The Special Inspector General for the Troubled Asset Relief Program (SIGTARP) announced last week that it will review federal oversight and interaction with management for companies receiving exceptional financial assistance. Those identified in the memorandum as targets of the audit include American International Group (AIG), General Motors (GM), Chrysler, Citigroup, Fannie Mae and Freddie Mac. SIGTARP identified these companies based on the fact that federal investments have placed the government in a position that approaches, or effectively is, majority ownership or control.
The audit will focus on four questions:
- What is the extent of government involvement in management of companies in which it has made sizeable investments, including government direction and control over such facets as governance, compensation, spending and other corporate decision making?
- To what extent are effective risk management, internal controls and monitoring in place to protect and balance the government’s interests in relation to corporate needs?\
- Are there performance measures in place that can be used to track progress against long-term goals and timeframes affecting the government’s ability to wind down its investments and disengage from these companies?
- Is there adequate transparency to support decision-making and provide full disclosure to the Congress and the public?
SIGTARP, with assistance from the Government Accountability Office, plans to begin the audit immediately. The audit will be composed of on-site field examinations of the company discussions with key regulators for the institutions, including the Office of Financial Stability, the Federal Reserve, including the Federal Reserve Bank of New York, the FDIC, and the SEC.