Last week, the Treasury Department granted preliminarily approval to certain life insurance companies to receive billions in funds under the Troubled Asset Relief Program, or TARP. While two well-known life insurers are expected to accept the money, several others have indicated that they are not interested. Rejection of TARP funds may be an indication of an insurer's confidence in its financial strength, however, even insurers that presently find themselves in a weakened financial state may be inclined to resist TARP funds because of the onerous terms and government monitoring associated with it.
The Office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, will, among other things, conduct, supervise and coordinate audits and investigations of the use, purchase, management and sale of assets under the TARP.
The SIGTARP promises "robust criminal and civil enforcement against those who would waste steal or abuse TARP funds." To that end, the SIGTARP's Investigative Division "will pursue any wrong doers focusing on the recipients of TARP funds," including "the institutions that receive TARP investments; the vendors hired to administer TARP activities; those who intentionally misrepresent in the TARP application processes and in their financial reporting to Treasury, [who] may be in violation of criminal statutes, including securities fraud, wire fraud, mail fraud and false statements." To date, over 200 "tips" have been reported to a fraud hotline established by SIGTARP, resulting in the initiation of nearly 20 criminal investigations.
In addition, the SIGTARP is forging close working relationships with the FBI, the Internal Revenue Service Criminal Investigation Division and the SEC, as well as the Department of Justice and U.S. Attorney's Offices across the country. Although the SIGTARP acknowledges that it will be the Department of Justice and Attorney General who "prosecute aggressively TARP related crimes," the SIGTARP vows to operate independently.
The complexities of the "economic stimulus packages" and the unprecedented vastness of the programs weave a web of unexplored legal authority. The powers created in SIGTARP combined with the public demand for swift results creates a situation demanding that financial services companies operating in the U.S. stay vigilant as to their direct or indirect participation in this program and receipt of any TARP related funds.
Just how far SIGTARP can go, and how long its reach can only be tested by time. Similar to the Patriot Act, this act was hastily prepared legislation in extreme reaction to the most severe economic crisis in the United States and worldwide since the Great Depression.