Emergency Economic Stabilization Act: Preliminary Analysis of Oversight Provisions

Emergency Economic Stabilization Act: Preliminary Analysis of Oversight Provisions

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Pr
epared for Members and Committees of Congress

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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.

˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ

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˜—?Ž—?œȱ
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
Leadership ....................................................................................................................................... 5
Pay for Members ............................................................................................................................. 5
Meetings/Quorum............................................................................................................................ 5
Staffing/Consultants ........................................................................................................................ 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
Staffing/Contracting .......................................................................................................................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

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Š‹•Žœȱ
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

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Author Contact Information .......................................................................................................... 26

˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
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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
O that the Secretary of the Treasury can use to restore liquidity and stability to the financial
system of the United States.”1 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
(A) residential or commercial mortgages and any securities, obligations, or other instruments
that are based on or related to such mortgages, that in each case was originated or issued on
or before March 14, 2008, the purchase of which the Secretary determines promotes financial
market stability; and (B) any other financial instrument that the Secretary, after consultation
with the Chairman of the Board of Governors of the Federal Reserve System, determines the
purchase of which is necessary to promote financial market stability, but only upon
transmittal of such determination, in writing, to the appropriate committees of Congress.
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
confirmation.2
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
assets.3 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
assets upon a written certification by the President that the Secretary needs additional authority.4
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

1 For more information on EESA and related issues, see CRS Report RL34730, The Emergency Economic Stabilization
Act and Current Financial Turmoil: Issues and Analysis, by Baird Webel and Edward V. Murphy.
2 On October 6, 2008, the Secretary of the Treasury named Assistant Secretary Neel Kashkari as interim Assistant
Secretary for the Office of Financial Stability.
3 On October 28, 2008, the Department of the Treasury transferred the first EESA-related funds to participating
institutions. See the remarks of Under Secretary for Domestic Finance Anthony Ryan at http://www.treasury.gov/press/
releases/hp1240.htm. The department has also published guidelines for the TARP Capital Purchase Program and a list
of frequently asked questions. See http://www.treas.gov/press/releases/hp1222.htm for a copy of those documents.
4 The President has certified to Congress that the additional $100 billion will be needed. See
http://www.whitehouse.gov/news/releases/2008/10/20081014-1.html for a copy of the President’s certification.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗȱ

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ȱ
securities.” Specifically, the Secretary is authorized to guarantee the timely payment of up to
100% of the principal and interest related to the assets.
ŸŽ›œ’?‘?ȱŠ—?ȱž?’?ȱŽŒ‘Š—’œ–œȱ
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
heads the Government Accountability Office (GAO).5 Many of the audit and reporting
responsibilities delineated in the act specifically reference the actions required in Sections 101
and 102 of the act to purchase troubled assets and to insure those assets.6
Questions have been raised by some observers as to whether these oversight and audit
responsibilities are complimentary to one another, or are contradictory.7 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.
‘Žȱ’—Š—Œ’Š•ȱ?Š‹’•’?¢ȱŸŽ›œ’?‘?ȱ˜Š›?ȱŠ—?ȱ?‘Žȱ˜—?›Žœœ’˜—Š•ȱ
ŸŽ›œ’?‘?ȱŠ—Ž•ȱ
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.

5 GAO’s responsibilities in the act are in addition to its existing responsibilities. For example, 31 U.S.C. §712(1)
requires the CG to “investigate all matters related to the receipt, disbursement, and use of public money,” and 31
U.S.C. §717(b) states that the CG shall “evaluate the results of a program or activity the Government carries out under
existing law.” For more information on GAO, see CRS Report RL30349, GAO: Government Accountability Office and
General Accounting Office, by Frederick M. Kaiser.
6 The act also requires certain reports from the Office of Management and Budget (OMB) and the Congressional
Budget Office (CBO). For example, Section 202(a) requires OMB to report to the President and the Congress within 60
days of the first exercise of authority under Section 101(a) (or by December 31, 2008, whichever comes earlier), and
semiannually thereafter on how much the troubled asset program is costing, how that cost estimate was derived, and
how the estimate changed from the previous report. CBO is required to assess the OMB reports within 45 days of their
submission to the Congress. Also, Section 201 of the act authorizes CBO and the Joint Committee on Taxation to
receive “all information used by the Secretary in connection with activities authorized under this Act” to assist
Congress with its oversight responsibilities.
7 See, for example, Gibson, Dunn & Crutcher LLP, “Financial Markets in Crisis: Section-by-Section Analysis of the
Emergency Economic Stabilization Act of 2008,” available at http://blogs.law.harvard.edu/corpgov/files/2008/10/
100208-analysis-economicsabilizationact08.pdf. The authors note that the oversight entities “overlap considerably,”
and that while Congress may want multiple perspectives, “the potential for these oversight entities to trip over each
other in the course of their work is great.”
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Řȱ

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ȱ
•ŠŒŽ–Ž—?ȱ’?‘’—ȱ?‘Žȱ ˜ŸŽ›—–Ž—?ȱ
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
Sunshine Act, and various human resources management and ethics requirements.8 Legislative
branch entities like the COP are generally not subject to these requirements.
Žœ™˜—œ’‹’•’?’Žœȱ
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.

8 See, for example, CRS Report RL32592, General Management Laws and the 9/11 Commission's Proposed Office of
National Intelligence Director (NID) and National Counterterrorism Center (NCTC), by Clinton T. Brass and Curtis
W. Copeland. That report indicated that more general management laws would appear to cover the NID and NCTC if
they were independent entities in the executive branch than if they were placed within the Executive Office of the
President. If the FSOB is considered part of a federal department or agency or an independent agency, then most of
these general management laws would appear to apply. For more information about these management statutes, see
CRS Report RL30795, General Management Laws: A Compendium, by Clinton T. Brass et al..
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
řȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
ŒŒŽœœȱ?˜ȱ —?˜›–Š?’˜—ȱ
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
agencies to provide needed information.9
Ž–‹Ž›œ‘’™ȱ
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,
2009.10 On November 14, 2008, Democratic congressional leaders named the first three members
of the panel,11 and Republican congressional leaders named the remaining two members on
November 19, 2008.12 However, one of the members named by Republican leaders withdrew

9 In contrast, the legislation establishing the Privacy and Civil Liberties Oversight Board (121 Stat. 355) authorizes the
Board to request the Attorney General to subpoena information on its behalf.
10 As noted earlier in this report, the Department of the Treasury transferred the first EESA-related funds to
participating institutions on October 28, 2008.
11 Amit R. Paley, “N.Y. Prosecutor Picked to Oversee Bailout,” Washington Post, November 15, 2008, p. D1.
Democratic congressional leaders reportedly selected Richard H. Neiman, superintendent of banks in New York;
Elizabeth Warren, a professor at Harvard Law School; and Damon Silvers, associate general counsel of the AFL-CIO.
12 Amit R. Paley, “Senators Moving Quickly to Install Bailout Watchdog,” Washington Post, November 20, 2008, p.
A10. Those named were Senator Judd Gregg and Representative Jeb Hensarling.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Śȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
from the panel less than two weeks later, citing scheduling difficulties.13 On December 17, 2008,
a replacement for this member was named.14
ŽŠ?Ž›œ‘’™ȱ
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
Reserve System to be chairman of the FSOB.15 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
of the COP.16
Š¢ȱ?˜›ȱŽ–‹Ž›œȱ
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.
ŽŽ?’—?œȦž˜›ž–ȱ
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 “Gregg Withdraws from Reform Panel; McConnell Expected to Name Successor,” BNA Daily Report for Executives,
December 3, 2008, p. A-33.
14 “Sununu Named to Bailout Oversight Panel,” Statesman.com, December 17, 2008.
15 See interim Assistant Secretary Kashkari’s remarks before the Institute of International Bankers, at
http://www.cnbc.com/id/27160443.
16 Diana B Henriques, “Bailout Monitor Sees Lack of a Coherent Plan,” New York Times, December 2, 2008, available
at http://www.nytimes.com/2008/12/02/business/02tarp.html.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
śȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
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
the board’s bylaws and reviewed the TARP’s initial work streams.17 The FSOB met again on
October 13, 2008, and on October 22, 2008.18 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
Department of the Treasury’s website.19
?Š??’—?Ȧ˜—œž•?Š—?œȱ
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
staff to the Board, including an executive director, a general counsel, and a secretary.20
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
pay.21
Ž™˜›?œȱ‹¢ȱ?‘Žȱ—?’?’Žœȱ
Section 104(g) of the act requires the FSOB to report to the “appropriate committees” of
Congress22 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. See http://www.treasury.gov/initiatives/eesa/docs/Amended_Bylaws.pdf for a copy of the bylaws.
18 Testimony of Neel Kashkari, interim Assistant Secretary for the Financial Stability Office, U.S. Department of the
Treasury, before the Senate Committee on Banking, Housing, and Urban Affairs, October 23, 2008.
19 See http://www.treas.gov/initiatives/eesa/minutes.shtml to view those minutes.
20 Testimony of Neel Kashkari, interim Assistant Secretary for the Financial Stability Office, U.S. Department of the
Treasury, before the Senate Committee on Banking, Housing, and Urban Affairs, October 23, 2008.
21 In mid-December 2008, the COP hired an Executive Director and a General Counsel.
22 Section 3(1) of the act defines the term “appropriate committees of Congress” as the Committee on Banking,
Housing, and Urban Affairs, the Committee on Finance, the Committee on the Budget, and the Committee on
Appropriations of the Senate; and the Committee on Financial Services, the Committee on Ways and Means, the
Committee on the Budget, and the Committee on Appropriations of the House of Representatives.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Ŝȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
after the first exercise of the Secretary’s authority under Section 101(a) or 102 of the act, and
every 30 days thereafter.23 The COP’s first report was issued on December 10, 2008.24
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
there are any gaps in existing consumer protections.25
Ž™˜›?œȱ?˜ȱ?‘Žȱ—?’?’Žœȱ
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.
ž—?’—?ȱ
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 As noted earlier in this report, the Department of the Treasury transferred the first EESA-related funds to
participating institutions on October 28, 2008.
24 See http://cop.senate.gov/documents/cop-121008-report.pdf for a copy of this report.
25 S. 3652, introduced by Senator Maria Cantwell on September 29, 2008, would have established an independent,
bipartisan commission to conduct a similar review of the U.S. financial system. The bill also would have established a
special inspector general for financial markets oversight.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŝȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
Ž›–’—Š?’˜—ȱ
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.
‘Žȱ™ŽŒ’Š•ȱ —œ™ŽŒ?˜›ȱ Ž—Ž›Š•ȱ?˜›ȱ?‘ŽȱȱŠ—?ȱ?‘Žȱ˜–™?›˜••Ž›ȱ
Ž—Ž›Š•Ȃœȱ˜•Žȱ’—ȱ?‘ŽȱŒ?ȱ
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.
•ŠŒŽ–Ž—?ȱ’?‘’—ȱ?‘Žȱ ˜ŸŽ›—–Ž—?ȱ
Pursuant to the Bowsher v. Synar decision of the Supreme Court, it is clear that GAO is a
legislative branch agency, and can have no significant executive branch functions.26 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
reported to the head of the Coalition Provisional Authority.27
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 Bowsher v. Synar, 478 U.S. 714, at 734 (1986).
27 For a detailed comparison of the Special IG for the TARP and other special IGs as well as statutory IGs under the
Inspector General Act of 1978, as amended, see CRS Report RS22981, The Special Inspector General for the Troubled
Asset Relief Program (SIG TARP), by Vanessa K. Burrows.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
Şȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
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.
Žœ™˜—œ’‹’•’?’Žœȱ
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.
‘Ž—ȱž?’?œȱŽ?’—ȱ
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
financial institutions.28 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 See U.S. Department of the Treasury, “Tarp Capital Purchase Program; Interim Final Rule,” 73 Federal Register
62205, October 20, 2008, for a copy of this rule.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
şȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
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
October 12.30
ŒŒŽœœȱ?˜ȱ —?˜›–Š?’˜—ȱ
The act provides both the CG and the Special IG with access to certain information, although
those rights differ somewhat.31 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.
‹•’?Š?’˜—ȱ˜?ȱ?‘Žȱȱ?˜ȱŽœ™˜—?ȱ?˜ȱž?’?œȱ
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 Specifically, Section 121(g) of the act says that “Of the amounts made available to the Secretary of the Treasury
under section 118, $50,000,000 shall be available to the Special Inspector General to carry out this section.” Section
118 states that the “Secretary may use the proceeds of the sale of any securities issued under chapter 31 of title 31,
United States Code.” Chapter 31 of Title 31 (“Public Debt”) includes savings bonds and savings certificates (Section
3105), retirement and savings bonds (Section 3106), and other vehicles.
30 See interim Assistant Secretary Kashkari’s remarks before the Institute of International Bankers, at
http://www.cnbc.com/id/27160443.
31 GAO has certain data access rights under existing law. For example, 31 U.S.C. §716(a) states that each agency is to
“give the Comptroller General information the Comptroller General requires about the duties, powers, activities,
organization, and financial transactions of the agency.”
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŖȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
?Š??’—?Ȧ˜—?›ŠŒ?’—?ȱ
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
under its existing statutory authorities.32
Ž™˜›?œȱ
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,
2008.33
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.
ž—?’—?ȱ
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-
323).34

32 For example, 31 U.S.C. §731 permits the Comptroller General to procure the services of up to 20 experts and
consultants for up to three years at daily rates of pay for level IV of the Executive Schedule (currently $149,000 per
year).
33 U.S. Government Accountability Office, Troubled Asset Relief Program: Additional Actions Needed to Better
Ensure Integrity, Accountability, and Transparency, GAO-09-161, December 2, 2008.
34 Section 6 of that legislation provides that, after October 1, 2009, if GAO “audits any financial statement or related
schedule which is prepared under section 3515 by an executive agency,” the agency must reimburse GAO for the cost
of the audit if GAO audited the statement for FY2007.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŗȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
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).
Ž›–’—Š?’˜—ȱ
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
(2) the date of expiration of the last insurance contract under Section 102.35 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.
˜—Œ•ž?’—?ȱ‹œŽ›ŸŠ?’˜—œȱ
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
reviewed by any court of law or any administrative agency.”36 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
caused by poor oversight with a plan that has no oversight.”37
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 comparison, the posts of Special Inspector General for Iraq Reconstruction and Special Inspector General for
Afghanistan Reconstruction are each to end 180 days after its parent entity’s reconstruction funds are less than $250
million.
36 Andrew Ross Sorkin, “A Bailout Above the Law,” New York Times, September 23, 2008, p. C1.
37 Michael Cooper and Patrick Healey, “McCain, More Critical of Bailout Plan, Faults Oversight,” New York Times,
September 22, 2008, available at http://www.nytimes.com/2008/09/23/us/politics/23campaign.html.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŘȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
different entities, with many of those reports required to be submitted on a recurring basis.38 No
single entity receives all of the reports.
ŸŽ›•Š™™’—?ȱŽœ™˜—œ’‹’•’?’Žœȱ
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
as similar specific responsibilities.39 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
better than less.”40

38 For a complete listing of the reports required by EESA, see CRS Report RL34740, Reporting Requirements in the
Emergency Economic Stabilization Act of 2008, by Curtis W. Copeland.
39 For example, the CG is to describe the “characteristics and disposition of acquired assets.” The Special IG is to
provide a “description of the categories of troubled assets purchased or procured by the Secretary,” and a “listing of the
troubled assets in each category.”
40 Alan Morrison, “Plugging Leaks in the Bailout,” Legal Times, November 10, 2008, p. 46.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗřȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
˜œœ’‹•Žȱ??’?’˜—œȱ?˜ȱŽ™˜›?’—?ȱŽšž’›Ž–Ž—?œȱ
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
would be purchased to increase lending by the banks.41 He later said that he decided to purchase
stock in financial institutions instead of bad assets because buying those assets would take too
long to recapitalize the banks for lending.42 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
the purchases of smaller banks—not to increase lending.43 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
“We don’t know who’s benefitting from this, [or] where the money’s going.”44 The Special
Inspector General for the TARP reportedly said he believes that he has the statutory authority
needed to determine how the banks spent the money,45 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
reports may be able to make them public, they are not required to do so.47 Concerns have been
raised about a perceived lack of transparency in various aspects of the financial system rescue

41 For example, in his statement upon the passage of EESA, the Secretary of the Treasury said that the authority
provided in the act “gives us the ability to protect and recapitalize our financial system as we work through the stresses
in our credit markets.” To view a copy of this statement, see http://www.treasury.gov/press/releases/hp1175.htm.
42 Aaron Lorenzo and R. Christian Bruce, “Treasury Pulls Back From TARP Purchase of Mortgage-Related Assets,
Paulson Says,” BNA Daily Report for Executives, November 13, 2008, p. AA-1.
43 See, for example, Mark Landler, “New Terrain for Arbiters of a Bailout,” New York Times, November 4, 2008, p.
B1, which said “critics from Capitol Hill to Wall Street are lashing out at the program, saying the banks are misusing
the capital infusions by hoarding the money rather than lending it, as the Treasury Secretary, Henry M. Paulson Jr.,
urged in order to unclog the credit markets.... Critics also say that, by not barring banks from paying dividends or hefty
bonuses, the Treasury is leading taxpayers to think that their money is being spent frivolously.” Also, see Binyamin
Appelbaum, “Banks to Continue Paying Dividends; Bailout Money is for Lending, Critics Say,” Washington Post,
October 30, 2008, p. A1; and Charlene Carter, “Leading House Democrats Pressure Treasury on Banks’ Use of Federal
Funds,” Congress Now, October 31, 2008, available at http://congressnow.gallerywatch.com/
ArticleDetail.aspx?articleID=7182.
44 R. Christian Bruce, “Federal Overseer Will Seek Real-Time Data From TARP Asset Mangers and Contractors,” BNA
Daily Report for Executives, November 20, 2008, p. A-20.
45 Terry Kivian, “Special IG Nominee Pledges Enforcement of TARP Rules,” Congress Daily PM, November 19,
2008, available at http://www.nationaljournal.com/congressdaily/
cdp_20081119_5781.php?related=true&story1=null&story2=null&story3=null.
46 Section 116(b) of the act requires TARP to prepare and issue audited financial statements to the appropriate
committees of Congress and the public.
47 For example, the Department of the Treasury posted the first “tranche” report on its public website even though
EESA did not require the report to be provided to the public. To view a copy, see http://www.treas.gov/initiatives/eesa/
docs/Tranche-Reportfinal.pdf.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŚȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
program, including the contracts that have been awarded, and the securities being accepted as
collateral for loans to the banks.48
ȱŽ•Š¢Ž?ȱ?Š›?ȱ?˜›ȱ?‘ŽȱȱŠ—?ȱ?‘Žȱ™ŽŒ’Š•ȱ ȱ
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
14, 2008—more than a month after the enactment of EESA.49 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,
2008—more than two weeks after the deadline.50 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
operations.51
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
time, but said that the new office should have at least 100 full time employees.52 On November
13, 2008, the Treasury IG was quoted as saying, “It’s a mess,” and “I don’t think anyone
understands right now how we’re going to do proper oversight of this thing.”53

48 See, for example, Ben Protess, “Bailout Docs Still Redacted,” ProPublica, November 13, 2008, available at
http://www.propublica.org/article/bailout-docs-still-redacted-1113%20/; and Dean Starkman, “Bloomberg Steps Up;
Wire Service Sues Fed for Bailout Transparency,” Columbia Journalism Review, November 7, 2008, available at
http://www.cjr.org/the_audit/bloomberg_steps_up.php.
49 Mike Soraghan, “Bush Picks a Bailout Watchdog,” The Hill, November 14, 2008. The nominee is Neil M. Barofsky,
of New York. EESA required the President to nominate the Special IG for the TARP “as soon as practicable after the
establishment of any program under sections 101 and 102.” The first programs were created on October 14, 2008.
50 See http://cop.senate.gov/documents/cop-121008-report.pdf for a copy of this report.
51 R. Christian Bruce and Ralph Lindeman, “Drawdown of Remaining TARP Funds May Be Left for Obama
Administration,” BNA Daily Report for Executives, p. A-23.
52 Amit R. Paley, “Bailout Lacks Oversight Despite Billions Pledged,” Washington Post, November 13, 2008, p. A1.
53 bid.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗśȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
˜œœ’‹•ŽȱŽŠœœŽœœ–Ž—?ȱ˜?ȱŸŽ›œ’?‘?ȱŽŒ‘Š—’œ–œȱ
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
securities, obligations, or other instruments that are based on or related to such mortgages.”54 The
composition of some of the oversight bodies, and the specific oversight and auditing
responsibilities given to those entities, appear to have been predicated on this expectation.55
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
preferred shares of stock in certain banks.56 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
financial system with a plan to take ownership stakes in the nation’s insurance companies.”57
Treasury officials were also reportedly in discussions about using TARP or other funds to address
liquidity problems facing state and local governments,58 as well as U.S. automakers.59
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
starting the market that provides financing for these companies.”60 Firms that reportedly could be
eligible for this new round of capital purchases include insurers and specialty lenders for small

54 For example, the legislation was described as having “granted authority to purchase up to $700 billion in troubled
mortgage-backed securities from debt-riddled Wall Street firms, a move designed to free up the credit markets.”
Michael Kranish and Jenny Paul, “Resounding Yes to Bailout,” Boston Globe, October 4, 2008, p. A1.
55 For example, several members of the FSOB appear to have been named to the board because of their relationship to
the housing industry (e.g., the Director of the Federal Housing Finance Agency and the Secretary of Housing and
Urban Development). Section 116(a)(1) of the act states that the CG is to describe the “characteristics of transactions
and commitments entered into, including transaction type, frequency, size, prices paid, and all other relevant terms and
conditions, and the timing, duration and terms of any future commitments to purchase assets.” The CG is also required
to describe the “characteristics and disposition of acquired assets, including type, acquisition price, current market
value, sale prices and terms, and use of proceeds from sales.”
56 David Cho, Neil Irwin, and Peter Whoriskey, “US Forces Nine Major Banks to Accept Partial Nationalization,”
Washington Post, October 14, 2008, p. A-1; and Neil Irwin and David Cho, “Paulson’s Change in Rescue Tactics,”
Washington Post, October 15, 2008, p. D-1.
57 David Cho, Binyamin Appelbaum, and Zachary A. Goldfarb, “Bailout Expands to Insurers,” Washington Post,
October 25, 2008, p. A1.
58 Yin Wilczek, “MSRB in Discussions Concerning Possible Bailout of State, Local Governments,” BNA Daily Report
for Executives, October 28, 2008, p. A-21.
59 Nora Macaluso, “Federal Aid Crucial for Survival of U.S. Automakers, Analysts Say,” BNA Daily Report for
Executives, October 30, 2008, p. AA-1.
60 Peter Whoriskey, David Cho, and Binyamin Appelbaum, “Treasury Redefines Its Rescue Program; Plan to Buy
Distressed Assets is Abandoned in Favor of Aid to Loosen Consumer Credit,” Washington Post, November 13, 2008,
p. A1.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŜȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
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
would be a more powerful incentive for them to lend.61
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
mortgages under Section 109).62 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
that he has authority for all aspects of EESA.63 Legislation was introduced late in the 110th
Congress that would give the Special IG broad authority regarding actions taken under EESA
authority.64

61 Aaron Lorenzo and R. Christian Bruce, “Treasury Pulls Back From TARP Purchase of Mortgage-Related Assets,
Paulson Says,” BNA Daily Report for Executives, November 13, 2008, p. AA-1.
62 On October 23, 2008, the interim Assistant Secretary for the Office of Financial Stability testified before the Senate
Committee on Banking, Housing, and Urban Affairs that the department was considering implementing a large-scale
program to guarantee troubled mortgages, which is authorized under Section 109 of EESA.
63 Amit R. Paley, “Senators Moving Quickly to Install Bailout Watchdog,” Washington Post, November 20, 2008, p.
A10. Senators Claire McCaskill and Charles E. Grassley reportedly introduced legislation on November 19, 2008, to
make clear that the Special IG has authority over all aspects of EESA, and to allow him to hire staff without following
the civil service hiring process.
64 See, for example, S. 3716, introduced by Senator McCaskill on November 20, 2008, and H.R. 7333, introduced by
Representative Flake, on December 10, 2008.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŝȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
Ž›?Š’—ȱ œœžŽœȱ›Žȱ—Œ•ŽŠ›ȱ
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
authority in 31 U.S.C. §§712 and 717.65
ŸŽ›œ’?‘?ȱŠ—?ȱ?‘ŽȱŠ•Š—ŒŽȱ˜?ȱ˜ Ž›ȱ
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
the first $350 billion has been obligated.66 Congress can use its regular legislative procedures to

65 As noted earlier in this report, 31 U.S.C. 712(1) requires the CG to “investigate all matters related to the receipt,
disbursement, and use of public money,” and 31 U.S.C. §717(b) states that the CG shall “evaluate the results of a
program or activity the Government carries out under existing law.”
66 As noted earlier in this report, Section 115(a)(3) of the act states that if the President sends Congress a written report
describing the Secretary of the Treasury’s plan to spend the second $350 billion, Congress has 15 calendar days to
enact a joint resolution of disapproval. For more information about this process, see CRS Report RS22985, "Fast
Track" Parliamentary Procedures to Authorize Additional Funds Under the Emergency Economic Stabilization Act, by
Christopher M. Davis. Although no written report has been submitted, legislation has already been introduced in the
(continued...)
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗŞȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
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,
legislation has been introduced in the 110th Congress to reverse the presumption and require
Congress to approve any expenditure over $350 billion,67 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
position is unlikely during the remaining days of the 110th Congress. The only other position
established by EESA that requires Senate confirmation is the Special Inspector General for the
TARP.
Ȃœȱ’›œ?ȱȱŽ™˜›?ȱ
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
Financial Services on December 10, 2008.69 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
TARP.”70 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
Office of Financial Stability] may not achieve its mission in an effective and efficient manner.”71
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

(...continued)
110th Congress (H.J.Res. 101) to invoke this requirement (i.e., to prevent expenditures above $350 billion).
67 See, for example, S. 3683, S. 3694, S. 3697, and H.R. 7276 in the 110th Congress.
68 U.S. Government Accountability Office, Troubled Asset Relief Program: Additional Actions Needed to Better
Ensure Integrity, Accountability, and Transparency, GAO-09-161, December 2, 2008.
69 U.S. Government Accountability Office, Troubled Asset Relief Program: Additional Actions Needed to Better
Ensure Integrity, Accountability, and Transparency, GAO-09-266T, December 10, 2008.
70 Ibid., p. 3.
71 Ibid., p. 5.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŗşȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ
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
track how each bank was spending TARP dollars.72 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
lending.73
Ȃœȱ’›œ?ȱŽ™˜›?ȱ
As noted previously, the COP released its first report on December 10, 2008—two weeks after its
first meeting.74 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
did not appear to have a coherent strategy for addressing the financial crisis.75 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
process.”76 The COP held its first field hearing on December 16, 2008, in Nevada.77 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 Stability Oversight Board Congressional Oversight Panel (COP)
(FSOB) (Section 104)
(Section 125)
Placement
Unclear. Subsection (a) simply says the
(a) An “establishment of the legislative branch.”
Within the
FSOB is “established”.

72 Dan Friedman and Bill Swindell, “Treasury Official Vows to Beef Up Oversight of Bailout Funds,” Congress Daily,
December 10, 2008, available at http://www.govexec.com/dailyfed/1208/121008cdpm1.htm.
73 R. Christian Bruce, “Frank Says Release of Second $350 Billion May Hinge on Bank Loans Using TARP Funds,”
BNA Daily Report for Executives, December 11, 2008, p. A-27.
74 See http://cop.senate.gov/documents/cop-121008-report.pdf for a copy of this report.
75 Diana B Henriques, “Bailout Monitor Sees Lack of a Coherent Plan,” New York Times, December 2, 2008, available
at http://www.nytimes.com/2008/12/02/business/02tarp.html.
76 Peter Whoriskey, “Congressional Oversight Panel Questions Bailout’s Efficacy,” Washington Post, December 10,
2008, p. D3.
77 For more information on this hearing see http://www.cop.senate.gov/.
˜—?›Žœœ’˜—Š•ȱŽœŽŠ›Œ‘ȱŽ›Ÿ’ŒŽȱ
ŘŖȱ

–Ž›?Ž—Œ¢ȱŒ˜—˜–’Œȱ?Š‹’•’£Š?’˜—ȱŒ?Ǳȱ›Ž•’–’—Š›¢ȱ—Š•¢œ’œȱ˜?ȱŸŽ›œ’?‘?ȱ›˜Ÿ’œ’˜—œȱ
ȱ

Financial Stability Oversight Board Congressional Oversight Panel (COP)
(FSOB) (Section 104)
(Section 125)
Federal
Government
Responsibilities (a) The FSOB is responsible for—
(b) The COP shall review the current state of the
(1) reviewing the exercise of authority
financial markets and the regulatory system, and
under a program developed in
submit “regular reports” to Congress on—
accordance with this Act, including
(1) the use by the Secretary of authority under
—(A) policies implemented by the
the act, including the use of contracting authority
Secretary and the Office of Financial
and the administration of the program;
Stability created under Sections 101 and (2) the impact of purchases made under the act
102, including the appointment of
on financial markets and financial institutions;
financial agents, the designation of asset
classes to be purchased, and plans for the (3) the extent to which information made
structure of vehicles used to purchase
available on transactions has contributed to
troubled assets; and
market transparency; and
—(B) the effect of such actions in
(4) the effectiveness of foreclosure mitigation
assisting American families in preserving
efforts and the effectiveness of the program from
home ownership, stabilizing financial
the standpoint of minimizing long-term costs to
markets, and protecting taxpayers;
the taxpayers and maximizing the benefits for
taxpayers.
(2) making recommendations, as
appropriate, to the Secretary regarding
use of the authority under this Act; and
(3) reporting any suspected fraud,
misrepresentation, or malfeasance to the
Special Inspector General for the
Troubled Assets Relief Program or the
Attorney General of the United States,
consistent with Section 535(b) of title 28,
United States Code.
Other
(e) In addition to the above
(e)(1) In carrying out its responsibilities, the COP
Authorities and
responsibilities, the FSOB has the
may hold hearings, “sit and act at times and
Powers
authority to ensure that the policies
places,” take testimony, receive evidence, and
implemented by the Secretary are—
administer oaths and affirmations to witnesses.
(1) in accordance with the purposes of
(e)(2) Any member or agent of the COP may, if
the Act;
authorized by the panel, take any action which the
(2) in the economic interests of the
COP is authorized to take.
United States; and
(3) consistent with protecting taxpayers,
in accordance with Section 113(a)
(entitled “Minimization of Long-Term
Costs and Maximization of Benefits for
Taxpayers”)
Access to Data
No mention.
(e)(3) The COP may secure directly from any
department or agency of the U.S. information
needed to carry out its responsibilities. Upon
request of the chairperson of the COP, the head
of any department or agency shall furnish such
information.
Membership
(b) The FSOB is comprised of (1)
(c) The COP shall consist of five members, with
Chairman of the Board of Governors of
one member each appointed by (1) the Speaker
the Federal Reserve System, (2) the
of the House of Representatives; (2) the minority
Secretary of the Treasury; (3) the
leader of the House of Representatives; (3) the
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ȱ

Financial Stability Oversight Board
Congressional Oversight Panel (COP)
(FSOB) (Section 104)
(Section 125)
Director of the Federal Housing Finance majority leader of the Senate; (4) the minority
Agency; (4) the Chairman of the
leader of the Senate; and (5) the Speaker and the
Securities and Exchange Commission, and majority leader of the Senate, after consultation
(5) the Secretary of Housing and Urban
with the minority leaders of each house.
Development.
(c)(6) A vacancy on the COP shall be filled in the
same manner as the original appointment.
Leadership
(c) The chairperson of the FSOB shall be Although Section (c)(7) authorizes a
elected by the members of the board
“chairperson” of the COP to call meetings, the
(other than the Secretary)
act does not indicate how the chairperson is
selected.
Pay for Members No mention
(c)(2) Each member of the COP shall be paid at
the daily rate of basic pay for level I of the
Executive Schedule ($191,300 in 2008) for each
day the member is performing duties in the
Commission.
(3) However, members of the COP who are
Members of Congress or full-time federal officers
or employees of the U.S. receive no additional
pay, allowances, or benefits.
Meetings
(d) The FSOB shall meet two weeks after (c)(7) The COP shall meet at the call of the
the first exercise of purchase authority of chairperson or a majority of its members.
the Secretary and monthly thereafter.
Quorum
No mention.
(c)(5) Four members of the COP constitute a
quorum, but a lesser number may hold hearings.
Subordinate
(f) The FSOB may appoint a credit review No mention.
Bodies
committee to evaluate the use of the
purchase authority provided under the
Act and the assets acquired through the
use of that authority.
Staffing and
No mention
(d)(1) The COP may appoint and fix the pay of
Consultants
any personnel it deems appropriate.
(d)(2) The COP may procure temporary and
intermittent services under Section 3109(b) of
title 5 (experts and consultants for up to one
year).
(d)(3) Upon request of the COP, the head of any
federal department or agency may detail (on a
reimbursable basis) any personnel of that
department or agency to the COP.
Reports by the
(g) The FSOB shall report to the
(b)(1)(B) The “regular reports” of the COP
Entity
appropriate committees of Congress and (described in subsection (a) above) shall be
the COP not less than quarterly
submitted within 30 days after the first exercise
regarding its responsibilities under
of the Secretary’s authority under Section 101(a)
subsection (a).
or 102, and every 30 days thereafter.
(b)(2) The COP is also to submit a “special report
on regulatory reform” not later than Jan. 20,
2009, analyzing the current regulatory system and
its effectiveness at overseeing the participants in
the financial system and protecting consumers,
with recommendations for improvement
(including whether other participants in the
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ȱ

Financial Stability Oversight Board
Congressional Oversight Panel (COP)
(FSOB) (Section 104)
(Section 125)
financial markets should be subject to the
regulatory system, the rationale for such a
recommendation, and whether there are any gaps
in existing consumer protections).
Reports to the
No mention.
Per Section 104(g) of the act, the FSOB is to
Entity
provide its quarterly reports to Congress to the
COP.
Per Section 105(d), any report to Congress by
the Secretary that is required by section 105 shall
also be provided to the COP.
Per Section 116(d), any report or audit required
under section 116 of the act (including
Comptroller General reports) shall also be
submitted to the COP.
Per Section 117(d), the Comptroller General’s
report on “margin authority” is also to be
provided to the COP.
Per Section 121(f)(3), reports by the Special
Inspector General for the TARP shall also be
submitted to the COP.
Per Section 129(e), the report to certain
congressional committees on “exercise of loan
authority” shall also be provided to the COP.
Funding
No mention.
(g) There is authorized to be appropriated to the
COP such sums as may be necessary for any fiscal
year, half of which shall be derived from the
applicable account of the House of
Representatives, and half from the contingent
fund of the Senate.
(h) 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.
Termination
(h) The FSOB and its authority shall
The COP shall terminate 6 months after the
terminate 15 days after the later of (1)
termination date in Section 120 (Dec. 31, 2009,
the date that the last troubled asset
subject to extension)
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.
Source: Congressional Research Service.
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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 (IG) (Section
116)
121)
Placement
GAO is a legislative branch agency (per
Unclear, although presumably within the
Within the
Department of the Treasury (since the Secretary
Federal
Bowsher v. Synar, 478 U.S. 714, at 734
(1986)).
is authorized to establish the TARP).
Government
Responsibilities
(a) (1) The CG shall oversee the activities (c) (1) The Special IG shall conduct, supervise,
and performance of the TARP and its
and coordinate audits and investigations of the
agents and representatives, including:
purchase, management, and sale of assets under
—(A) the performance of the TARP in
any Section 101 program, and the management
meeting the purposes of the Act,
of any program under Section 102, including by
particularly foreclosure mitigation, cost
collecting and summarizing:
reduction, stability of financial markets or —(A) a description of the categories of troubled
banking system, and protection of
assets purchased or procured by the Secretary;
taxpayers;
—(B) a listing of the troubled assets in each
—(B) the financial condition and internal category;
controls of the TARP and its agents;
—(C) an explanation of why the Secretary
—(C) the characteristics of transactions
deemed it necessary to purchase each asset;
and commitments entered into, including
type, frequence, size, prices paid,
—(D) a listing of each institution selling those
terms/conditions, and terms of future
assets;
commitments;
—(E) a listing (with detailed biographical
—(D) the characteristics and disposition
information) of each person or entity hired to
of acquired assets, including type,
manage such troubled assets;
acquisition price, market value, sale prices —(F) a current estimate of the amount of
and terms, and use of proceeds);
troubled assets on the books, purchased, and
—(E) the efficiency of TARP operations in sold, and the profit or loss on each sale; and
using appropriated funds;
—(G) a listing of the insurance contracts issued.
—(F) the compliance of TARP and its
(c)(3) In addition to the above, the Special IG
agents with applicable laws and
shall also have the authorities provided to IGs in
regulations;
section 6 of the Inspector General Act of 1978.
—(G) TARP’s efforts to prevent, identify,
and minimize conflicts of interest by its
agents;
—(H) the efficiency of contracting
procedures pursuant to Section 107(b)
(minority and women contracting).
(b)(2) The CG may audit the
programs/activities of the TARP, its
agents, and any vehicles established.
Obligation to
(b)(3) The TARP is required to take
No specific provision (although the Inspector
Respond to Its
action to address deficiencies identified by General Act requires agencies to furnish
Audits
the CG or other auditor engaged by the
requested information or assistance).
TARP, or to certify to the appropriate
committees of Congress that no action is
needed.
Audit Space and
(a)(2)(A) The Secretary shall provide
No specific provision (although the Inspector
Facilities
appropriate audit space and facilities in
General Act requires agencies to furnish office
the Department of the Treasury.
space and facilities).
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ȱ

Comptroller General (CG) (Section Special Inspector General (IG) (Section
116)
121)
Staffing and
No provision (although GAO will likely
(e) The Special IG may (1) select, appoint, and
Contracting
use existing staff and contracting
employ such officers and employees as may be
authority)
necessary, subject to the provisions of title 5
regarding appointments, classification, and pay;
(2) employ experts and consultants at daily rates
not to exceed GS-15; and (3) enter into
contracts or other arrangements for audits and
studies as may be necessary.

Access to Data
(a)(2)(B) To the extent consistent with
(e)(4) Upon request of the IG, the head of other
and Records
law, the CG has access to any
agencies shall furnish any requested information
information, data, reports, papers, or
or assistance that is practicable and not in
things belonging to or used by the TARP, contravention of law. If information or assistance
and to officers, agents, advisors, and
is unreasonably refused, the IG shall report to
employees. The CG shall be given full
the appropriate committees of Congress without
facilities for verifying transactions, and
delay.
may make and retain copies of any
records.

Appointment,
Removal, and Pay N/A
(b)(1) The Special IG is to be appointed by the
President, with the advice and consent of the
of the Auditor
Senate. (2) The appointment is to be made on
the basis of integrity and demonstrated ability in
accounting, auditing, financial analysis, law,
management analysis, public administration, or
investigation. (3) The nomination is to be made
as soon as practicable after the establishment of
any program under Sections 101 and 102. (4)
The IG may be removed by the President, with
communication of the reason to Congress. (6)
The IG shall be paid the same as other
presidentially-appointed IGs.
Reports
(a)(3) The CG shall submit reports of
(f)(1) The Special IG shall submit a report to the
findings to the appropriate committees of appropriate committees of Congress
Congress and to the Special IG for the
summarizing the IG’s activities during the
TARP at least every 60 days. The CG may relevant period within 60 days after confirmation
also submit special reports as warranted
and each calendar quarter thereafter. Each
by GAO’s findings.
report shall include a detailed statement of all
(b)(1) The CG is to annually audit the
purchases, obligations, expenditures, and
TARP’s financial statements.
revenues associated with any program under
Sections 101 and 102, as well as information
Also, Section 117 requires the CG to
under subsection (c)(1).
determine the extent to which leverage
and sudden deleveraging of financial
(f)(2) None of the above authorizes the
institutions was a factor behind the crisis, disclosure of information that is prohibited from
including the roles of the Board of
disclosure by law or executive order, or part of
Governors, the SEC, the Secretary, and
a criminal investigation.
others.
(f)(3) The reports shall also be submitted to the

COP.

Funding
(a)(2)(C) Treasury shall reimburse GAO
(g) Of the funds available to the Secretary of the
for the full cost of any oversight activities Treasury under Section 118 (from the sale of
as billed by the CG.
securities), $50 million shall be provided to the
(b)(1) Treasury is also to reimburse GAO Special IG until expended.
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Řśȱ

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ȱ

Comptroller General (CG) (Section Special Inspector General (IG) (Section
116)
121)
for the full cost of the audit of the TARP
financial statement.

In both cases, the reimbursements are
credited to GAO’s “salaries and
expenses” appropriation account and
available until expended.
Termination
(e) Any oversight, reporting, or audit
(h) The Office of the Special IG shall terminate
requirement terminates on the later of
on the later of (1) the date that the last troubled
(1) the date that the last troubled asset
asset acquired under Section 101 has been sold
acquired under Section 101 has been sold or transferred or (2) the date of expiration of
or transferred or (2) the date of
the last insurance contract under Section 102.
expiration of the last insurance contract
under Section 102.
(a)(2) Secretary is to provide the CG with
space and facilities until the termination
date in Section 120 (Dec. 31, 2009,
subject to extension).
Source: Congressional Research Service.

ž?‘˜›ȱ˜—?ŠŒ?ȱ —?˜›–Š?’˜—ȱ
Curtis W. Copeland
Specialist in American National Government
cwcopeland@crs.loc.gov, 7-0632

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ŘŜȱ