Government regulatory bodies have been in place for decades. Under TARP, a variety of new government oversight mechanisms were put into place. Following is a list of new TARP related and previously existing regulatory authorities:
Auto Industry Task Force
The president designated the Treasury secretary, Timothy F. Geithner, and the chairman of the National Economic Council, Lawrence H. Summers to oversee a task force on the auto industry.
Commodity Futures Trading Commission
Congress created the Commodity Futures Trading Commission (CFTC) in 1974 as an independent agency with the mandate to regulate commodity futures and option markets in the United States. The agency's mandate has been renewed and expanded several times since then, most recently by the Commodity Futures Modernization Act of 2000.
In 1974 the majority of futures trading took place in the agricultural sector. The futures industry has become increasingly varied over time and today encompasses a vast array of highly complex financial futures contracts.
Congressional Budget Office
Congressional Budget Office's mandate is to provide Congress with:
• objective, nonpartisan, and timely analyses to aid in economic and budgetary decisions on the wide array of programs covered by the federal budget and
• the information and estimates required for the Congressional budget process.
The Emergency Economic Stabilization Act of 2008 instructs the Congressional Budget Office to report semiannually on the Office of Management and Budget’s assessment of expenditures under the Troubled Asset Relief Program.
Congressional Oversight Panel
The Congressional Oversight Panel (COP) is tasked with reviewing the current state of the financial markets and the regulatory system. As a by-product of these oversight activities, COP is required to produce the following reports to Congress:
• regular reports every 30 days that cover a variety of issues, including administration of the program, the impact of purchases on the financial markets/financial institutions, market transparency, and the effectiveness of foreclosure mitigation, minimization of long-term costs, and maximization of benefits for taxpayers
• a special report on regulatory reform, published no later than January 20, 2009, analyzing the current state of the regulatory system and its effectiveness at overseeing the participants in the financial system and protecting consumers. The report is to provide recommendations for improvement regarding whether any participants in the financial markets that are currently outside the regulatory system should become subject to the regulatory system, the rationale underlying such recommendation, and whether there are any gaps in existing consumer protections
Congressional Research Service
The Congressional Research Service (CRS) experts assist members of Congress and congressional staff with every stage of the legislative process — from the early considerations that precede bill drafting, through committee hearings and floor debate, to the oversight of enacted laws and various agency activities.
Executive Office of the President
The Executive Office of the President (EOP) has responsibility for tasks ranging from communicating the president’s message to the American people to promoting our trade interests abroad. Overseen by the White House Chief of Staff, the EOP has traditionally been home to many of the president’s closest advisors. The EOP periodically releases economic reports.
Federal Bureau of Investigation
The FBI mission is to protect and defend the United States against terrorist and foreign intelligence threats, to uphold and enforce the criminal laws of the United States, and to provide leadership and criminal justice services to federal, state, municipal, and international agencies and partners.
Federal Deposit Insurance Incorporation (FDIC)
The Federal Deposit Insurance Corporation (FDIC) is an independent agency created by the Congress that maintains the stability and public confidence in the nation’s financial system by insuring deposits, examining and supervising financial institutions, and managing receiverships.
The FDIC directly examines and supervises about 5,160 banks and savings banks, more than half of the institutions in the banking system. Banks can be chartered by the states or by the federal government. Banks chartered by states also have the choice of whether to join the Federal Reserve System. The FDIC is the primary federal regulator of banks that are chartered by the states that do not join the Federal Reserve System. In addition, the FDIC is the back-up supervisor for the remaining insured banks and thrift institutions.
Federal Housing Finance Agency
The Federal Housing Finance Agency (FHFA) was created on July 30, 2008, when the President signed into law the Housing and Economic Recovery Act of 2008. The Act created a world-class, empowered regulator with all of the authorities necessary to oversee vital components of our country’s secondary mortgage markets – Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. In addition, this law combined the staffs of the Office of Federal Housing Enterprise Oversight (OFHEO), the Federal Housing Finance Board (FHFB), and the Government Sponsored Enterprise (GSE) mission office at the Department of Housing and Urban Development (HUD).
Federal Reserve
The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.
Today, the Federal Reserve's duties fall into four general areas:
• conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
• supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
• maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
• providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system
Financial Stability Oversight Board
The Financial Stability Oversight Board (FSOB) is responsible for reviewing the exercise of authority under programs developed in accordance with Emergency Economic Stabilization Act (EESA), including:
• policies implemented by the Secretary and the Office of Financial Stability, including the appointment of financial agents, the designation of asset classes to be purchased, and plans for the structure of vehicles used to purchase troubled assets
• the effect of such actions in assisting American families in preserving home ownership, stabilizing financial markets, and protecting taxpayers
In addition, FSOB is responsible for making recommendations to the Secretary on the use of the authority under EESA, as well as for reporting any suspected fraud, misrepresentation, or malfeasance to SIGTARP or the U.S. Attorney General.
Government Accountability Office
The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for Congress. Often called the "congressional watchdog," GAO investigates how the federal government spends taxpayer dollars.
GAO is tasked with performing ongoing oversight of TARP’s performance, including:
• evaluating the characteristics of asset purchases and the disposition of assets acquired
• assessing TARP’s efficiency in using the funds
• evaluating compliance with applicable laws and regulations
• assessing the efficacy of contracting procedures
• auditing TARP’s annual financial statements and internal controls
• submitting reports to Congress at least every 60 days
Inspectors General
Inspectors General are responsible for detecting and preventing fraud, waste, abuse, and violations of law and promoting economy, efficiency and effectiveness in the operations of the Federal Government.
Office of Management and Budget
OMB's predominant mission is to assist the President in overseeing the preparation of the federal budget and to supervise its administration in Executive Branch agencies. In helping to formulate the President's spending plans, OMB evaluates the effectiveness of agency programs, policies, and procedures, assesses competing funding demands among agencies, and sets funding priorities. OMB ensures that agency reports, rules, testimony, and proposed legislation are consistent with the President's Budget and with Administration policies.
In addition, OMB oversees and coordinates the Administration's procurement, financial management, information, and regulatory policies. In each of these areas, OMB's role is to help improve administrative management, to develop better performance measures and coordinating mechanisms, and to reduce any unnecessary burdens on the public.
Office of Thrift Supervision
The OTS is the federal bank regulator and supervisor of a diverse industry of savings associations and their subsidiaries spread across the nation. The OTS also oversees domestic and international activities of the holding companies and affiliates that own these thrift institutions.
The OTS is an office within the Department of the Treasury.
President's Corporate Fraud Task Force
The Special Inspector General for TARP, SIGTARP, has joined the President’s Corporate Fraud Task Force.
The President’s Corporate Fraud Task Force was created in 2002 to “provide direction for the investigation and prosecution of cases of securities fraud, accounting fraud, mail and wire fraud, money laundering, tax fraud based on such predicate offenses, and other related financial crimes committed by commercial entities and directors, officers, professional advisers, and employees thereof. It is an inter-agency group that coordinates enforcement efforts among several agencies, including the Departments of Justice, the Commodities Futures Trading Commission, the Federal Energy Regulatory Commission, Department of Treasury, Department of Labor, the Securities and Exchange Commission, and the U.S. Postal Inspection Service."
Securities and Exchange Commission
The Securities Exchange Commission (SEC) administers the federal securities laws, requires disclosure by public companies, and brings enforcement actions against violators of securities law. While other federal and state agencies are legally responsible for regulating mortgage lending and the credit markets, SEC has taken these decisive actions to address the extraordinary challenges caused by the current credit crisis:
• aggressively combating fraud and market manipulation through enforcement actions
• taking swift action to stabilize financial markets
• enhancing transparency in financial disclosure
Special Inspector General for the Troubled Asset Relief Program (SIGTARP)
The Special Inspector General for the Troubled Asset Relief Program (SIGTARP) is responsible for conducting, supervising, and coordinating 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 EESA. SIGTARP shall also establish, maintain, and oversee such systems, procedures, and controls as the Special Inspector General considers appropriate.
State Authorities
State governments have various law enforcement and regulatory authorities over some financial institutions and insurance companies. Most notably, New York Attorney General Andrew Cuomo is investigating the activities of some TARP beneficiaries. SIGTARP has entered into partnerships with other criminal and civil law enforcement agencies, including the New York State Attorney General’s Office.
TARP Inspector General Council
The Special Inspector General for TARP founded and chairs the TARP Inspector General Council (“TARP-IGC”), which is made up of the Comptroller General and those IGs whose oversight functions are most likely to touch on TARP issues.
Current members include: • Inspector General of the Department of the Treasury • Inspector General of the Federal Reserve Board • Inspector General of the Federal Deposit Insurance Corporation • Inspector General of the Securities and Exchange Commission • Inspector General of the Federal Housing Finance Agency • Inspector General of the Department of Housing and Urban Development • Treasury Inspector General for Tax Administration • Comptroller General of the United States.
United States Treasury
The mission of Treasury is to serve the American people and strengthen national security by managing the U.S. government’s finances effectively; promoting economic growth and stability; and ensuring the safety, soundness, and security of the U.S. and international financial systems. Treasury advises the President on economic and financial issues, encourages sustainable economic growth, and fosters improved governance in financial institutions.
Section 101 of the Emergency Economic Stabilization Act of 2008 (EESA) authorizes the Secretary of the Treasury to establish a Troubled Asset Relief Program (TARP) to purchase troubled assets from financial institutions.
Section 105 dictates that the Secretary of the Treasury is to produce monthly reports within 60 days of the first exercise of authority under the EESA and every month thereafter. The Secretary is required to report to Congress its activities under TARP. The Secretary must generate tranche reports for every $50 billion in assets purchased, detailing all transactions, the pricing mechanisms used, and justifications for the financial terms of such transactions. And prior to April 30, 2009, the Secretary is required to submit a report to Congress on the current state of the financial markets, the effectiveness of the financial regulatory system, and to provide any recommendations.
