Inspector General for 2008 Economic Recovery Program Offers Lessons for Pandemic Oversight
“We'll do whatever we can to help [the special IG for pandemic recovery] be successful,” says Christy Goldsmith Romero in an interview with Government Executive.
The economic relief package enacted in March created a special inspector general position to oversee the government’s use of $2.2 trillion to alleviate damage from the novel coronavirus pandemic. Although the global pandemic is largely unprecedented, many have compared the resulting recession to the 2008 financial crisis.
Congress passed the Troubled Asset Relief Program in October 2008 to allow the Treasury Department to purchase “toxic” assets and stocks to stabilize the economy. That program also included an inspector general office to oversee the recovery effort. Almost 12 years after its creation, the office has a smaller workforce, but its oversight efforts are still underway. “In fiscal year 2019, nearly $900 million was recovered as a result of [the TARP special inspector general’s] work,” which is “a 39 times return on our $23 million budget,” said the watchdog's website.
Christy Goldsmith Romero is the special inspector general for TARP’s Office of the Special Inspector General. She succeeded Neil Barofsky, who was the TARP IG from December 2008 to April 2011. Romero was confirmed to the position in March 2012, but has been with the office since 2009 in various capacities. Government Executive interviewed Romero on June 17 about how her office’s work has changed over the years and what advice she would give to Brian Miller, the newly confirmed special IG for pandemic recovery.
GE: Is there a sunset date for your office? If so, when is it?
Romero: When Congress initiated the law that approved TARP and created SIGTARP in it, they set our sunset to the last dollar or government commitment in TARP, so that we stay providing oversight the whole time that TARP exists. So it's a shifting sunset date because, as these programs have been extended and shifted over time, our sunset date would shift, so it's tied to the end of TARP.
As of now, that's in 2024, but that even had been extended last year from the Treasury [Department] because it was in 2023. So it just has continued to extend, extend, extend on the part of Treasury and Congress.
GE: Do you think the pandemic and its resulting recession could further extend the Special IG for TARP’s sunset date?
Romero: You know, I don't know. Because the interesting thing is there's been so much TARP money that has been left that has not been spent yet in the TARP foreclosure prevention programs and the Treasury and Congress have looked for ways to provide that assistance to struggling homeowners. They usually do that largely through banks or other lenders who hold these mortgages, but also through some state housing finance agencies. So what has happened with the pandemic is it has already changed and extended some, at least one, of the TARP programs that exist today.
A TARP program that operates in 19 states called the Hardest Hit Fund...had initially started off to provide some mortgage assistance for people who are unemployed. Well as unemployment numbers improved that number shifted, but now that unemployment has been so significant after COVID-19, many of those states are reopening those programs. They’re starting to use money that they may not have used or have put to other things. And so Treasury has already done some extension in that, so COVID-19 it's very much impacting TARP and so I don't know if it'll go into any further extensions. That's for Treasury and for Congress to decide.
GE: How has your work shifted over the years?
Romero: The one thing that's really important to think about with an IG is that much of our work is looking backward...We have shifted to…[be] far heavier in law enforcement. So our investigations account for 85% of our resources and about 15% [goes to] audits. That has shifted over time because a lot of times [with] audits we will put out recommendations for Treasury or any other government agency involved in TARP programs, how to get stronger; prevent fraud, waste and abuse; be more efficient; be more effective. So over time that percentage of investigations versus audits has shifted to be more heavily weighted to law enforcement.
When you conduct criminal investigations and civil investigations of violations of the law, it takes a long time to find the conduct, to investigate it and then to work with the Department of Justice or potentially a state or local prosecutor in order to prosecute it. So some of those cases can take years. So the bank fraud cases and other crimes that we found in banks, we're still doing some of that work because it took so long for us to do it. But as a result, we've had more than 100 bankers who have been charged with crimes and I believe the number is 77 bankers who were sentenced by courts to prison.
The other thing is we are continuing to be focused on the programs that still give out TARP dollars. I think a lot of people are shocked to hear that TARP spent $1.8 billion last fiscal year. It's a significant amount of money. So as that money's going out the door in these TARP foreclosure prevention programs, we continue to investigate corruption, fraud, other violations of the law and then we also are looking for waste or looking to prevent fraud, waste and abuse in those programs.
GE: Can you tell me approximately how many staff members you have?
Romero: I think we're at about 85 right now.... [which has] dropped down from I think our high was more than 170 at one point, maybe it was 175 … We've also just been shifting what that balance looks like. So, for example, fewer auditors and more agents and non-agent investigators.
GE: What lessons would you give to Special IG for Pandemic Recovery Brian Miller and his staff as they start a similar initiative for oversight of pandemic relief funds?
Well, first of all, you know, we partner up and support all of our fellow IGs and we'll do whatever we can to help [the special IG for pandemic recovery] be successful …. One of the main [lessons learned] is that speed in getting out the pandemic recovery funds is really important to get that out during the crisis. So the special IG can really help facilitate that speed.
One of the reasons why the TARP foreclosure prevention programs still exist today is because there wasn't speed in getting those funds out when they were most needed. And so we were able to identify roadblocks, such as overly strict criteria or confusing or broken application processes or systems or mismanagement that ended up blocking the money from going out when it was most needed and that blocked the TARP programs from achieving their goals. So that's really something that any IG, including [the pandemic IG], could work on.
The other [lesson] is rescue fraud is really a crime of opportunity. And so as we built SIGTARP, we really wanted to build an office that had the experience in knowing where to look, and how to look for rescue fraud, including knowing how to proactively find fraud without waiting for example, for a whistleblower or some kind of other government referral … I really think you can use data analytics and other information and intelligence to be proactive in trying to root out the fraud. So those are some things in building an office that we found to lead to the successful results that we have had.