Although a final version of the Coronavirus Aid, Relief, and Economic Security (CARES) Act is not yet available, based on what we know so far, it appears that the legislation will include the provisions described below establishing oversight functions for the use of stimulus and bailout funds. According to a number of sources, the bill provides for a Treasury Department Special Inspector General for Pandemic Recovery, a Pandemic Response Accountability Committee, and a Congressional Oversight Commission with subpoena power. Senate leaders reportedly modeled these provisions after the Troubled Asset Relief Program (TARP), which was similarly subject to a special inspector general, oversight board, and five-member congressional oversight panel. We expect that these provisions likely will survive any further negotiations and votes in both houses of Congress.
Special Inspector General for Pandemic Recovery
The bill establishes a Special Inspector General for Pandemic Recovery within the Department of the Treasury. The Special Inspector General will be presidentially appointed, as was the Special Inspector General for TARP. They will be responsible for conducting, supervising, and coordinating audits and investigations of the making, purchase, management, and sale of loans, loan guarantees, and other investments by the Treasury under this Act. Like the Special Inspector General for TARP, the Special Inspector General for Pandemic Recovery will also be responsible for providing quarterly reports to Congress.
Pandemic Response Accountability Committee
The bill establishes a Pandemic Response Accountability Committee through the Council of Inspectors General on Integrity and Efficiency to enhance government-wide protection for taxpayer dollars, and appropriates $80,000,000 for the Committee. TARP created a similar oversight board, called the Financial Stability Oversight Board, which was comprised of 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 Exchange Commission, and the Secretary of Housing and Urban Development.
Congressional Oversight Commission
The bill authorizes the creation of a bipartisan Congressional Oversight Commission charged with the oversight of the Department and Treasury and Federal Reserve as they work to provide economic stability in the wake of the Coronavirus. Like the TARP Congressional Oversight Panel, the Oversight Commission will consist of five congressionally appointed members:
- 1 member appointed by the Speaker of the House of Representatives;
- 1 member appointed by the House Majority Leader;
- 1 member appointed by the Senate Majority Leader;
- 1 member appointed by the Senate Minority Leader; and
- 1 member appointed by the Speaker of the House and Senate Majority Leader, after consultation with the Senate Minority Leader and House Minority Leader.
Also like the TARP Congressional Oversight Panel, the CARES Congressional Oversight Commission will have significant authority to conduct oversight and investigations. It will be allowed to hold hearings, take testimony, and make requests for information. It will also be required to submit reports to Congress every 30 days, like the TARP Oversight Panel. The reports must specify the following:
- The impact of purchases made on the financial wellbeing of people, financial markets, and financial institutions;
- The extent to which the information made available on transactions has contributed to market transparency; and
- The effectiveness of loans, loan guarantees, and investments made in minimizing long-term costs to taxpayers and maximizing the benefits for taxpayers.
The Commission will terminate on September 30, 2025. We expect the Commission to be very active in that time, based on its predecessor. The TARP Congressional Oversight Panel held twenty-six hearings over two-and-a-half years on the causes, symptoms, and effects of the economic crisis and government response and reform efforts.
Given the significance of these newly proposed oversight functions, we will revisit this topic in greater detail once CARES is enacted.