The public comment period for this legislation has now ended.

TITLE I - Authorizing the Treasury Department to Buy Mortgage-Related Assets

Sec. 20. Special inspector general for the troubled asset program. (4 Comments) subscribe to the comments feed

  1. PURPOSES.The purposes of this section are as follows:

    1. To provide for the independent and objective conduct and supervision of audits and investigations relating to the programs and operations of the program authorized to be established under section 2.

    2. To provide for the independent and objective leadership and coordination of, and recommendations on, policies designed to

      1. promote economy efficiency, and effectiveness in the administration of such program; and

      2. prevent and detect fraud and abuse in such program.

    3. To provide for an independent and objective means of keeping the Congress fully and currently informed about problems and deficiencies relating to the administration of such program and the necessity for and progress for corrective action.

  2. OFFICE OF INSPECTOR GENERAL.There is hereby established the Office of the Special Inspector General for the Troubled Asset Program.

  3. APPOINTMENT OF INSPECTOR GENERAL; REMOVAL.

    1. The head of the Office of the Special Inspector General for the Troubled Asset Program is the Special Inspector General for the Troubled Asset Program, who shall be appointed by the President.

    2. The appointment of the Special Inspector General for the Troubled Asset Program shall be made solely on the basis of integrity and demonstrated ability in accounting, auditing, financial analysis, law, management analysis, public administration, or investigations.

    3. The nomination of an individual as Special Inspector General for the Troubled Asset Program shall be made not later than 30 days after the establishment of any program under section 2.

    4. The Special Inspector General for the Troubled Asset Program shall be removable from office in accordance with the provisions of section 3(b) of the Inspector General Act of 1978 (5 U.S.C. App.).

    5. For purposes of section 7324 of title 5, United States Code, the Special Inspector General for the Troubled Asset Program shall not be considered an employee who determines policies to be pursued by the United States in the nationwide administration of Federal law.

    6. The annual rate of basic pay of the Special Inspector General for the Troubled Asset Program shall be the annual rate of basic pay provided for positions at level IV of the Executive Schedule under section 5315 of title 5, United States Code.

  4. ASSISTANT INSPECTORS GENERAL.The Special Inspector General for the Troubled Asset Program shall, in accordance with applicable laws and regulations governing the civil service

    1. appoint an Assistant Inspector General for Auditing who shall have the responsibility for supervising the performance of auditing activities relating to any program established under section 2; and

    2. appoint an Assistant Inspector General for Investigations who shall have the responsibility for supervising the performance of investigative activities relating to such program.

  5. DUTIES.

    1. It shall be the duty of the Special Inspector General for the Troubled Asset Program to conduct, supervise, and coordinate audits and investigations of the purchase, management, and sale of assets by the Secretary of the Treasury under any program established by the Secretary under section 2, including by collecting and summarizing the following information:

      1. A description of the categories of troubled assets purchased or otherwise procured by the Secretary.

      2. A listing of the troubled assets purchased in each such category described under subparagraph (A).

      3. An explanation of the reasons the Secretary deemed it necessary to purchase each such troubled asset.

      4. A listing of each financial institution that such troubled assets were purchased from.

      5. A listing of and detailed biographical information on each person or entity hired to manage such troubled assets.

      6. A current estimate of the total amount of troubled assets purchased pursuant to any program established under section 2, the amount of troubled assets on the books of the Treasury, the amount of troubled assets sold, and the profit and loss incurred on each sale or disposition of each such troubled asset.

    2. The Special Inspector General for the Troubled Asset Program shall establish, maintain, and oversee such systems, procedures, and controls as the Special Inspector General considers appropriate to discharge the duty under paragraph (1).

    3. In addition to the duties specified in paragraphs

    4. and (2), the Inspector General shall also have the duties and responsibilities of inspectors general under the Inspector General Act of 1978.

  6. POWERS AND AUTHORITIES.

    1. In carrying out the duties specified in subsection (e), the Special Inspector General for the Troubled Asset Program shall have the authorities provided in section 6 of the Inspector General Act of 1978.

    2. The Special Inspector General for the Troubled Asset Program shall carry out the duties specified in subsection (e)(1) in accordance with section 4(b)(1) of the Inspector General Act of 1978.

  7. PERSONNEL, FACILITIES, AND OTHER RESOURCES.

    1. The Special Inspector General for the Troubled Asset Program may select, appoint, and employ such officers and employees as may be necessary for carrying out the duties of the Special Inspector General, subject to the provisions of title 5, United States Code, governing appointments in the competitive service, and the provisions of chapter 51 and subchapter III of chapter 53 of such title, relating to classification and General Schedule pay rates.

    2. The Special Inspector General for the Troubled Asset Program may obtain services as authorized by section 3109 of title 5, United States Code, at daily rates not to exceed the equivalent rate prescribed for grade GS15 of the General Schedule by section 5332 of such title.

    3. The Special Inspector General for the Troubled Asset Program may enter into contracts and other arrangements for audits, studies, analyses, and other services with public agencies and with private persons, and make such payments as may be necessary to carry out the duties of the Inspector General.

      1. Upon request of the Special Inspector General for the Troubled Asset Program for information or assistance from any department, agency, or other entity of the Federal Government, the head of such entity shall, insofar as is practicable and not in contravention of any existing law, furnish such information or assistance to the Special Inspector General, or an authorized designee.

      2. Whenever information or assistance requested by the Special Inspector General for the Troubled Asset Program is, in the judgment of the Special Inspector General, unreasonably refused or not provided, the Special Inspector General shall report the circumstances to the appropriate committees of Congress without delay.

  8. REPORTS.

    1. Not later than October 31, 2008, and every calendar quarter thereafter, the Special Inspector General for the Troubled Asset Program shall submit to the appropriate committees of Congress a report summarizing the activities of the Special Inspector General during the 120-day period ending on the date of such report. Each report shall include, for the period covered by such report, a detailed statement of all purchases, obligations, expenditures, and revenues associated with any program established by the Secretary of the Treasury under section 2, as well as the information collected under subsection (e)(1).

    2. Nothing in this subsection shall be construed to authorize the public disclosure of information that is

      1. specifically prohibited from disclosure by any other provision of law;

      2. specifically required by Executive order to be protected from disclosure in the interest of national defense or national security or in the conduct of foreign affairs; or

      3. a part of an ongoing criminal investigation.

        1. APPROPRIATE COMMITTEES OF CONGRESS DEFINED.In this section, the term "appropriate committees of Congress" means

    3. the Committees on Finance, Budget, and Banking, Housing, and Urban Affairs of the Senate; and

    4. the Committees on Ways and Means, Budget, and Financial Services of the House of Representatives.

  9. FUNDING.

    1. Of the amounts made available to the Secretary of the Treasury under section 6, $75,000,000 shall be available to the Special Inspector General for the Troubled Asset Program to carry out this section.

    2. The amount available under paragraph (1) shall remain available until expended.7

4 comments on Sec. 20. Special inspector general for the troubled asset program.

  • The thing which is missing for me is review of the mortgages that are failing for fraudulent origination or just plain excessively permissive underwriting. It seems to me that there should be different treatment for mortgagees and mortgage originators where the mortgage was fraudulent. The act should specify three tiers: fraudulent, excessively permissive, other bad loans. The inspector general should be able to review the loans and make the determinations, and the IRS should help by providing tax return information for the year of mortgage origination.

    If the IRS return information doesn't match reasonably closely, or if the property is subsequently found not to be as described in the mortgage, then the loan should be classified as fraudulent and not purchased by the US Government under any circumstances (or we should be able to return it to the FI at the cost we paid plus expenses).

    If the mortgage should never have been originated (income could not reasonably sustain the price, mortgage origination used a teaser rate where it was improbable that buyer could refinance, etc.) then the government should pay a lower percentage for the item, again, perhaps retroactively.

    If the mortgage just failed for some other reason, then the government buyback makes some sense, even if it is just to help balance sheets.

    Bonuses for executives and pay clawbacks should be tied to the percentage of fraudulent loans and loans which should never have been made. Those entities which originated and/or packaged securities should get the greatest clawback, and those entities who failed to do appropriate due diligence in buying the assets should get nailed under SARBOX for failure to maintain adequate controls and price the assets correctly. Their auditors were also asleep and should get nailed by the inspector general.

    The key to this in my mind is to give the inspector general the authority to investigate each mortgage (through some reasonable automated process) for a probability of fraud, and to divvy them up. Banks which got nailed because of the market downturn and excesses of other banks would then come out of this process less damaged than those whose irresponsibility caused the mess.

    Oh yes, and fraudulent mortgages should lead to prosecution of originators and no bailout for the mortgagee. Fraud is fraud and should never be rewarded, even if it was fraud through stupidity.

    posted by Frank J at September 23, 2008

  • The Inspector General cannot be appointed unilaterally by this President. Either the new President must have the authority to remove this Inspector and replace him/her on February 1, or the office should be a nomination subject to Congressional approval. Otherwise, we'll just have another incompetent crony appointment in what needs to be a highly professional, non-partisan position.

    posted by Cathubodua Ygerna (private citizen) at September 23, 2008

  • Well, if this guy is going to be appointed by the President, can we wait until we get a new President? Likely the Presidental appointment will be someone from The Carlyle Group, Halliburton, KBR or Monsanto. Oh wait, maybe Henry Kissinger!

    How about a congressional appointment? Or let "we the people" vote.

    posted by Craig Bryant, Citizen at September 28, 2008

  • Whoever gets appointed will be getting a lot of grief. Just appointed gets a turn for a Quarter before new appointment comes on line. After that yea, Halliburton, Carlyle Group, Acorn, Fannie May, Freddy Mac..
    Come on people WE THE PEOPLE NEED TO VOICE OUR CHOICE.
    Throw in Ron Paul if nothing else Same Choice..:}

    posted by Chris in Phoenix at September 28, 2008
The Sunlight Foundation supports, develops and deploys new Internet technologies to make information about Congress and the federal government more accessible to the American people. Through its projects and grant-making, Sunlight serves as a catalyst to create greater political transparency and to foster more openness and accountability in government. This Site may contain links to Internet sites that are not operated by Sunlight Foundation. These links are provided as a service and do not imply any endorsement of the activities or content of these sites, nor any association with their operators. Sunlight Foundation does not control these Internet sites and is not responsible for their content, security, or privacy practices. We urge you to review the privacy policy posted on web sites you visit before using the site or providing personal information.