CONGRESSWOMAN ELISE STEFANIK
S. 383 is expected to be considered on the House floor on Tuesday, March 24, 2009, under a motion to suspend the rules, requiring a two-thirds majority vote for passage. This legislation was introduced by Senator Claire McCaskill (D-MO) on February 4, 2009.
S. 383 would expand the authority of the Troubled Asset Relief Program (TARP) Special Inspector General (SIG) that was established to oversee how TARP funds are spent under the Emergency Economic Stabilization Act (EESA).
The bill would allow the SIG to conduct, supervise, and coordinate audits and investigations regarding any action taken pursuant to EESA. The legislation would also grant the SIG with authority to hire up to 25 retired inspectors general as auditors.
The bill would require the Secretary of Treasury to take action to address any deficiencies identified by a report of the SIG and to certify to the appropriate Congressional Committees whether further action is necessary. The legislation would require the SIG, when carrying out his duties to coordinate with a number of other inspectors general to avoid duplicating oversight efforts. In addition the SIG would be required to issue a report summarizing its activities with 30 days of each fiscal quarter, rather than within 60 days as is stipulated in the original EESA.
The bill would also require that all of the funds remaining from the $50 million originally appropriated for the cost of the SIG be distributed to the SIG with seven days of enactment. According to CBO, about $40 million of previously appropriated money would be transferred, but it would not have any impact on the budget since the money had already been appropriated.
Finally, the legislation would stipulate that the Special Inspector General for Iraq Reconstruction and the Special Inspector General for Afghanistan Reconstruction shall be members of the Council of the Inspectors General on Integrity and Efficiency until their termination.
On October 3, 2008, the President signed the Emergency Economic Stabilization Act (EESA), which established the Troubled Asset Relief Program (TARP). The $700 billion program authorized the Department of Treasury to purchase "troubled assets" from financial and lending institutions in an effort to provide stability and restore confidence and liquidity to the financial markets. The first $250 billion of TARP funding was immediately authorized for use by Treasury after the passage of EESA. The next $100 billion was released at the request of the President. As of January 2009, Treasury had committed $354 billion in TARP funds to a myriad of companies and financial institutions. According to the EESA, the President is required to submit a written certification to Congress to receive the final $350 billion tranche of funds. On Monday, January 12, 2009, then-President Bush requested the final $350 billion at the behest of President Obama, setting the 15 day disapproval clock in motion. Congress then had 15 calendar days to introduce a joint resolution of disapproval. While the House passed a disapproval resolution on a January 22, 2009, by a vote of 270-155, the vote was basically meaningless because the bill was defeated in the Senate the week before. The final $350 billion was made available to President Obama on January 27, 2009.
Members of Congress have expressed strong concerns with how TARP funds have been allocated by Treasury. While urging Congress to quickly pass the bailout legislation in October, Treasury maintained that TARP funds would be used to purchase troubled assets to increase liquidity in the market.
Since its passage, TARP has been sharply criticized for a lack of transparency and accountability regarding Treasury's disbursement of funds. According to a December Government Accountability Office (GAO) report, "Treasury has yet to address a number of critical issues, including determining how it will ensure that CPP is achieving its intended goals and monitoring compliance with limitations on executive compensation and dividend payments." The lack of transparency has made it increasingly difficult for lawmakers and the public to follow distributed TARP funds and assess the effect on financial markets. It has also made it difficult to assess the amount, if any, of taxpayer funds that may be recouped in the future.
Due to the variety of changes in the use of TARP funds, combined with a lack of consistent and adequate oversight, GAO noted that it has become difficult to track exactly what institutions have done with the assistance received through the TARP program. Sparse transparency requirements, and insufficient oversight by Treasury, have combined to make it undeterminable whether "the legislation considered would ultimately cost the taxpayer far less than the $700 billion" as the President stated in September.
According to House Report 111-041, which accompanied S. 383, the office of the Special Inspector General for TARP, was created in the EESA and is headed by Neil M. Barofsky, who was appointed by President Bush and sworn in on December 15, 2008. According to Mr. Barofsky's testimony before the Committee on Oversight and Government Reform, the added hiring flexibility and expanded audit authority in the underlying legislation is necessary for the SIG 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 by the Secretary." An identical House bill (H.R. 1341) was introduced March 5, 2009, by Reps. Dennis Moore (D-KS) and Judy Biggert (R-OH), but was never considered.
According to the Congressional Budget Office (CBO), S. 383 would require that the any funds remaining from the initial $50 million appropriated for the cost of the Special Investigator General (SIG) of TARP be given to the SIG within seven days of enactment. According to CBO, about $40 million of previously appropriated money would be transferred under the legislation, but it would not have any impact of the budget since the money had already been appropriated.