In response to the global financial crisis, Congress enacted late last year the Emergency Economic Stabilization Act of 2008 (EESA). In section 121 of the EESA, Congress created the Office of the Special Inspector General For The Troubled Asset Relief Program (SIGTARP). SIGTARP has the responsibility, among other things, to conduct, supervise and coordinate audits and investigations of the purchase, management and sale of assets under the Troubled Asset Relief Program (TARP). TARP was created and authorized the Department of Treasury to spend up to $700 billion to purchase “troubled assets.”

In March 2009, Congress passed SIGTARP, which amended EESA and expanded the powers of SIGTARP to include, among other things, undertaking law enforcement functions, without first obtaining Attorney General approval. 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.

SIGTARP promises “robust criminal and civil enforcement against those who would waste, steal or abuse TARP funds.” To that end, 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 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.

The complexities of these “economic stimulus” efforts and the unprecedented vastness of these 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 all financial services companies stay vigilant as to their direct or indirect participation in this program and receipt of any TARP-related funds or participation in TALF.