^the^by^la^w^s^.
¹⁸^T^e^sti^m^on^y^of^Ne^e^l^Ka^shk^a^{ri, inte}^rim^A^ssist^aⁿ^{t Se}^c^r^e^t^a^r^y^f^o^{r the}^Fi^na^nc^ia^{l Sta}^b^ility^Offⁱ^c^e^,^{U.S. De}^p^a^rtm^e^{nt of}^the
^T^r^e^a^s^u^r^y^{, be}^f^o^r^e^the^Se^na^te^C^o^m^m^itte^e^{on B}^a^nk^ing^,^H^ousⁱⁿ^g^,^aⁿ^d^U^r^ba^{n A}^f^f^a^ir^s^,^O^c^tobe^r²³^,²⁰^08.
¹⁹^Se^e^htt^p^://w^ww^.tre^a^s^.g^ov^/ⁱ^nitia^ti^v^e^s/^e^e^s^a^/^mⁱ^nute^s^.shtm^l^{to v}ⁱ^e^w^those^mⁱ^nute^s^.
²⁰^T^e^sti^m^on^y^of^Ne^e^l^Ka^shk^a^{ri, inte}^rim^A^ssist^aⁿ^{t Se}^c^r^e^t^a^r^y^f^o^{r the}^Fi^na^nc^ia^{l Sta}^b^ility^Offⁱ^c^e^,^{U.S. De}^p^a^rtm^e^{nt of}^the
^T^r^e^a^s^u^r^y^{, be}^f^o^r^e^the^Se^na^te^C^o^m^m^itte^e^{on B}^a^nk^ing^,^H^ousⁱⁿ^g^,^aⁿ^d^U^r^ba^{n A}^f^f^a^ir^s^,^O^c^tobe^r²³^,²⁰^08.
²¹^Iⁿ^mⁱ^d-^D^e^c^e^m^b^e^r²⁰⁰⁸^{, t}^h^e^C^O^{P hir}^e^{d a}ⁿ^Ex^e^c^u^tiv^e^Dⁱ^r^e^c^t^or^aⁿ^d^a^G^e^ne^r^a^{l C}^ouns^e^l^.
²²^Se^c^tion³⁽^{1) of}^the^a^c^t^de^fⁱ^ne^{s the}^te^rm^“^a^ppropria^te^c^o^m^m^itte^e^s^of^Cong^re^ss”^a^s^the^Com^m^itte^e^on^Ba^nk^ing^,
^H^ous^ing^,^aⁿ^{d U}^r^ba^{n A}^f^f^a^ir^s^,^the^C^o^m^m^itte^e^{on Fina}^nc^e^,^t^h^e^C^o^m^m^itte^e^{on the}^B^u^dg^e^t^{, a}^nd^the^C^o^m^m^itte^e^on
^A^ppr^opr^ia^ti^ons^of^the^Se^na^te^{; a}ⁿ^d^the^C^o^m^m^itte^e^{on Fina}ⁿ^cⁱ^a^l^S^e^rvⁱ^ces,^t^h^{e Co}^mmⁱ^t^t^{ee o}ⁿ^W^a^y^s^an^d^M^ean^s,^t^h^e
^C^o^m^m^itte^e^{on the}^B^u^dg^e^t^{, a}ⁿ^d^th^e^C^o^m^m^itte^e^{on A}^ppr^opr^ia^ti^ons^o^f^the^H^ous^e^of^R^e^pr^e^s^eⁿ^ta^tiv^e^s^.

after the first exercise of the Secretary’s authority under Section 101(a) or 102 of the act, and ²³²⁴
every 30 days thereafter. The COP’s first report was issued on December 10, 2008.
In addition, the COP is required to submit a one-time “special report” by January 20, 2009,
analyzing the current regulatory system and its effectiveness at overseeing the participants in the
financial system and protecting consumers. The report is also required to contain
recommendations for improvement, including whether other participants in the financial markets
should be subject to the regulatory system, the rationale for such a recommendation, and whether ²⁵
there are any gaps in existing consumer protections.

The act does not require the FSOB to be the recipient of any reports prepared by other entities,
but several provisions in the act specify that certain reports are to be sent to the COP. For
example, (1) Section 104(g) of the act requires the FSOB to provide to the COP its quarterly
reports to Congress; (2) Section 105(d) states that any report to Congress by the Secretary that is
required by Section 105 (e.g., “tranche” reports for each $50 billion of purchases and a
“regulatory modernization” report) shall also be provided to the COP; (3) Section 116(d) says that
any report or audit required under Section 116 of the act (including Comptroller General reports)
shall also be submitted to the COP; (4) Section 117(d) requires the CG’s report on “margin
authority” to be provided to the COP; (5) Section 121(f)(3) provides that reports by the Special
IG for the TARP shall also be submitted to the COP; and (6) Section 129(e) states that the report
to certain congressional committees on “exercise of loan authority” shall also be provided to the
COP.

The act does not indicate whether and, if so, how the FSOB is to be funded. In contrast, the act
specifies in Section 125(g) that the COP is authorized “such sums as may be necessary for any
fiscal year,” and specifies that half of the funds are to be derived from the applicable account of
the House of Representatives, and half from the contingent fund of the Senate. The act goes on to
state in Section 125(h) that an amount equal to the expenses of the COP shall be promptly
transferred by the Secretary from time to time upon the presentment of a statement of such
expenses by the chairperson of the panel. The funds are to be taken from funds provided to the
Secretary under the act and sent to the applicable fund of the House of Representatives and the
contingent fund of the Senate.

²³^A^s^note^d^e^a^r^lie^rⁱⁿ^this^r^e^por^t,^th^e^D^e^pa^r^t^m^e^{nt of}^the^T^r^e^a^s^ur^y^tr^aⁿ^s^f^e^r^r^e^{d the}^fⁱ^r^s^{t EESA}^-^r^e^la^te^{d f}^unds^to
^pa^rtic^ipa^tingⁱⁿ^stit^utio^ns^{on Oc}^to^be^{r 28}^{, 2}⁰⁰⁸^.
²⁴^Se^e^htt^p^://c^o^p^.seⁿ^a^t^e^.^g^o^v^/^doc^um^eⁿ^ts/c^op-¹²¹⁰⁰⁸^-re^p^o^rt.^pdf^f^o^{r a}^c^opy^of^{this re}^port.
²⁵^S.³⁶^52,^intr^od^uc^e^d^by^Se^na^tor^Ma^rⁱ^a^C^a^ntw^e^{ll on Se}^p^t^e^m^be^r^29,²⁰^08,^w^ould^ha^v^e^e^s^ta^blis^he^{d a}ⁿ^inde^pe^nde^nt^,
^bipa^rtisaⁿ^c^o^m^m^{ission to c}^o^nd^uc^t^a^sim^ila^{r re}^vⁱ^e^w^of^the^U.^{S. f}ⁱ^na^nc^ia^{l s}^y^ste^m^.^T^h^e^{bill a}^l^{so w}^oul^d^h^a^v^e^e^s^ta^blishe^{d a}
^sp^eci^alⁱⁿ^sp^ect^o^r^gen^e^ral^f^o^{r f}ⁱⁿ^a^nci^a^l^market^{s o}^v^er^si^gh^t^.

Section 104(h) of the act requires that the FSOB and its authority terminate 15 days after (1) the
date that the last troubled asset acquired under Section 101 has been sold or transferred out of the
ownership of the federal government, or (2) the date of expiration of the last insurance contract
under Section 102, whichever is later. Section 125(f) of the act states that the COP is to terminate
six months after the authorities provided to the Secretary expire, which is described in Section
120 of the act as December 31, 2009, subject to extension. There are no requirements in the act
that either the FSOB or the COP preserve any records, or to provide a means by which the public
or others can access any records.
As was the case with the two general oversight bodies, the act’s descriptions of the duties and
responsibilities of the Special IG for the TARP and the Comptroller General are similar in some
respects, but differ in other ways. Also, certain elements of the Special IG’s operations appear to
be undefined. The discussion below and in Table 2 at the end of this report compares the roles of
the Special IG and the CG with regard to several relevant dimensions.

Pursuant to the Bowsher v. Synar decision of the Supreme Court, it is clear that GAO is a ²⁶
legislative branch agency, and can have no significant executive branch functions. However,
although Section 121(a) of EESA “established” the Office of the Special IG for the TARP, the act
does not indicate where in the government that office is to be housed. Legislation establishing
other special inspectors general, while not specifying organizational placement, contains other
indications of where the entity was housed. For example, the Special Inspector General for Iraq
Reconstruction was established by Section 3001 of P.L. 108-106, which provided that the IG was
appointed by the Secretary of Defense (after consultation with the Secretary of State), and ²⁷
reported to the head of the Coalition Provisional Authority.
The act is also unclear where the Special IG’s offices are to be located. Section 116(a)(2)(A)
requires the Secretary of the Treasury to provide GAO with appropriate audit space and facilities
in the Department of the Treasury, but the act contains no similar requirement for the Special IG.
However, Section 121(d)(1) of the act says that, in carrying out the duties delineated in the act in
subsection (c), “the Special Inspector General shall have the authorities provided in section 6 of
the Inspector General Act of 1978.” Section 6 of the Inspector General Act (codified at 5 U.S.C
Appendix) states, in relevant part, that the “head of an establishment shall provide the Office
within such establishment with appropriate and adequate office space at central and field
locations of such establishment, together with such equipment, office supplies, and

²⁶^Bow^s^he^r^v^.^Sy^nar^,⁴^{78 U}^.^S.⁷¹^4,^a^t⁷³^{4 (}¹⁹⁸⁶⁾^.
²⁷^For^a^de^ta^ile^{d c}^o^m^p^a^r^is^on^of^the^Spe^cⁱ^a^l^I^G^f^o^r^the^TA^R^P^a^nd^ot^he^r^s^p^e^cⁱ^a^l^I^G^s^a^s^w^e^{ll a}^s^s^t^a^t^utor^y^I^G^s^unde^r^the
^Iⁿ^s^p^e^c^t^or^G^e^ne^r^a^{l A}^c^{t of}^{1978, a}^s^a^m^e^nde^{d, s}^e^e^C^R^S^R^e^p^o^r^t^R^S²²⁹⁸¹^,^T^h^{e Sp}^eci^a^l^Iⁿ^sp^ect^o^r^Gen^e^r^a^l^f^o^{r t}^h^e^T^r^o^u^b^l^ed
^Asse^{t Re}^lie^{f Progr}^{am (}^S^{IG TARP}⁾^{, by}^V^a^ne^s^s^a^K^.^Burrow^s^.

communications facilities and services as may be necessary.” Therefore, if the Special IG is
determined to be located within the Department of the Treasury, then the Secretary may be
required to provide the Special IG with space and facilities.

Section 116(a)(1) of the act describes the responsibilities of the Comptroller General with regard
to the TARP, and Section 121(c)(1) describes the responsibilities of the Special IG. The general
responsibilities of both the CG and the IG are similar, although stated somewhat differently. For
example, once the TARP is established, the CG is to “commence ongoing oversight of the
activities and performance of the TARP,” including the performance of the TARP in meeting the
purposes of this Act”. The Special IG is to “conduct, supervise, and coordinate audits and
investigations of the purchase, management, and sale of assets by the Secretary of the Treasury
under any program established under section 101, and the management of the Secretary of any
program established under section 102.”
The two audit organizations’ specific responsibilities are similar, but also differ in some ways. For
example, while both the CG and the Special IG are required to identify the troubled assets
acquired under the program, only the Special IG is charged with describing why the Secretary
deemed it necessary to purchase each asset, and to list (with detailed biographical information)
each person or entity hired to manage the troubled assets. The CG, on the other hand, is the only
entity specifically required to examine the internal controls of the TARP, to examine the
efficiency of TARP operations and contracting procedures, and to review the TARP’s efforts to
minimize conflicts of interest.
The act gives two responsibilities to the CG that are not given to the Special IG. Section 116(b)(1)
of the act requires the CG to audit the TARP’s financial statements, and Section 117 requires the
CG to determine the extent to which leverage and sudden deleveraging of financial institutions
was a factor behind the financial crisis, including the roles of the Board of Governors of the
Federal Reserve System, the Securities and Exchange Commission, the Secretary of the Treasury,
and others.

Section 121(b)(1) requires the President to nominate the Special IG “as soon as practicable after
the establishment of any program under sections 101 and 102.” According to an interim final rule
issued by the Board of Governors of the Federal Reserve System, on October 14, 2008, the
Secretary of the Treasury announced a program within the TARP to provide capital to eligible ²⁸
financial institutions. Therefore, it appears that a “program” triggering the nomination of the
Special IG was established at that point. However, the President did not submit a nomination for
the position until November 14, 2008, and the nominee was not confirmed by the Senate until
December 8, 2008. Also, Section 121(e) of the act indicates that the Office of the Special IG is to
be provided $50 million from the proceeds of the sale of securities, including Treasury bills and

²⁸^S^{ee U.}^S^.^Dep^a^rt^m^eⁿ^t^o^f^t^h^{e T}^r^ea^su^ry^,^“^T^arp^Ca^pita^l^P^u^rc^ha^se^P^r^o^g^r^a^m^{; Inte}^rim^Fina^{l Rule}^,”⁷³^Fe^de^{ral Re}^giste^r
⁶²²⁰⁵^{, O}^c^to^be^r²⁰^,²⁰^08,^f^o^r^a^c^o^py^of^this^r^u^le^.

savings bonds.²⁹ However, the act does not indicate when or how those funds are to be provided,
so it is unclear when the Office of the Special IG will be operational.
The act says that the CG’s audit functions are to begin “upon establishment of the troubled asset
relief program.” According to the interim Assistant Secretary and the acting CG, GAO officials
and staff met with Treasury officials on October 9, and they reviewed certain contracts on ³⁰
October 12.

The act provides both the CG and the Special IG with access to certain information, although ³¹
those rights differ somewhat. Section 116(a)(2)(B) states that, consistent with applicable law,
the CG has access to any information or “things” belonging to the TARP, and to its officers,
employees, or agents. Section 121(e)(4) requires the heads of other agencies to furnish the Special
IG with any requested information or assistance that is “practicable” and not in contravention to
law. Therefore, the CG appears to have specific access rights to information from the TARP,
whereas the Special IG appears to have specific access only to information from other agencies.
Also, the act requires that the CG be given “full facilities for verifying transactions with the
balances or securities held by depositaries, fiscal agents, and custodians,” and is permitted to
make and retain copies of any records. No similar rights are specifically afforded the Special IG.
As noted previously, however, Section 121(d)(1) of the act says that, in carrying out the duties
delineated in the act in subsection (c), “the Special Inspector General shall have the authorities
provided in section 6 of the Inspector General Act of 1978.” Section 6 of the Inspector General
Act states, in relevant part, that each inspector general is authorized to “have access to all records,
reports, audits, reviews, documents, papers, recommendations, or other material available to the
applicable establishment which relate to programs and operations with respect to which that
Inspector General has responsibilities under this Act.” That section goes on to authorize the IGs to
require by enforceable subpoena the production of all information, documents, and other evidence
needed in the performance of the functions assigned by the act.

Section 116(b)(3) of the act requires the TARP to address deficiencies that the CG identifies, or to
certify to the appropriate committees of Congress that no action is needed. The act places no
similar requirement on the TARP regarding audit findings by the Special IG.

²⁹^Spe^cⁱ^fⁱ^c^a^l^l^y^{, Se}^c^{tion 1}²¹⁽^g⁾^of^th^e^a^c^t^s^a^y^s^tha^t^“^O^f^the^am^ounts^m^a^de^a^v^a^ila^ble^{to the}^Se^c^r^e^t^a^r^y^of^t^h^e^T^r^e^a^s^ur^y
^unde^r^s^e^c^tⁱ^on¹¹^8,^$5^0,0⁰⁰^,⁰^{00 s}^h^a^{ll be}^a^v^a^ila^ble^to^the^Spe^cⁱ^a^l^Iⁿ^s^p^e^c^t^or^G^e^ne^r^a^{l to c}^a^r^r^y^{out t}^h^is^s^e^c^tion.”^Se^c^tioⁿ
¹¹⁸^{states th}^{at t}^h^{e “Secretar}^y^m^a^y^u^s^e^th^e^p^r^o^ceed^{s o}^f^th^{e sale o}^f^an^y^s^ecu^{rities issu}^ed^uⁿ^d^e^{r ch}^ap^ter³¹^o^f^{title 3}¹^,
^Uⁿ^ite^{d S}^t^a^t^e^s^Code^.”^C^h^a^p^te^{r 3}¹^of^T^itle^{31 (“}^P^u^blic^D^e^bt”⁾ⁱⁿ^c^l^u^d^e^s^s^a^vⁱ^ng^s^bonds^aⁿ^{d s}^a^vⁱ^ng^s^c^e^r^tif^ic^a^t^es^(Se^c^tion
³¹⁰⁵⁾^,^r^e^tir^e^m^eⁿ^{t a}^{nd s}^a^vⁱ^ng^s^bon^ds⁽^S^e^c^tio^{n 3}¹⁰⁶⁾^,^a^nd^othe^r^v^e^hi^c^l^e^s^.
³⁰^Se^e^inte^rim^Assistaⁿ^{t Se}^c^r^e^t^a^r^y^Ka^shk^a^{ri’s re}^m^a^rk^{s be}^f^o^re^the^Ins^titu^te^of^Inte^rna^tio^na^{l Ba}^nk^e^r^{s, a}^t
^http:^//w^w^w^.c^nbc^.c^om^/ⁱ^d/²⁷¹⁶⁰⁴⁴³^.
³¹^GA^{O h}^a^{s cert}^aⁱⁿ^d^a^t^a^acce^{ss ri}^gh^t^s^uⁿ^d^e^{r exi}^s^tⁱⁿ^{g l}^a^w^.^F^o^{r exa}^m^p^l^e,³¹^U^.^S^.^C.^§7¹⁶^{(a) st}^at^{es t}^h^at^each^agen^c^yⁱ^s^t^o
^“^g^iv^e^the^Com^p^trolle^{r G}^e^ne^ra^{l inform}^a^{tion the}^C^o^m^p^trolle^{r G}^e^ne^ra^l^re^quire^{s a}^b^out^the^dutie^s,^pow^e^r^{s, a}^c^tiv^itie^s,
^or^g^a^niz^a^tion,^aⁿ^d^fⁱ^na^nc^ia^{l tr}^aⁿ^s^a^c^tions^of^the^a^g^eⁿ^cy^.”

Section 121(e) of the act permits the Special IG to select, appoint, and employ as many officers
and employees as he or she deems necessary, but the selection, classification, and pay of those
employees is governed by the requirements of current civil service law in Title 5, United States
Code. That section also permits the Special IG to employ experts and consultants at a rate not to
exceed GS-15 of the General Schedule (the top end of which is currently $149,000 per year in
Washington, D.C.), and to enter into contracts for other audits or studies. These authorities are
similar to those provided to other statutory inspectors general under the Inspector General Act of

1978. The act contains no similar provisions for the CG, but GAO already has similar abilities ³²

under its existing statutory authorities.

Both the CG and the Special IG are required to submit reports regarding their audit activities to
the appropriate committees of Congress, but some of the specifics are unclear and appear to be
different. For example, Section 116(a)(3) requires the CG to submit GAO’s reports at least every
60 days, but does not specifically indicate when the first 60-day period begins. As discussed in
more detail later in this report, GAO issued its first report regarding the TARP on December 2, ³³

2008.

Section 121(f)(1) requires the Special IG’s reports to include a “detailed statement of all
purchases, obligations, expenditures, and revenues associated with any program established by
the Secretary of the Treasury under sections 101 and 102.” In contrast, the CG is simply required
to submit reports of “findings under this section.” The CG is required to submit GAO’s reports to
the Special IG, among others; the Special IG is not required to reciprocate, but is required (by
Section 121(f)(3) of the act) to submit its reports to the COP. Notably, in contrast to reports from
statutory inspectors general, the Special IG’s reports are not required to be sent to the Secretary of
the Treasury or any other executive branch official.

Section 116(a)(2)(C) of the act requires the Department of the Treasury to reimburse GAO for the
full cost of any oversight activities that are billed by the CG. Section 116(b)(1) requires the
department to reimburse GAO for the full cost of the audit of the TARP financial statement—a
requirement that is similar to one in the Government Accountability Office Act of 2008 (P.L. 110-³⁴

323).

³²^For^e^x^a^m^ple^,^{31 U}^.^S^.^C^.^§7³¹^pe^r^m^its^the^C^o^m^p^tr^olle^r^G^e^ne^r^a^{l to p}^r^oc^ur^e^the^s^e^r^v^ic^e^s^of^{up t}^o²⁰^e^x^pe^r^t^s^a^nd
^c^ons^ulta^nts^f^o^r^u^p^to^thr^e^e^y^e^a^r^s^{at da}^ily^r^a^te^s^of^pay^f^o^r^le^v^e^{l I}^V^of^the^Ex^e^c^u^tiv^e^Sc^he^du^le⁽^c^ur^r^e^ntl^y^$149,0⁰⁰^pe^r
^y^ear).
³³^U^.^{S. G}^o^v^e^rnm^e^nt^A^c^c^ounta^b^ility^O^f^fⁱ^c^e^,^Tr^ouble^d^As^s^e^{t Re}^lie^{f Pr}^ogr^am^:^Ad^diti^on^{al Ac}^ti^ons^N^e^e^d^e^d^to^Be^tte^r
^Ensure^Inte^grity^{, Ac}^c^o^unt^abi^lity^,^and^Traⁿ^sp^areⁿ^c^y^{, G}^A^O^-^09-¹⁶^1,^D^e^c^e^m^b^e^r^{2, 20}^08.
³⁴^S^ectio^{n 6}^o^f^th^{at legislatio}^{n p}^r^o^v^id^{es th}^at,^af^{ter Octo}^b^e^{r 1,}²⁰⁰⁹^,^if^{GAO “au}^d^{its an}^y^fⁱⁿ^aⁿ^c^{ial state}^m^en^{t o}^r^related
^sch^e^d^u^l^{e w}^h^ich^is^p^r^ep^ared^un^d^e^r^sectioⁿ³⁵¹⁵^b^y^an^exe^c^u^{tive age}ⁿ^cy^,^”^th^{e ag}^en^c^y^m^u^{st rei}^m^b^u^r^{se GAO f}^o^{r th}^{e co}^st
^of^the^a^udit^if^G^A^O^a^udite^{d the}^s^t^a^t^em^eⁿ^{t f}^o^r^FY²⁰⁰^7.

In contrast, Section 121(g) of the act requires that $50 million of the funds from the proceeds of
the sale of securities under Section 118 be provided to the Special IG to carry out his or her
responsibilities. Section 118 of the act states that the Secretary “may use the proceeds of the sale
of any securities issued under chapter 31 of title 31, United States Code” for the authorities
granted in the act and the cost of administering those authorities. Chapter 31 of title 31 (“Public
Debt”) includes Treasury bills, savings bonds and savings certificates, and other instruments.
However, the timing and mechanics of the transfer of funds to the Special IG are unclear (e.g.,
whether the Special IG gets a one-time payment of $50 million at the time the office is
established, or whether that amount is to be provided over a longer period of time, as determined
by the Secretary of the Treasury).

Section 121(h) of the act specifies that the Office of the Special IG terminates on the later of (1)
the date the at the last troubled asset acquired under Section 101 has been sold or transferred, or ³⁵
(2) the date of expiration of the last insurance contract under Section 102. Section 116(e) says
that the CG’s oversight, audit, and reporting requirements under the act also terminate on those
dates. Also, Section 116(a)(2)(A) states that the Secretary of the Treasury is to provide the CG
with audit space and facilities until the termination date specified in Section 120 (which is
December 31, 2009, subject to extension). There are no requirements in the act that either the CG
or the Special IG preserve any records or provide a means by which the public or others can
access any records.
The Secretary of the Treasury’s initial proposal to purchase troubled assets was very short and
contained no oversight provisions. Instead, it stated that, “Decisions by the Secretary pursuant to
the authority of this Act are non-reviewable and committed to agency discretion, and may not be ³⁶
reviewed by any court of law or any administrative agency.” Several Members of Congress and
many others, including both of the major party presidential candidates, called for increased
oversight of the program. For example, Senator John McCain said, “We won’t solve a problem ³⁷
caused by poor oversight with a plan that has no oversight.”
As enacted on October 3, 2008, however, EESA contained an elaborate oversight system, with
general oversight responsibilities given to the FSOB and the COP, and with detailed auditing
responsibilities assigned to the Comptroller General and a new Special Inspector General for the
TARP. Other, albeit more limited, responsibilities were assigned to OMB, CBO, and the Joint
Committee on Taxation to help Congress oversee the implementation of the TARP. Together, 11
different entities are required to prepare and submit a total of 18 different types of reports to six

³⁵^In^co^m^p^ari^s^oⁿ^,^t^h^e^p^o^s^t^s^o^f^S^p^eci^al^In^sp^ect^o^r^G^eⁿ^e^ral^f^o^{r Iraq}^Recoⁿ^s^t^r^u^c^tⁱ^on^an^{d S}^p^eci^al^Iⁿ^sp^ect^o^r^G^eⁿ^e^r^a^l^f^o^r
^Afgh^anⁱ^s^t^aⁿ^Recoⁿ^s^t^r^u^c^tⁱ^oⁿ^{are each}^t^o^end¹⁸⁰^d^a^y^s^a^f^t^e^{r i}^t^s^p^a^ren^t^en^tⁱ^t^y^{’s reco}ⁿ^s^t^r^u^c^tⁱ^oⁿ^f^u^nd^{s ar}^{e l}^e^{ss t}^h^an^$2⁵⁰
^m^illion.
³⁶^Aⁿ^d^r^ew^Ro^{ss S}^o^rkiⁿ^,^“A^Bai^l^o^u^t^A^b^o^v^{e t}^h^{e L}^a^w^,^”^{New Yo}^{rk Times}^{, Se}^pte^m^be^r^23,²⁰⁰⁸^{, p}^.^C¹^.
³⁷^Mⁱ^ch^ael^Coo^p^e^{r and}^P^a^t^rⁱ^c^{k Heal}^e^y^,^“M^cCaiⁿ^,^M^o^{re Cri}^tⁱ^cal^o^f^Bai^l^o^u^t^P^l^an,^F^a^ul^t^s^Oversi^gh^t^,^”^{New Yo}^{rk Times}^,
^Se^pte^m^be^{r 22, 2}⁰⁰⁸^{, a}^v^a^ila^ble^a^t^http:^//www^.ny^tⁱ^m^e^s^.c^o^m^/²⁰^08/⁰⁹^/23/^us/^politic^s/^23c^a^m^pa^ig^n.htm^l^.

different entities, with many of those reports required to be submitted on a recurring basis.³⁸ No
single entity receives all of the reports.

The duties and responsibilities of both oversight panels and both audit organizations overlap in
several key areas. For example, both the FSOB and the COP are broadly required to review how
the Secretary of the Treasury uses the act’s authorities. Likewise, the Special IG and the CG have
similar general responsibilities (e.g., to “oversee the activities and performance of the TARP” and
to audit the “purchase, management, and sale of assets under any Section 101 program”), as well ³⁹
as similar specific responsibilities. Even where the entities’ responsibilities differ, it is not clear
why certain responsibilities were given to one organization instead of another.
Some of the EESA reporting requirements also appear to overlap, even for the same entity. For
example, Section 105(a) of the act requires the Secretary of the Treasury to report to the
“appropriate committees” within 60 days after the first use of his authority in Sections 101 and
102, and every 30 days afterward, on all “actions taken by the Secretary,” including all
agreements, transactions, and insurance contracts. Section 105(b) requires the Secretary to report
to the same committees on the same transactions within seven days of each $50 billion in
commitments to purchase troubled assets. Section 116 requires the Comptroller General to
oversee the activities of the TARP and report on his findings at least every 60 days, which would
presumably include TARP-related agreements, transactions, and insurance contracts. Section 121
requires the Special Inspector General to report every quarter on his audits of (among other
things) all “troubled assets” purchased or sold under Section 101, and the management of any
insurance program under Section 102.
Congress may have wanted these overlaps and divisions of responsibility to occur, providing it
with differing perspectives on the same issues. However, in practice, the areas of overlap may
prove to be counterproductive, particularly if the bodies are not sharing relevant information and,
as a result, are reaching different conclusions based on incomplete or variable data and methods.
Also, with duplicative and uncoordinated oversight, the Secretary of the Treasury and other
officials responsible for implementing the financial rescue plan may spend the bulk of their time
responding to requests for information from multiple entities asking the same questions. One
author commented that, once it was clear that some type of oversight was needed in EESA,
“consensus seemed to have been reached by including everyone’s favorite idea in the bill, with no
one thinking hard about how all of them fit together and whether more oversight is necessarily ⁴⁰
better than less.”

³⁸^For^a^c^o^m^p^le^te^lis^ti^ng^of^the^r^e^po^r^t^s^r^e^quir^e^d^by^EESA^,^s^e^e^C^R^S^R^e^por^{t R}^L³⁴⁷⁴^0,^Re^porti^ng^Re^qu^ire^m^eⁿ^{ts in t}^h^e
^Em^e^r^ge^nc^y^Ec^onom^ic^Sta^b^iliz^ati^o^{n Ac}^t^{of 2}⁰⁰⁸^,^by^C^u^r^tis^W^.^C^ope^l^a^nd.
³⁹^{For e}^x^a^m^ple^,^the^CG^{is to de}^sc^ribe^the^“^c^h^a^r^a^c^t^e^r^istic^s^a^nd^disp^osition^of^a^c^quire^{d a}^sse^ts.”^T^h^e^Spe^cⁱ^a^l^IG^{is to}
^p^r^o^vⁱ^d^{e a “d}^escri^p^tⁱ^on^o^f^t^h^{e cat}^ego^rⁱ^e^{s o}^f^t^r^o^u^b^l^e^d^asset^s^p^u^r^ch^ase^d^o^r^p^r^o^c^u^r^ed^b^y^t^h^{e S}^ecret^ar^y^,^{” a}ⁿ^d^{a “l}ⁱ^s^tⁱⁿ^g^o^f^t^h^e
^t^r^o^u^b^l^ed^asset^sⁱⁿ^each^cat^ego^r^y^.^”
⁴⁰^A^l^aⁿ^Morris^o^{n, “}^P^l^u^g^gⁱ^ng^L^e^a^k^s^{in t}^h^e^Ba^ilo^ut,”^Le^g^a^{l Tim}^e^s^{, N}^o^v^e^m^b^e^r^10,²⁰⁰⁸^{, p}^.⁴⁶^.

These numerous oversight and audit requirements notwithstanding, it is unclear how effective
they will be in ensuring that the underlying purpose of the TARP is being met, or that the program
is transparent to the public. None of the 18 types of reports delineated in EESA are specifically
required to address one of the central issues that have been raised about the purchases of these
troubled assets—how the funds provided by the Secretary of the Treasury are being used by the
recipients of those funds. Initially, the Secretary of the Treasury indicated that troubled assets ⁴¹
would be purchased to increase lending by the banks. He later said that he decided to purchase
stock in financial institutions instead of bad assets because buying those assets would take too ⁴²
long to recapitalize the banks for lending. However, a number of questions have been raised by
Members of Congress and others about whether the banks that received TARP funds were using
the money to pay dividends to stockholders, to pay bonuses to corporate executives, or to finance ⁴³
the purchases of smaller banks—not to increase lending. Although none of these activities are
prohibited uses of the funds, it is notable that none of the reports specifically require the
disclosure of how the money is being used. Senator Richard Shelby was quoted as saying that ⁴⁴
“We don’t know who’s benefitting from this, [or] where the money’s going.” The Special
Inspector General for the TARP reportedly said he believes that he has the statutory authority ⁴⁵
needed to determine how the banks spent the money, but he is not specifically required to
include that information in any of his reports.
Also, only one of the 18 types of EESA reports is required to be made to the public.⁴⁶ All of the
other reports are required to be submitted to Congress, the “appropriate” committees of Congress,
or to one of the oversight or auditing bodies. While either the preparers or the recipients of these ⁴⁷
reports may be able to make them public, they are not required to do so. Concerns have been
raised about a perceived lack of transparency in various aspects of the financial system rescue

⁴¹^F^o^{r exam}^p^l^e,ⁱⁿ^hⁱ^{s st}^at^em^en^t^u^p^oⁿ^t^h^{e p}^a^{ssage o}^f^E^E^S^A^,^t^h^{e S}^ecret^ar^y^o^f^t^h^{e T}^r^e^a^su^r^y^sai^d^t^h^at^t^h^e^au^t^h^o^rⁱ^t^y
^p^r^o^v^id^edⁱⁿ^th^{e act “g}^iv^{es u}^s^th^{e ab}^ility^to^p^r^o^t^{ect an}^d^recap^{italize o}^u^{r f}ⁱⁿ^aⁿ^c^{ial sy}^ste^m^as^w^e^w^o^rk^th^ro^u^g^h^t^h^{e stresses}
ⁱⁿ^ou^{r cred}ⁱ^t^m^a^rk^et^s.^{” T}^o^vi^e^w^a^co^p^y^o^f^t^hⁱ^s^st^at^e^m^en^t^,^{see h}^t^t^p^:^/^/^www^.^t^re^asu^r^y^.^go^v/^p^r^ess/^rel^eases/^h^p¹¹⁷⁵^.^h^t^m^.
⁴²^A^a^r^{on L}^o^r^e^nz^{o a}^{nd R}^.^C^h^rⁱ^s^t^iaⁿ^B^r^uc^e^,^“^T^r^e^a^s^ur^y^P^u^lls^B^a^c^k^Fr^o^m^TA^R^P^P^u^r^c^ha^s^e^of^Mo^r^t^g^a^g^e^-^R^e^l^a^t^e^d^A^s^se^ts^,
^P^a^ul^so^{n S}^a^y^s^,^”^B^N^A^Daⁱ^l^y^R^e^p^o^r^t^f^o^{r E}^xecu^tⁱ^ves^{, N}^o^v^e^m^b^e^r^{13, 2}⁰^08,^{p. A}^A^-^1.
⁴³^S^ee,^f^o^{r exa}^m^p^l^e,^M^a^{rk L}^aⁿ^d^l^er,^“Ne^w^T^e^rraiⁿ^f^o^{r A}^r^bⁱ^t^e^{rs o}^f^{a Ba}ⁱ^l^o^u^t^,^”^{New Yo}^{rk T}ⁱ^mes^,^No^vem^b^er⁴^,²⁰⁰⁸^,^p^.
^{B1, w}^h^ic^{h sa}^{id “}^c^r^itic^{s f}^r^om^Ca^{pitol Hill}^to^W^a^{ll Stre}^e^t^a^r^e^la^shing^{out a}^t^the^prog^ra^m^,^sa^yⁱ^ng^the^ba^nk^{s a}^r^e^mⁱ^susing
^t^h^{e cap}ⁱ^t^a^lⁱⁿ^f^u^si^oⁿ^s^b^y^h^o^a^rdⁱⁿ^{g t}^h^{e m}^oⁿ^e^y^rat^h^{er t}^h^an^l^e^ndⁱⁿ^{g i}^t^,^a^s^t^h^{e T}^r^easu^r^y^S^ecret^ar^y,^Hen^r^y^M^.^P^a^u^l^s^o^{n Jr.}^,
^urg^e^{d in}^orde^r^to^unc^l^o^g^the^c^r^e^dⁱ^t^m^a^r^k^e^t^{s.... Critic}^{s a}^l^{so sa}^y^tha^t^{, by}^{not ba}^rri^ng^ba^nk^{s f}^r^om^pa^yⁱ^{ng div}ⁱ^deⁿ^d^{s or}^he^f^t^y
^bon^use^s^{, the}^T^r^e^a^s^ury^{is le}^a^d^ing^ta^x^p^a^y^e^r^{s to thi}ⁿ^k^tha^t^th^eⁱ^r^m^one^y^is^be^ing^s^p^eⁿ^{t f}^r^iv^olous^ly^.”^A^l^{so, s}^e^e^Bⁱ^ny^amⁱⁿ
^A^ppe^lba^u^m^,^“^B^aⁿ^k^s^{to Conti}^nue^P^a^yⁱ^ng^Divⁱ^de^{nds; Ba}^ilo^ut^Mo^ne^y^is^f^o^{r L}^e^nding^{, Critic}^{s Sa}^y^,^”^Wa^shⁱⁿ^gt^on^Po^st^,
^O^c^tobe^r³⁰^,²⁰^08,^p.^A¹^{; a}^{nd C}^h^a^r^le^ne^C^a^r^t^e^r^{, “}^L^e^a^d^ing^H^ous^e^D^e^m^o^c^r^a^t^s^P^r^e^s^s^u^r^e^T^r^e^a^s^u^r^y^{on B}^a^nk^s^’^U^s^e^of^Fe^de^r^a^l
^Fun^d^s^,^”^Coⁿ^g^r^{ess No}^w^,^Oc^tobe^r^31,²⁰⁰⁸^{, a}^v^a^ila^ble^a^t^htt^p^://c^ong^r^e^ssnow^.g^a^lle^r^y^wa^tc^h.c^o^m^/
^A^r^tic^le^D^e^ta^il.a^s^px^?^a^r^tic^le^I^D⁼⁷¹⁸^2.
⁴⁴^{R. Christ}^ia^{n Bruc}^e^,^“^F^e^d^e^r^a^l^Ov^e^r^se^e^r^W^{ill Se}^e^k^Re^a^l^-Tⁱ^m^e^Da^ta^F^r^om^TARP^A^sse^{t Ma}^ng^e^r^{s a}^{nd Contra}^c^t^ors,”^BN^A
^Daⁱ^l^y^R^e^p^o^r^t^f^o^r^E^xecu^tⁱ^ves^{, N}^o^v^e^m^b^e^r^20,²⁰⁰⁸^{, p}^.^A^-^20.
⁴⁵^T^e^rr^y^Ki^vi^an^,^“S^p^eci^al^IG^No^mⁱⁿ^{ee P}^l^ed^{ges E}ⁿ^f^o^rce^m^en^t^o^f^T^A^R^P^Ru^l^e^s,^”^C^o^ngr^e^s^s^D^a^ily^PM^{, N}^o^v^e^m^b^e^r^19,
²⁰⁰^{8, a}^v^a^ila^ble^a^t^http^://w^ww^.na^tⁱ^ona^lj^our^na^l.c^o^m^/^c^ong^re^ssdaⁱ^l^y^/
^c^dp_²⁰⁰⁸¹¹¹⁹^_5⁷⁸^1.p^hp?^r^e^la^te^d⁼^tr^ue^&^s^tor^y¹⁼^null&^s^t^or^y²⁼^null&^s^t^or^y³⁼^null.
⁴⁶^S^ectⁱ^o^{n 11}⁶⁽^b⁾^o^f^t^h^{e act}^requⁱ^r^{es T}^A^RP^t^o^p^r^ep^{are and}ⁱ^ssu^{e aud}ⁱ^t^e^d^fⁱⁿ^aⁿ^cⁱ^a^l^st^at^emen^t^s^t^o^t^h^{e ap}^pro^p^rⁱ^a^t^e
^c^o^m^m^itte^e^s^of^Cong^re^{ss a}^{nd the}^p^ublic^.
⁴⁷^For^e^x^a^m^ple^,^the^D^e^pa^r^t^m^e^{nt of}^t^h^e^T^r^e^a^s^ur^y^pos^te^{d the}^fⁱ^r^s^{t “}^t^r^a^nc^he^”^r^e^por^t^on^its^p^u^b^lic^w^e^bs^ite^e^v^eⁿ^tho^u^g^h
^EESA^did^not^re^quire^the^re^p^o^{rt t}^o^be^prov^ide^d^to^the^pu^blic^{. T}^o^vⁱ^e^w^a^c^opy^{, se}^e^http://www^.tre^a^s^.gov^/initia^tiv^e^s^/^e^e^s^a^/
^doc^s^/^T^r^aⁿ^c^h^e^-^R^e^por^tf^ina^l^.pdf^.

program, including the contracts that have been awarded, and the securities being accepted as ⁴⁸
collateral for loans to the banks.

Although the FSOB and GAO began their oversight and auditing responsibilities quickly, the first
members of the COP were not appointed, and the Special IG was not nominated, until November ⁴⁹
14, 2008—more than a month after the enactment of EESA. Then, the Special IG was not
confirmed until December 8, 2008 (largely because of a hold that was placed on the nomination
by a Senator)—more than two months after EESA was enacted. By that time, a substantial portion
of the $700 billion in TARP funds had already been committed to purchase bank stock and other
“troubled assets.”
The COP was required to submit its first “regular report” within 30 days of the Secretary’s first
purchase of “troubled assets,” which occurred on October 28, 2008. However, because of the
delay in appointments to the COP, the panel did not issue its first report until December 10, ⁵⁰
2008—more than two weeks after the deadline. Also, the COP is required to submit its “special
report” by January 20, 2009, “analyzing the regulatory system and its effectiveness at overseeing
the participants in the financial system,” and making recommendations for reform.
EESA requires the first report by the Special IG to be submitted within 60 days after
confirmation. Because the Special IG was not confirmed until December 8, 2008, this report is
not required to be submitted until February 6, 2009. Also, the act states that the Special IG is to be
provided $50 million from the proceeds of the sale of securities to carry out the act’s
requirements, but it is unclear when those payments are to be made and in what amounts. At a
hearing before the Senate Finance Committee on November 17, 2008, the Special Inspector
General nominee said he was unsure whether $50 million would be enough to fund the office’s ⁵¹
operations.
Before the confirmation of the Special IG, the inspector general for the Department of the
Treasury, Eric M. Thorson, attempted to oversee the implementation of EESA in addition to his
regular responsibilities. He reportedly had “a few dozen” people working on the program part ⁵²
time, but said that the new office should have at least 100 full time employees. On November

13, 2008, the Treasury IG was quoted as saying, “It’s a mess,” and “I don’t think anyone ⁵³

understands right now how we’re going to do proper oversight of this thing.”

⁴⁸^Se^e^,^f^o^{r e}^x^a^m^ple^,^Be^{n P}^r^ote^{ss, “}^B^a^{ilout D}^o^c^s^Still^Re^da^c^t^e^d^,”^Pro^P^ublic^a^{, N}^o^v^e^m^b^e^r^13,²⁰⁰⁸^{, a}^v^a^ila^ble^a^t
^http:^//www^.prop^ublic^a^.^org^/^a^r^tic^le^/ba^ilo^ut-d^oc^s-still-re^da^c^t^e^d^-1¹¹³^%^20/^{; a}^{nd De}^aⁿ^Sta^r^k^m^aⁿ^{, “}^B^loo^m^be^r^g^Ste^p^{s Up;}
^Wⁱ^{re S}^e^rvi^c^{e S}^u^{es F}^e^d^f^o^{r Bai}^l^out^T^r^an^sp^aren^c^y^,^”^Co^l^u^mbⁱ^a^Jou^r^na^lⁱ^s^{m R}^evi^ew^,^No^vem^b^{er 7}^,²⁰⁰⁸^,^avai^l^a^b^l^{e at}
^http:^//www^.c^jr.org^/the^_^a^u^d^it/^blo^o^m^be^r^g^_ste^ps_up^.p^hp.
⁴⁹^Mik^e^Sor^a^g^h^aⁿ^{, “}^B^us^h^Pic^k^s^a^B^a^{ilout W}^a^tc^hd^og^,”^The^Hill^{, N}^o^v^e^m^b^e^r^{14, 2}⁰⁰⁸^{. T}^h^eⁿ^o^mⁱ^ne^e^is^N^e^{il M. Ba}^rof^s^ky^,
^o^f^Ne^w^Yo^rk.^E^E^S^A^req^uⁱ^red^t^h^e^P^r^esi^d^eⁿ^t^t^oⁿ^o^mⁱⁿ^at^{e t}^h^{e S}^p^eci^al^IG^f^o^{r t}^h^{e T}^A^RP^{“as so}^on^{as p}^r^ac^tⁱ^cab^l^e^af^t^e^{r t}^h^e
^e^s^ta^blis^hm^eⁿ^{t of}^aⁿ^y^pr^og^r^a^m^un^de^r^s^e^c^tions¹⁰^{1 a}ⁿ^{d 1}⁰²^.^”^T^h^e^fⁱ^r^s^{t pr}^og^r^a^m^s^w^e^r^e^c^r^e^a^t^e^d^{on O}^c^to^be^r¹⁴^{, 2}⁰⁰⁸^.
⁵⁰^Se^e^htt^p^://c^o^p^.seⁿ^a^t^e^.^g^o^v^/^doc^um^eⁿ^ts/c^op-¹²¹⁰⁰⁸^-re^p^o^rt.^pdf^f^o^{r a}^c^opy^of^{this re}^port.
⁵¹^R^.^C^h^rⁱ^s^t^ia^{n B}^r^uc^e^aⁿ^{d R}^a^lp^{h L}ⁱ^nde^m^a^{n, “}^D^r^a^w^dow^{n of}^R^e^m^aⁱⁿⁱⁿ^g^TA^R^P^F^uⁿ^d^s^Ma^y^B^e^L^e^f^t^f^o^r^O^b^a^m^a
^A^d^mⁱ^nis^t^r^a^tion,”^B^N^A^Daⁱ^l^y^R^e^po^rt^f^o^r^E^xecu^tⁱ^ves^{, p. A}^-^23.
⁵²^Am^{it R. P}^a^le^y^,^“^B^a^{ilout L}^a^c^k^{s O}^v^e^r^sig^h^{t De}^spite^Billions^Ple^d^g^e^d^,^”^Wa^sh^ing^t^on^P^o^st^{, N}^o^v^e^m^b^e^r^{13, 2}⁰⁰⁸^,^{p. A}¹^.
⁵³^bid^.

Some of the oversight and auditing requirements may need to be reassessed given the changed
nature of the TARP. When EESA was enacted on October 3, 2008, the type of “troubled assets”
that were generally expected to be purchased under the TARP were those fitting the first
definition in Section 3(9) of the act—i.e., “residential or commercial mortgages and any ⁵⁴
securities, obligations, or other instruments that are based on or related to such mortgages.” The
composition of some of the oversight bodies, and the specific oversight and auditing ⁵⁵
responsibilities given to those entities, appear to have been predicated on this expectation.
However, on October 14, 2008—less than two weeks after EESA was enacted—the Secretary of
the Treasury announced that initial funds authorized by the act would be used to purchase ⁵⁶
preferred shares of stock in certain banks. Congress had authorized the Secretary to take such
action when it defined a “troubled asset” in Section 3(9) of EESA as both mortgage-based
financial instruments as well as “any other financial instrument that the Secretary ... determines
the purchase of which is necessary to promote financial stability.” Subsequent developments
seemed to confirm this shift in direction. On October 25, 2008, the Washington Post reported that
the Department of the Treasury was “dramatically expanding the scope of its bailout of the ⁵⁷
financial system with a plan to take ownership stakes in the nation’s insurance companies.”
Treasury officials were also reportedly in discussions about using TARP or other funds to address ⁵⁸⁵⁹
liquidity problems facing state and local governments, as well as U.S. automakers.
Then, on November 12, 2008, the Secretary of the Treasury announced that the department no
longer planned to buy troubled mortgage-based assets from financial firms, but would instead
provide “aid to banks and other firms that issue student, auto and credit card loans in part by jump ⁶⁰
starting the market that provides financing for these companies.” Firms that reportedly could be
eligible for this new round of capital purchases include insurers and specialty lenders for small

⁵⁴^For^e^x^a^m^ple^,^the^le^gⁱ^s^l^a^{tion w}^a^s^de^s^c^rⁱ^be^{d a}^s^ha^vⁱ^ng^“^g^r^a^nte^d^a^u^t^h^or^ity^{to pu}^r^c^ha^s^e^up^to^$7⁰⁰^bil^lio^{n in}^tr^o^uble^d
^m^o^rtg^a^g^e^-ba^c^k^e^{d se}^c^u^ritie^{s f}^r^o^m^de^bt-ri^ddle^d^W^a^{ll Stre}^e^t^fⁱ^r^m^{s, a}^m^ove^de^sigⁿ^e^d^{to f}^r^e^e^{up t}^h^e^c^r^e^d^{it m}^a^r^k^e^t^s.”
^Mic^h^a^e^l^K^r^aⁿ^is^{h a}ⁿ^{d J}^eⁿⁿ^y^P^a^ul,^“^R^e^s^oundi^ng^Y^e^s^{to B}^a^il^out^,”^Bo^s^t^{on G}^l^obe^{, O}^c^t^obe^r^4,²⁰^08,^p.^A¹^.
⁵⁵^F^o^{r exam}^p^l^e,^sev^e^ral^m^e^m^b^{ers o}^f^t^h^{e F}^S^O^{B a}^p^p^{ear t}^o^h^a^{ve b}^eenⁿ^a^med^t^o^t^h^{e bo}^ard^b^ecau^{se o}^f^t^h^ei^r^rel^a^tⁱ^oⁿ^s^hⁱ^p^t^o
^t^h^{e ho}^u^sⁱⁿ^{g i}ⁿ^du^st^ry^(e.^g^.^,^t^h^{e Di}^r^ect^o^r^o^f^t^h^{e F}^e^d^e^ral^Hou^sⁱⁿ^{g F}ⁱⁿ^aⁿ^{ce Agen}^c^y^an^d^t^h^{e S}^ecret^ary^o^f^Ho^u^sⁱⁿ^{g and}
^Urb^aⁿ^Devel^o^p^m^en^t⁾^.^S^ectⁱ^o^{n 116}^(a)(1⁾^o^f^t^h^{e act}^st^at^{es t}^h^at^t^h^{e C}^Gⁱ^s^t^o^d^e^scri^b^e^t^h^{e “ch}^aract^eri^s^tⁱ^c^{s o}^f^t^r^an^sactⁱ^oⁿ^s
^a^{nd c}^o^m^m^it^m^e^nts^eⁿ^te^r^e^{d int}^o^{, i}ⁿ^c^l^udi^ng^tr^aⁿ^s^a^c^tion^ty^pe^{, f}^r^e^que^ncy^,^sⁱ^ze^{, pr}^ic^e^s^pa^{id, a}^{nd a}^l^l^ot^he^r^r^e^le^v^a^{nt te}^r^m^s^a^nd
^c^ondi^tio^ns^{, a}ⁿ^{d t}^h^e^tim^ing^,^dur^a^tⁱ^{on a}ⁿ^{d te}^r^m^s^of^aⁿ^y^f^u^tur^e^c^o^m^mⁱ^tm^eⁿ^ts^{to pur}^c^h^a^s^e^a^s^s^e^ts^.”^T^h^e^C^G^is^a^l^s^o^r^e^quir^e^d
^{to de}^sc^ribe^t^h^e^“^c^h^a^r^a^c^t^e^r^istic^{s a}^{nd dis}^posit^ion^of^a^c^quire^d^a^sse^{ts, inc}^l^ud^ing^ty^pe^{, a}^c^quisitioⁿ^pric^e^,^c^u^rre^{nt m}^a^rk^e^t
^val^u^e,^sal^e^p^rⁱ^{ces an}^d^t^e^rm^s,^an^d^u^s^{e o}^f^p^r^o^ceed^{s f}^r^o^m^sal^e^s.^”
⁵⁶^Davi^d^Ch^o^,^Nei^l^Irwⁱⁿ^,^and^P^e^t^e^r^W^h^o^rⁱ^s^ke^y^,^“US^F^o^{rces Ni}ⁿ^e^M^a^j^o^{r Ban}^k^{s t}^o^A^ccep^t^P^a^rtⁱ^a^l^Natⁱ^oⁿ^a^lⁱ^zatⁱ^o^n,^”
^Wa^shⁱⁿ^gt^on^Po^st^{, O}^c^to^be^r¹⁴^,²⁰^08,^{p. A}^-^{1; a}ⁿ^{d N}^e^{il I}^r^w^{in a}ⁿ^{d D}^a^vⁱ^{d C}^h^o^,^“^P^a^u^ls^on’^s^C^h^aⁿ^g^e^{in R}^e^s^c^ue^T^a^c^tic^s^,^”
^Wa^shⁱⁿ^gt^on^Po^st^{, O}^c^to^be^r¹⁵^,²⁰^08,^{p. D}^-^1.
⁵⁷^D^a^vⁱ^{d C}^ho,^Bⁱ^ny^am^{in A}^ppe^lba^u^m^,^a^{nd Za}^c^h^a^r^y^A^.^G^o^ldf^a^r^b^{, “}^B^ailout^Ex^paⁿ^d^s^to^Iⁿ^s^u^r^e^r^s^,”^W^a^s^hⁱ^ngt^{on Pos}^t^,
^O^c^tobe^r²⁵^,²⁰^08,^p.^A¹^.
⁵⁸^Yiⁿ^Wⁱ^l^czek,^“M^S^{RB i}ⁿ^Di^scu^s^sⁱ^oⁿ^s^C^oⁿ^cernⁱⁿ^g^P^o^ssi^b^l^{e Bai}^l^o^u^t^o^f^S^t^at^e,^L^o^cal^G^o^v^e^rn^men^t^s,^”^{BNA Daily}^Re^p^o^rt
^f^o^{r E}^xecu^tⁱ^ves^{, O}^c^tobe^r^28,²⁰⁰⁸^,^{p. A}^-^21.
⁵⁹^No^{ra M}^acal^u^s^o^,^“F^e^d^eral^Aⁱ^d^Cru^cⁱ^a^l^f^o^{r S}^u^rvi^v^al^o^f^U.^S^.^A^u^t^o^m^a^kers,^Aⁿ^al^y^s^t^s^S^a^y^,^”^{BNA Daily}^Re^{port f}^o^r
^E^xecu^tⁱ^ves^{, O}^c^tobe^r³⁰^,²⁰^08,^p.^A^A^-¹^.
⁶⁰^P^e^te^r^W^hor^is^k^e^y^,^D^a^vⁱ^{d C}^{ho, a}ⁿ^{d B}ⁱ^ny^am^{in A}^ppe^lba^u^m^,^“^T^r^e^a^s^ur^y^R^e^de^fⁱ^ne^s^I^t^s^R^e^s^c^ue^P^r^og^r^a^m^;^P^l^aⁿ^t^o^B^u^y
^Dⁱ^s^t^r^e^s^s^e^{d A}^s^s^e^ts^is^A^b^a^ndone^{d i}ⁿ^Fa^v^o^r^of^Aⁱ^{d to L}^oos^eⁿ^C^o^ns^u^m^e^r^C^r^e^d^it,”^W^a^s^hⁱⁿ^gt^{on P}^o^s^t^{, N}^o^v^e^m^b^e^r^13,²⁰⁰⁸^,
^{p. A}¹^.

businesses. The Secretary said that the department had decided that buying mortgage-based assets
would take too long to recapitalize the financial institutions, and that buying equity in these firms ⁶¹
would be a more powerful incentive for them to lend.
While the oversight and audit responsibilities of the COP, the FSOB, the CG, and the Special IG
may still generally apply to these new TARP-related programs, the makeup and the nature of their
specific responsibilities may need to be reconsidered and redefined in light of the type of
“troubled assets” being purchased and the other types of programs being considered. For
example, given the current focus on purchasing bank stock instead of mortgage-based securities,
members of the FSOB could be appointed based on their expertise in the banking industry (e.g.,
the head of the Federal Deposit Insurance Corporation or the Comptroller of the Currency) in
addition to, or instead of, those appointed to the board based on their housing-related expertise.
In addition, to the extent that the Secretary establishes programs based on statutory authorities
outside of Sections 101 and 102 of EESA, the audit responsibilities of both the CG and the
Special IG may need to be redefined to ensure that they cover all aspects of the program. For
example, Section 116(a)(1) defines the CG’s “scope of oversight” as “the activities and
performance of the TARP and of any agents and representatives of the TARP (as related to the
agent or representative’s activities on behalf of or under the authority of the TARP), including
vehicles established by the Secretary under this Act.” Section 3(8) of the act defines the TARP as
“the Troubled Asset Relief Program established under section 101.” Similarly, Section 121(c) of
the act defines the duties of the Special IG as audits and investigations of the “purchase,
management, and sale of assets by the Secretary of the Treasury under any program established
by the Secretary under section 101, and the management by the Secretary of any program
established under section 102.” Since all of these audit functions are geared to Sections 101 and
102 of the act, it is unclear whether the CG or the Special IG can audit or investigate programs
established pursuant to other sections of the act (e.g., the proposed program to guarantee troubled ⁶²
mortgages under Section 109). However, during Senate hearings on his nomination to be
Special IG for the TARP, several Senators reportedly told Neil M. Barofsky that he should assume ⁶³^th
that he has authority for all aspects of EESA. Legislation was introduced late in the 110
Congress that would give the Special IG broad authority regarding actions taken under EESA ⁶⁴
authority.

⁶¹^A^a^r^{on L}^o^r^e^nz^{o a}^{nd R}^.^C^h^rⁱ^s^t^iaⁿ^B^r^uc^e^,^“^T^r^e^a^s^ur^y^P^u^lls^B^a^c^k^Fr^o^m^TA^R^P^P^u^r^c^ha^s^e^of^Mo^r^t^g^a^g^e^-^R^e^l^a^t^e^d^A^s^se^ts^,
^P^a^ul^so^{n S}^a^y^s^,^”^B^N^A^Daⁱ^l^y^R^e^p^o^r^t^f^o^{r E}^xecu^tⁱ^ves^{, N}^o^v^e^m^b^e^r^{13, 2}⁰^08,^{p. A}^A^-^1.
⁶²^{On Oc}^to^be^{r 23}^{, 2}⁰⁰⁸^,^theⁱⁿ^te^rim^A^ssistaⁿ^{t Se}^c^r^e^t^a^r^y^f^o^{r the}^Offⁱ^c^e^of^Fina^nc^ia^{l S}^t^a^b^ility^te^stif^ie^{d be}^f^o^re^the^Se^na^te
^C^o^m^m^itte^e^{on B}^a^nk^ing^,^H^ousⁱⁿ^g^,^a^{nd U}^r^ba^{n A}^f^f^a^ir^s^tha^t^the^de^pa^r^t^m^e^{nt w}^a^s^c^ons^ide^r^ing^im^plem^eⁿ^ting^a^la^r^g^e^-^s^c^a^l^e
^pr^og^r^a^m^{to g}^u^a^r^aⁿ^te^e^tr^oub^le^{d m}^o^r^t^g^a^g^e^s^,^w^h^ic^{h is}^a^u^th^or^iz^e^d^un^d^e^r^Se^c^tion¹⁰^{9 of}^EESA^.
⁶³^A^m^{it R}^.^P^a^le^y^,^“^S^eⁿ^a^t^or^s^Movⁱⁿ^g^Q^u^ic^k^l^y^{to I}ⁿ^s^t^a^{ll B}^a^il^{out W}^a^tc^hdog^,”^Wa^s^hⁱⁿ^g^t^on^Po^st^{, N}^o^v^e^m^b^e^r²⁰^{, 2}⁰⁰⁸^,^p.
^A^{10. Se}^na^{tors Cla}ⁱ^re^Mc^Ca^sk^{ill a}^{nd C}^h^a^r^le^{s E. G}^r^a^ssle^y^re^porte^dly^intr^od^uc^e^d^le^gⁱ^sla^tion^oⁿ^Nov^e^m^b^e^r¹⁹^{, 2}⁰⁰⁸^,^to
^m^a^k^e^c^l^e^a^r^tha^t^the^S^p^e^cⁱ^a^l^I^G^ha^s^a^u^thor^ity^ov^e^r^a^{ll a}^s^pe^c^t^s^of^EESA^,^a^{nd to a}^l^low^him^{to hir}^e^s^t^a^f^f^w^{ithout f}^o^llowⁱ^ng
^t^h^{e ci}^vi^l^servi^{ce h}ⁱ^riⁿ^g^p^r^o^cess.
⁶⁴^Se^e^,^f^o^{r e}^x^a^m^ple^,^{S. 37}¹⁶^{, i}ⁿ^tro^d^u^c^e^d^by^Se^na^{tor Mc}^Ca^sk^{ill o}ⁿ^No^v^e^m^b^e^r^{20, 2}⁰⁰⁸^{, a}^{nd H.R}^.⁷³³³^,^intro^duc^e^d^by
^Rep^r^esen^t^a^tⁱ^v^{e F}^l^ake,^oⁿ^Dece^m^b^{er 1}⁰^,²⁰⁰⁸^.

The information provided in the body of this report also suggests that certain aspects of these
oversight and auditing organizations may need to be clarified. For example, it is currently unclear
where the FSOB is located within the federal government, or whether it is covered by a variety of
general management and transparency requirements. Also, unlike the COP, the act does not
provide the FSOB with a statutory right to information from federal departments or agencies.
When the FSOB meets, it is not clear whether all or a majority of members must be present to
take action, as the act does not specify what constitutes a quorum. The act does not indicate
whether, and if so how, the FSOB is to be funded or staffed, or whether it can employ consultants
to help it carry out its mission. As a result, it may be difficult for the board to carry out some of
the tasks that it has been assigned (e.g., reporting evidence of fraud or malfeasance)—particularly
since several members of the FSOB are likely to change at the end of this Administration.
Although the FSOB is required to report “quarterly,” the act does not specify when those
quarterly periods begin. The FSOB also does not appear to receive any of the various reports that
are provided to the COP (e.g., reports by the Special IG or the CG).
In addition, although the act states that the Office of the Special IG is “established,” it does not
indicate where the office will be housed, and (in contrast to the provisions regarding GAO) there
is no specific requirement in the act that the Secretary of the Treasury or any other department or
agency provide the office with space or facilities. (However, if the Office of the Special IG is
considered part of the Department of the Treasury, then the Secretary may be required by the
Inspector General Act of 1978 to do so.) Finally, the act indicates that both the Office of the
Special IG and GAO’s audit and reporting responsibilities under the act terminate on the date that
the last asset is sold or the last insurance contract expires, whichever is later. It is therefore
unlikely that reports of the Special IG will reflect all relevant transactions, as some period after
those dates will likely be needed to summarize the information and provide a complete historical
record. GAO’s final report, however, could address those transactions under the CG’s general ⁶⁵
authority in 31 U.S.C. §§712 and 717.

It is unclear what effect the various oversight and audit mechanisms will have on the balance of
power between Congress and the executive branch. EESA gave the Secretary of the Treasury
broad authority to purchase “troubled assets,” and defined that term to include any financial
instrument that the Secretary deems “necessary to promote financial market stability.” Congress
gave itself expedited legislative procedures to disapprove actions by the Secretary, but only after ⁶⁶
the first $350 billion has been obligated. Congress can use its regular legislative procedures to

⁶⁵^A^sⁿ^o^t^ed^earlⁱ^e^{r i}ⁿ^t^hⁱ^s^re^p^o^r^t^,^{31 U.}^S^.^C.⁷¹²⁽¹⁾^req^uⁱ^r^{es t}^h^{e CG}^t^o^“iⁿ^v^estⁱ^g^at^{e al}^l^m^a^t^t^e^{rs rel}^a^t^e^d^t^o^t^h^{e recei}^p^t^,
^dis^bur^s^e^m^e^{nt, a}^nd^us^e^of^p^ublic^m^oney^,^”^a^{nd 31 U}^.^S.C^.^§7¹⁷⁽^b)^s^t^a^t^e^s^tha^t^the^C^G^s^h^a^{ll “}^e^v^a^l^ua^te^the^r^e^s^u^lts^of^a
^pr^og^r^a^m^or^a^c^tiv^it^y^the^G^ove^rⁿ^m^e^{nt c}^a^r^rⁱ^e^s^out^un^de^r^e^x^is^ting^la^w^.^”
⁶⁶^A^s^note^d^e^a^r^lie^{r in}^{this re}^port,^Se^c^tion¹¹^5(a⁾⁽³⁾^of^the^a^c^t^sta^t^e^s^th^a^t^if^the^P^r^e^sⁱ^d^eⁿ^{t se}ⁿ^d^{s Co}^ng^re^{ss a}^w^r^itte^{n re}^port
^de^s^c^rⁱ^bing^the^Se^c^r^e^t^a^r^y^of^the^T^r^e^a^s^ur^y^’^s^plaⁿ^{to s}^p^eⁿ^d^the^s^e^c^oⁿ^d^$3⁵⁰^bill^io^{n, C}^ong^r^e^s^s^ha^s¹⁵^c^a^l^e^nda^r^da^y^s^to
^eⁿ^a^c^t^a^joint^re^solu^tio^{n of}^disa^p^p^r^o^v^a^{l. For m}^o^re^inf^o^r^m^a^{tion a}^b^o^u^t^this^pr^oc^e^s^s^,^s^e^e^C^R^S^R^e^por^{t R}^S²²⁹⁸^5,^"F^as^t
^Tr^ac^k^"^Par^l^iam^e^nt^ar^y^Pr^oc^e^dur^e^s^{to A}^u^th^or^iz^e^Ad^diti^on^{al F}^uⁿ^d^s^U^nde^r^the^Em^e^r^ge^nc^y^Ec^onom^ic^Sta^b^iliz^a^tio^{n Ac}^t^{, b}^y
^Chris^t^o^phe^{r M}^.^D^a^vⁱ^s^.^A^lthoug^h^{no w}^r^itte^{n re}^p^o^rt^ha^s^be^eⁿ^s^u^bm^itte^{d, le}^gⁱ^s^l^a^tion^ha^s^a^l^re^a^d^y^be^eⁿ^intro^duc^e^dⁱⁿ^t^h^e
⁽^c^onti^nue^d.^..)

disapprove actions regarding the first $350 billion of asset purchases, but a presidential veto of
any congressional action (whether through regular or expedited procedures) would require a two-
thirds vote of both houses of Congress to prevent the Secretary’s actions from taking effect. Also, ^th
legislation has been introduced in the 110 Congress to reverse the presumption and require ⁶⁷
Congress to approve any expenditure over $350 billion, but the President could veto this type of
initiative as well—again requiring a two-thirds majority in both houses of Congress for
enactment.
Senate confirmation of agency officials is another means by which Congress can provide
oversight of executive branch actions, and that authority will be particularly relevant regarding
the nomination of the Assistant Secretary of the Treasury for the Office of Financial Stability.
However, the legislation permits the Secretary of the Treasury to appoint an interim Assistant
Secretary, and places no limit on how long that appointee may serve. Given the scope of the
Assistant Secretary’s responsibilities and the need for immediate action, a nomination for the ^th
position is unlikely during the remaining days of the 110 Congress. The only other position
established by EESA that requires Senate confirmation is the Special Inspector General for the
TARP.

As noted previously in this report, on December 2, 2008, GAO issued its first TARP report,⁶⁸ and
the Acting Comptroller General testified about the report before the House Committee on ⁶⁹
Financial Services on December 10, 2008. GAO concluded that the Department of the Treasury
had not addressed a number of critical issues, including how it would ensure that the TARP
Capital Purchase Program (CPP) was achieving its intended goals, and how it would monitor
compliance with limits on executive compensation, dividend payments, and stock repurchases.
Among other things, GAO recommended that the department (1) “establish a systematic means of
determining and reporting in a timely manner whether financial institutions’ activities are
generally consistent with the purposes of the CPP and help ensure an appropriate level of
accountability and transparency,” (2) “ensure that institutions participating in CPP comply with
key program requirements,” and (3) “develop a comprehensive system of internal control over ⁷⁰
TARP.” GAO went on to say that, “Until these issues are resolved, there is heightened risk that
the interests of the government and taxpayers may not be adequately protected and that [the ⁷¹
Office of Financial Stability] may not achieve its mission in an effective and efficient manner.”
Commenting on GAO’s report, the Department of the Treasury agreed that it should develop
means to determine whether financial institutions are complying with statutory and other program
requirements, but expressed concern about whether the actions of individual institutions’ use of
the funds needed to be monitored. However, in the wake of concerns expressed by several

^(...c^on^tin^ue^d)
¹¹⁰^th^C^o^ng^r^e^s^s⁽^H^.J^.R^e^s^{. 10}¹⁾^toⁱⁿ^v^o^k^e^this^r^e^q^u^ir^e^m^eⁿ^{t (}ⁱ^.e^{., to}^pr^e^v^eⁿ^{t e}^x^pe^nditur^e^s^a^b^ov^e^$35⁰^bi^llion)^.
⁶⁷^Se^e^,^f^o^{r e}^x^a^m^ple^,^{S. 36}⁸³^{, S.}³⁶⁹⁴^{, S}^.³⁶⁹⁷^{, a}ⁿ^{d H}^.^R^.⁷²⁷⁶ⁱⁿ^t^h^e¹¹⁰^th^C^ong^r^e^s^s^.
⁶⁸^U^.^{S. G}^o^v^e^rnm^e^nt^A^c^c^ounta^b^ility^O^f^fⁱ^c^e^,^Tr^ouble^d^As^s^e^{t Re}^lie^{f Pr}^ogr^am^:^Ad^diti^on^{al Ac}^ti^ons^N^e^e^d^e^d^to^Be^tte^r
^Ensure^Inte^grity^{, Ac}^c^o^unt^abi^lity^,^and^Traⁿ^sp^areⁿ^c^y^{, G}^A^O^-^09-¹⁶^1,^D^e^c^e^m^b^e^r^{2, 20}^08.
⁶⁹^U^.^{S. G}^o^v^e^rnm^e^nt^A^c^c^ounta^b^ility^O^f^fⁱ^c^e^,^Tr^ouble^d^As^s^e^{t Re}^lie^{f Pr}^ogr^am^:^Ad^diti^on^{al Ac}^ti^ons^N^e^e^d^e^d^to^Be^tte^r
^Ensure^Inte^grity^{, Ac}^c^o^unt^abi^lity^,^and^Traⁿ^sp^areⁿ^c^y^{, G}^A^O^-^09-²⁶⁶^T^{, D}^e^c^e^m^b^e^r^{10, 20}⁰⁸^.
⁷⁰^Ibid^{., p. 3.}
⁷¹^Ibid^{., p. 5.}

Members of Congress regarding poor oversight, interim Assistant Secretary Kaskhari told the
House Financial Services Committee that the department would set up a monitoring system to ⁷²
track how each bank was spending TARP dollars. After that hearing, the chairman of the
committee reportedly said that Congress’ willingness to permit the use of the second $350 billion
may hinge on whether banks can show that the funds provided thus far were being used for ⁷³
lending.

As noted previously, the COP released its first report on December 10, 2008—two weeks after its ⁷⁴
first meeting. The report posed a series of questions, including the following:
• What does the Department of the Treasury think the central causes of the
financial crisis are, and what is the department’s strategy for addressing those
causes?
• What metrics can the department cite to show the effects of the $250 billion spent
thus far?
• What have financial institutions done with the taxpayer money received so far?
• How is Treasury deciding which institutions receive the money?
Elizabeth Warren, the chairwoman of the COP, was quoted as saying that the federal government ⁷⁵
did not appear to have a coherent strategy for addressing the financial crisis. However, the
Republican-appointed member of the COP did not sign the report, saying he could not do so until
“every panel member has the resources and rights necessary to conduct effective oversight” and
until “the panel adopts a serious agenda that truly brings transparency and accountability to the ⁷⁶⁷⁷
process.” The COP held its first field hearing on December 16, 2008, in Nevada. The
Republican-appointed member did not participate.
Table 1. Characteristics of the Financial Stability Oversight Board and the
Congressional Oversight Panel in the Emergency Economic Stabilization Act of
2008
^{Financial Stabilit}^{y Oversight Board}^Cong^{ressional Oversight Pan}^{el (COP)}
^{(FSOB) (Section 104)}^{(Section 125)}
^Placement^{Unclear. Subsection (a) simply sa}^{ys the}^{(a) An “establishmen}^{t of the legis}^{lative branch.”}
^{Within the}^{FSOB is “established”.}

⁷²^D^a^{n Fr}^ie^dm^aⁿ^a^{nd B}ⁱ^{ll Sw}^inde^ll^,^“^T^r^e^as^ur^y^O^f^fⁱ^cⁱ^a^l^Vow^s^{to B}^e^e^f^U^p^O^v^e^r^sⁱ^g^h^{t of}^B^a^{ilout F}^uⁿ^d^s^,^”^C^ongr^e^s^s^D^aⁱ^l^y^,
^D^e^c^e^m^b^e^r^{10, 2}⁰⁰⁸^{, a}^v^a^ila^ble^a^t^http:^//w^w^w^.g^ov^ex^e^c^.^c^o^m^/^da^ily^f^e^d/¹²⁰^8/¹²¹⁰⁰^8c^dpm^1.h^t^m^.
⁷³^{R. Chris}^t^ia^{n Bruc}^e^,^“^F^ra^nk^Sa^y^s^Re^le^a^s^e^of^Sec^ond^$3^{50 B}^illi^on^Ma^y^Hⁱ^nge^{on Ba}^nk^L^o^aⁿ^s^U^s^ing^TA^RP^F^uⁿ^d^s^,^”
^B^N^A^Daⁱ^l^y^R^e^p^o^r^t^f^o^{r E}^xecu^tⁱ^ves^,^D^e^c^e^m^b^e^r^{11, 2}⁰⁰⁸^,^{p. A}^-^27.
⁷⁴^Se^e^htt^p^://c^o^p^.seⁿ^a^t^e^.^g^o^v^/^doc^um^eⁿ^ts/c^op-¹²¹⁰⁰⁸^-re^p^o^rt.^pdf^f^o^{r a}^c^opy^of^{this re}^port.
⁷⁵^Dⁱ^aⁿ^a^B^H^e^nr^iq^ue^s^,^“^B^a^ilo^{ut M}^o^nitor^Se^e^s^L^a^ck^of^a^C^ohe^r^e^nt^P^l^aⁿ^,”^{New Yo}^{rk T}ⁱ^mes^,^Dece^m^b^{er 2}^,²⁰⁰⁸^,^avai^l^a^b^l^e
^a^t^http^://w^ww^.n^y^tⁱ^m^e^s^.c^o^m^/²⁰⁰⁸^/^12/^02/^busiⁿ^e^ss/02ta^r^p.h^t^m^l^.
⁷⁶^P^e^te^r^W^hor^is^k^e^y^,^“^C^ong^r^e^s^sⁱ^ona^{l O}^v^e^r^sⁱ^g^h^{t P}^a^ne^{l Q}^u^e^s^tions^B^a^ilo^ut’^s^Ef^fⁱ^c^acy^,”^Wa^shⁱⁿ^gt^on^Po^st^,^Dece^m^b^er¹⁰^,
²⁰⁰^{8, p.}^D³^.
⁷⁷^{For m}^o^re^inf^o^rm^a^{tion o}ⁿ^th^{is he}^a^r^ing^se^e^http:^//www^.c^op.se^na^te^.g^ov^/.

^{Financial Stabilit}^{y Oversight Board}^Cong^{ressional Oversight Pan}^{el (COP)}
^{(FSOB) (Section 104)}^{(Section 125)}
^Federal
^Government
^{Responsibilities}^{(a) The FSOB is responsible for}^—^{(b) The COP shall review th}^{e cu}^r^{rent state of}^the
^{(1) reviewing the e}^{xercise of a}^u^t^hority^{financial markets a}^{nd the}^regulat^{ory system, and}^{submit “reg}^{ular re}^{ports” to Cong}^{ress on—}
^{under a}^{program dev}^{eloped in}
^{accordance with t}^{his Act, including}^{(1) the u}^{se by}^{the Sec}^{retary of a}^u^{thority under}
^{—(A) policies}^{implemented by t}^h^e^{the act, including the}^{use of}^contr^{acting authority}^{and the administration of t}^{he p}^rogram;
^{Secretary and t}^{he O}^{ffice of Finan}^cial
^{Stability created under Sections 1}^{01 a}^nd^{(2) the impact of}^pu^rcha^{ses made}^{under t}^{he act}
^{102, including t}^{he a}^ppointme^{nt of}^{on financial markets a}^{nd fina}^{ncial institutions;}
^{financial agents, the designation o}^f^asset^{(3) the ex}^{tent to w}^{hich informati}^{on made}
^{classes to be p}^urc^{hased, and plan}^{s for the}^{available on transactions has}^cont^{ributed to}
^struct^{ure of ve}^{hicles used to p}^u^r^chase^{market tra}^nspa^{rency; a}^nd
^{troubled assets; and}
^{—(B) the effect of s}^uch^{actions in}^{(4) the eff}^ectiveness^{of foreclosu}^{re mitigation}^{efforts and t}^{he ef}^fectiveness^{of th}^{e program}^from
^{assisting American families in p}^r^e^serving^{the stand}^{point of minimizing long-term costs to}
^{home owners}^{hip, stabilizing financial}^{the tax}^payers^{and ma}^{ximizing the bene}^{fits for}
^{markets, and p}^{rotecting tax}^payer^s;^taxpaye^rs.
^{(2) making recomme}^{ndations, as}
^approp^{riate, to the Secretary}^reg^arding
^{use of the}^aut^{hority unde}^{r this A}^{ct; and}
^{(3) reporting a}^{ny s}^uspect^{ed fra}^ud,
^misreprese^{ntation, or malfeasanc}^{e to the}
^{Special Inspector}^Gene^{ral for the}
^{Troubled Assets Relief Program or the}
^{Attorney Ge}^{neral of th}^{e United}^States,
^{consistent with Section 5}³⁵⁽^{b) of title 28,}
^{United States Code.}
^Other^{(e) In addition to the above}^{(e)(1) In carr}^{ying out its res}^ponsi^{bilities, the COP}
^{Authorities and}^{responsibilities, the FSOB has the}^{may hold hearings, “sit and act at}^{times and}
^Powers^{authority to ens}^{ure t}^{hat t}^{he policies}^{places,” take testimony, receive e}^{vidence, and}
^{implemented by t}^{he Secreta}^{ry ar}^e—^{administer oaths and af}^{firmations to witnesses.}
^{(1) in accordance with}^the^pu^rpo^{ses of}^{(e)(2) Any memb}^{er or age}^{nt of t}^{he COP may, if}
^{the Act;}^{authorized by t}^{he pa}^{nel, take any}^{action which t}^he
^{(2) in the economic inte}^{rests of t}^he^{COP is authorized to take.}
^{United States; and}
^{(3) consistent with}^{protecting ta}^x^payers,
^{in accordance with Section}¹¹^3(a)
^{(entitled “Minimizati}^{on of Long-Term}
^{Costs and Maximization of Benefits for}
^{Taxpayers”)}
^{Access to Data}^{No mention.}^{(e)(3) The COP may sec}^{ure direc}^{tly from any}
^department^{or agency}^{of the U.S. information}
^{needed to carry out}^{its respo}^nsib^ilit^{ies. Upon}
^reque^{st of the}^chair^{person of t}^h^e^{COP, the head}
^{of any depart}^{ment or ag}^ency^shal^{l furnish}^suc^h
^information.
^Membership^{(b) The FSOB is comprised of (1)}^{(c) The COP shall consist of five}^{members, with}
^{Chairman of t}^{he Board of Gover}^{nors of}^{one membe}^{r each}^ap^{pointed by (}^{1) the Speak}^er
^{the Federal Reserve System, (2) t}^he^{of the House}^{of Represe}^ntatives;^{(2) the minority}
^{Secretary of the}^Treasu^{ry; (3) th}^e^{leader of the House of}^Represe^nt^{atives; (3) the}

^{Financial Stabilit}^{y Oversight Board}^Cong^{ressional Oversight Pan}^{el (COP)}
^{(FSOB) (Section 104)}^{(Section 125)}
^{Director of the Federal Housing}^Finance^{majority leader of the Senate; (4)}^{the minority}
^{Agency; (4) th}^{e Chairma}^{n of the}^{leader of the Senate; and (}^{5) the}^{Speaker and t}^he
^{Securities and E}^xcha^{nge Commission, and}^{majority leader of the Senate, after consultation}
^{(5) the Secretar}^{y of Housing}^and^Urban^{with the minority leaders of eac}^h^house.
^Development.^{(c)(6) A vacancy on t}^{he COP s}^{hall be filled in the}
^{same man}^{ner as}^{the original appo}^intment.
^Leadership^{(c) The chairpe}^{rson of t}^{he FSOB shall be}^{Although Section (c)(7) authorize}^{s a}
^{elected by the}^membe^{rs of t}^{he b}^oard^{“chairperso}^{n” of the}^{COP to call meetings, the}
^{(other than}^{the Sec}^retary)^{act does not indicate how the c}^h^{airperson is}
^selected.
^{Pay for Members}^{No mention}^{(c)(2) Each me}^mber^{of the COP}^{shall be paid at}
^{the daily rate of basic pa}^{y for lev}^{el I of the}
^Exec^{utive Schedule ($}¹⁹^1,30^{0 in}²⁰⁰^{8) for eac}^h
^{day the mem}^{ber is}^performing^du^{ties in the}
^Commission.
^{(3) However, membe}^{rs of t}^{he C}^{OP who are}
^Membe^{rs of Congres}^{s or f}^ull-tim^{e federal officers}
^{or employees of the U.S. receive}^{no additional}
^{pay, allowances, or benefits.}
^Mee^tings^{(d) The FSOB shall meet two weeks after}^{(c)(7) The COP shall meet at the}^{call of the}
^{the first e}^{xercise of}^pu^rchase^aut^{hority of}^chairperso^{n or a majority of its members.}
^{the Secretary}^{and mont}^{hly the}^rea^fter.
^Quor^um^{No mention.}^{(c)(5) Four member}^{s of the}^{COP constitute a}
^quoru^{m, but a}^lesser^num^{ber ma}^{y hold hearings.}
^Subordinate^{(f) The FSOB may appoint a}^{credit review}^{No mention.}
^Bodies^{committee to evaluate the}^{use of}^the
^purc^{hase a}^uthority^{provided und}^{er the}
^{Act and the a}^{ssets ac}^{quired t}^hro^{ugh t}^he
^{use of that}^aut^hority.
^{Staffing and}^{No mention}^{(d)(1) The COP may appoint a}ⁿ^d^{fix the}^{pay of}
^Consultants^{any pe}^{rsonnel it deems a}^p^p^ropria^te.
^{(d)(2) The COP may procu}^{re te}^{mporary a}^nd
^{intermittent ser}^{vices u}^{nder Section 31}⁰⁹⁽^{b) of}
^{title 5 (experts}^{and cons}^ultants^f^{or up to one}
^year).
^{(d)(3) Upon requ}^{est of the}^{COP, the head of a}^ny
^{federal departme}^{nt or agen}^{cy ma}^{y detail (on a}
^reimbur^{sable basis) a}^{ny pe}^rsonn^e^l^{of that}
^department^{or agency}^{to the CO}^P.
^{Reports by the}^{(g) The FSOB shall report to the}^{(b)(1)(B) The “regular re}^{ports” of the COP}
^Entity^approp^{riate committees of Cong}^{ress and}^{(described in su}^{bsection (a) abov}^{e) shall be}
^{the COP not less t}^han^qua^rterly^{submitted within}^{30 days}^{after t}^h^e^{first exe}^rcise
^{regarding its res}^{ponsibilities under}^{of the Secretary’s a}^uthority^unde^{r Section 10}^1(a)
^subsec^{tion (a).}^{or 10}^{2, and every}³⁰^{days th}^ereaf^ter.
^{(b)(2) The COP is also to submit}^{a “special report}
^{on regulatory re}^{form” not later t}^{han Ja}^{n. 2}^0,
²⁰⁰^{9, analyzing the}^cu^rrent^regul^{atory system a}^nd
^{its effectiveness at}^{overseeing t}^h^e^participantsⁱⁿ
^{the fina}^{ncial system and}^protectin^{g consume}^rs,
^{with recommendations for im}^pro^vement
^{(including whether}^other^particip^{ants in t}^he

^{Financial Stabilit}^{y Oversight Board}^Cong^{ressional Oversight Pan}^{el (COP)}
^{(FSOB) (Section 104)}^{(Section 125)}
^{financial markets s}^{hould be s}^ubje^{ct to the}
^{regulatory system, t}^{he rationale f}^{or such}^a
^{recommendation, and whet}^{her t}^{here are}^{any ga}^ps
^{in existing cons}^umer^protections)^.
^{Reports to the}^{No mention.}^{Per Section 10}^{4(g) of the act, the}^{FSOB is to}
^Entity^{provide its quarte}^{rly reports}^{to Congress to the}
^COP.
^{Per Section 10}^{5(d), any report to}^{Congress b}^y
^{the Secretary}^{that is r}^e^q^{uired by}^{section 10}^{5 s}^hall
^{also be provided to the COP.}
^{Per Section 11}^{6(d), any report or}^{audit req}^uired
^{under s}^{ection 11}^{6 of t}^{he act (incl}^uding
^{Comptroller General re}^{ports) sh}^{all also be}
^{submitted to the C}^OP.
^{Per Section 11}^{7(d), the Comptroller General’s}
^{report on “ma}^{rgin aut}^{hority” is also to be}
^{provided to the COP.}
^{Per Section 12}^{1(f)(3), reports}^by^{the Special}
^Inspe^{ctor Ge}^{neral for t}^{he TARP shall also be}
^{submitted to the C}^OP.
^{Per Section 12}^{9(e), the report}^{to certain}
^{congressional committees on “ex}^{ercise of loan}
^{authority” shall also be p}^{rovided to the COP.}
^Funding^{No mention.}^{(g) There is authorized to be a}^p^p^{ropriated to the}
^{COP such}^sums^{as may}^be^neces^{sary for a}^{ny fiscal}
^{year, half of which}^{shall be derive}^{d from the}
^{applicable account}^{of the}^House^of
^{Representatives, a}^{nd half from t}^h^e^contingent
^{fund of t}^{he Senate.}
^{(h) An amou}^{nt eq}^{ual to the e}^xpe^{nses of t}^{he COP}
^{shall be prom}^{ptly tran}^sferr^{ed by}^{the Secretary}
^{from time to time upon}^the^pres^entment^{of a}
^{statement of s}^uch^ex^pense^{s by}^th^{e chairpe}^{rson of}
^{the pa}^{nel. The fu}^{nds are to}^{be ta}^{ken from}^fu^nds
^{provided to the Secretary}^under^{the act a}^{nd sent}
^{to the ap}^{plicable fund of t}^{he Hou}^{se of}
^{Representatives a}^{nd the}^continge^{nt fu}^{nd of the}
^Senate.
^Termination^{(h) The FSOB and its aut}^{hority shall}^{The COP shall terminate}^{6 mont}^{hs after}^the
^{terminate 1}⁵^{days aft}^{er t}^{he later}^{of (1)}^{termination date in Section 12}^{0 (}^{Dec. 31, 20}^09,
^{the date that t}^{he last tro}^{ubled as}^set^{subject to ext}^ension)
^{acquired u}^{nder Section 1}⁰¹^has^b^{een sold}
^{or transfe}^{rred out of t}^{he owne}^rs^{hip of}
^{the federal gover}^{nment, or (2) t}^h^e^date
^{of expiration of the}^{last insura}^nce
^{contract u}^{nder Section 1}^02.
^Source:^{Congressional Researc}^h^Service.

Table 2. Responsibilities of the Comptroller General and the Special Inspector
General for the TARP in the Emergency Economic Stabilization Act of 2008
^{Comptroller General (CG)}⁽^Section^{Special Inspector General (I}^{G) (Section}
¹¹⁶⁾¹²¹⁾
^Placement^{GAO is a legislative branc}^{h agenc}^{y (per}^{Unclear, although p}^res^{umably wit}^{hin the}
^{Within the}^{Bowsher v. Synar,}^{478 U.S. 714, at}⁷³⁴^Department^{of the Trea}^sury^(sin^{ce the Secreta}^ry
^Federal⁽¹⁹⁸^6)).^{is authorized to establish the TA}^RP).
^Government
^{Responsibilities}^{(a) (1) The CG shall oversee t}^he^activities^{(c) (1) The Special IG s}^{hall conduct, super}^vise,
^{and per}^{formance of}^{the TARP an}^{d its}^{and coordinate audits and investi}^{gations of the}
^{agents and}^repr^{esentatives, inclu}^ding:^purc^{hase, ma}^{nagement, a}^{nd sale of assets u}^nder
^{—(A) the per}^{formance of}^{the TA}^{RP in}^{any Section 1}⁰¹^{program, and t}^h^e^manageme^nt^{of any p}^{rogram u}^{nder Section 1}⁰^{2, including by}
^{meeting the}^pu^{rposes of t}^{he Act,}^{collecting and summarizing:}
^{particularly foreclosure}^mitigatio^{n, cost}
^{reduction, stability of financial markets or}^{—(A) a description of the catego}^{ries of troubled}
^{banking s}^{ystem, and}^{protection of}^{assets p}^urc^{hased or p}^rocured^by^{the Secretary;}
^taxpaye^rs;^{—(B) a list}^{ing of the trou}^{bled ass}^{ets in each}
^{—(B) the financial condition and internal}^category;
^{controls of the TARP and its agents;}^{—(C) an explanation of w}^{hy t}^he^Secretary
^{—(C) the characte}^{ristics of trans}^actions^{deemed it necessary}^{to pu}^rchase^{each asset;}
^{and commitments e}^{ntered into, including}^{—(D) a list}^{ing of each institution}^{selling those}
^{type, fre}^que^{nce, size, prices paid,}^assets;
^{terms/conditions, and terms of f}^u^ture
^commitments;^{—(E) a listing (with detailed bi}^ographical
^{—(D) the characte}^{ristics and disposition}^{information) of each pe}^{rson or e}^{ntity hired to}^{manage s}^{uch t}^{roubled assets;}
^{of acquired asset}^{s, including type,}
^{acquisition price, market val}^{ue, sale prices}^{—(F) a current}^{estimate of the}^a^{mount of}
^{and terms, and}^{use of}^proceeds);^{troubled assets on t}^he^{books, pu}^{rchased, and}
^{—(E) the efficienc}^{y of TARP operations in}^{sold, and the profit or loss on each sale; and}
^{using ap}^prop^{riated funds;}^{—(G) a listing of the insu}^rance^c^{ontracts issued.}
^{—(F) the compliance of TARP and its}^{(c)(3) In addition to the above, th}^{e Special IG}
^{agents with a}^{pplicable laws and}^{shall also have the aut}^{horities pr}^{ovided to IGs in}
^regulations;^{section 6 of the}^In^spector^Gene^r^{al Act of 19}^78.
^{—(G) TARP’s efforts to prevent,}^identify,
^{and minimize conflicts of interest}^{by its}
^agents;
^{—(H) the efficiency}^{of contractin}^g
^procedures^p^ursua^{nt to Section}¹⁰⁷⁽^b)
^{(minority and women contrac}^ting^).
^{(b)(2) The CG may}^{audit the}
^{programs/activities of the TARP, its}
^{agents, and any}^{vehicles esta}^blished.
^{Obligation to}^{(b)(3) The TARP is required to t}^ake^{No specific p}^{rovision (although the In}^spector
^{Respond to Its}^{action to address deficiencies identified by}^{General Act}^req^{uires age}^{ncies to fur}^nish
^Audits^{the CG or oth}^{er a}^{uditor engaged by th}^e^reque^{sted information or assistan}^ce).
^TARP,^{or to certify to the ap}^pro^priate
^{committees of Congress t}^{hat no}^{action is}
^needed.
^{Audit Space an}^d^{(a)(2)(A) The Secretary shall pro}^vide^{No specific p}^{rovision (although the In}^spector
^Faciliti^es^approp^{riate audit space a}^{nd facilities in}^{General Act}^req^{uires age}^{ncies to fur}^{nish office}
^{the Depart}^{ment of t}^{he Treas}^ury.^{space and}^facilities).

^{Comptroller General (CG)}⁽^Section^{Special Inspector General (I}^{G) (Section}
¹¹⁶⁾¹²¹⁾
^{Staffing and}^{No provision (although GA}^{O will}^likely^{(e) The Special IG may (1) s}^{elect, appoint, and}
^Contra^cting^{use existing}^{staff a}^{nd contracting}^{employ suc}^{h officers a}^{nd employ}^{ees as may}^be
^authority)^necessar^{y, subject to t}^{he p}^rovisio^{ns of title 5}
^{regarding ap}^{pointments, classification, and pay;}
^{(2) employ exp}^{erts a}^{nd consulta}ⁿ^{ts at daily rates}
^{not to exceed GS-1}^{5; and (3) e}ⁿ^t^{er into}
^{contracts or othe}^{r arra}^ngeme^nts^{for audits and}
^{studies as may}^{be ne}^cessary.

^{Access to Data}^{(a)(2)(B) T}^o^{the extent}^consisten^{t with}^{(e)(4) Upon req}^{uest of t}^{he I}^{G, th}^{e head of other}
^{and Rec}^ords^{law, the CG has a}^{ccess to an}^y^{agencies shall fu}^{rnish a}^ny^req^uest^{ed information}
^{information, data, reports, papers}^{, or}^{or assistance that}^{is practica}^{ble and not in}
^{things belonging to or}^{used by}^th^{e TARP,}^{contravention of law. If infor}^{mation or assistance}
^{and to officers, agents, advisors, and}^{is unreasona}^{bly ref}^{used, the}^{IG s}^{hall report to}
^{employees. The CG s}^{hall be given full}^{the ap}^{propriate committees of C}^{ongress without}
^{facilities for verifying transactions}^{, and}^delay.
^{may make and}^{retain copies of a}ⁿ^y
^records.
^Appointment,^N/A^{(b)(1) The Special IG is to be}^app^{ointed by the}
^{Removal, and Pay}^{President, with the advice and co}^{nsent of t}^he
^{of the Au}^ditor^{Senate. (2) The ap}^{pointment is to}^{be made on}
^{the basis of integ}^{rity and demons}^{trated ability in}
^{accounting, auditing, financial anal}^{ysis, law,}
^management^{analysis, pu}^{blic administration, or}
^{investigation. (3) The nomination is to be made}
^{as soon as pra}^{cticable after t}^{he e}^{stablishment of}
^{any p}^{rogram u}^{nder Sections 1}⁰¹^{and 10}^{2. (4)}
^{The IG ma}^{y be}^{removed by}^{the P}^{resident, with}
^{communication of the}^{reason to}^{Congress. (6)}
^{The IG s}^{hall be paid th}^{e same as}^other
^{presidentially-appointed IGs.}
^Reports^{(a)(3) The CG shall su}^{bmit repor}^{ts of}^{(f)(1) The Special IG s}^{hall submit}^{a report to th}^e
^{findings to the ap}^prop^{riate comm}^{ittees of}^approp^{riate committees of Cong}^ress
^{Congress and to t}^{he Special IG}^f^{or the}^{summarizing the}^{IG’s activities du}^{ring the}
^{TARP at least every 60 day}^{s. The CG may}^{relevant pe}^{riod within 60 days a}^f^t^{er confirmation}
^{also submit special report}^{s as wa}^rranted^{and each cale}^{ndar q}^uarter^ther^ea^{fter. Each}
^{by GA}^{O’s findings.}^{report s}^{hall include a detailed sta}^{tement of all}
^{(b)(1) The CG is to an}^{nually audit the}^purc^{hases, obligations, expenditu}^{res, and}^reven^{ues associated with any}^pro^{gram u}^nder
^{TARP’s financial statements.}^{Sections 101}^{and 1}^{02, as w}^{ell as information}
^{Also, Sect}^{ion 117}^req^{uires th}^{e C}^G^to^{under s}^u^b^{section (c)(1).}
^{determine the}^exte^{nt to which le}^verage^{(f)(2) None of the a}^{bove aut}^{horizes the}
^{and sudden deleveraging of}^financ^ial^{disclosure of information that is}^{prohibited from}
^{institutions was a factor}^{behind t}^{he crisis,}^{disclosure by law or exec}^{utive or}^{der, or part of}
^{including the roles of the}^{Board of}^{a criminal investigation.}
^{Governors, the}^{SEC, the Secreta}^{ry, and}
^others.^{(f)(3) The reports}^{shall also be su}^{bmitted to the}
^COP.

^Funding^{(a)(2)(C) Treasury shall reimbu}^rs^{e GAO}^{(g) Of the f}^{unds a}^{vailable to the Secretary of t}^he
^{for the f}^{ull cost of any oversight}^activities^Treasury^under^{Section 11}^{8 (fro}^{m the sale of}
^{as billed by the CG.}^{securities), $50}^milli^{on shall be p}^r^{ovided to the}
^{(b)(1) Treasury is also to reimb}^ur^{se GAO}^{Special IG u}^{ntil expended.}

^{Comptroller General (CG)}⁽^Section^{Special Inspector General (I}^{G) (Section}
¹¹⁶⁾¹²¹⁾
^{for the f}^{ull cost of the audit of th}^{e TARP}
^{financial statement.}
^{In bot}^{h cases, the}^reimb^ursem^ent^{s are}
^{credited to GAO’s “salaries and}
^expe^{nses” a}^ppro^{priation account}^and
^{available until expended.}
^Termination^{(e) Any oversight, reporting, or a}^udit^{(h) The Office of t}^{he Special IG}^s^{hall terminate}
^requirem^{ent te}^{rminates on}^{the la}^{ter of}^{on the later of (1) t}^{he date t}^{hat t}^{he last trou}^bled
^{(1) the date that}^{the last t}^roubled^asset^{asset acq}^{uired u}^{nder Section 1}⁰¹^{has b}^{een sold}
^{acquired u}^{nder Section 1}⁰¹^has^b^{een sold}^{or transfe}^{rred or (2) t}^{he date of}^{expiration of}
^{or transfe}^{rred or (2) t}^{he date of}^{the last insu}^rance^contract^unde^r^{Section 102.}
^{expiration of the}^{last insura}^{nce c}^ontract
^{under Section}^102.
^{(a)(2) Secretary is to provide the}^{CG with}
^{space and}^{facilities until the termi}^nation
^{date in Sect}^{ion 120}^{(Dec. 31, 2}⁰⁰^9,
^{subject to ext}^ension).
^Source:^{Congressional Researc}^h^Service.
^Cur^tⁱ^s^W^.^Co^p^e^la^nd
^Sp^{ecialist i}ⁿ^Am^er^ican^Natioⁿ^a^{l Go}^v^e^rⁿ^m^eⁿ^t
^c^w^copel^aⁿ^d^@^c^rs^.l^oc.g^ov^{, 7-}⁰⁶³²