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Summary:
The Emergency Economic Stabilization Act of 2008 (EESA, H.R. 1424, P.L 110-343) provides authority for the Secretary of the Treasury to purchase and insure "troubled assets" to provide stability and prevent disruption in the economy and financial system. The act established two organizations to provide broad oversight for the stability program -- a Financial Stability Oversight Board (FSOB) and a Congressional Oversight Panel (COP). The act also placed audit responsibilities for the program with two individuals -- a new Special Inspector General (IG) for the Troubled Asset Relief Program (TARP), and the Comptroller General (CG) of the Government Accountability Office (GAO). The duties and responsibilities of both oversight panels and both auditors overlap in some areas, but are different in other areas. Several aspects of the FSOB do not appear to be clearly delineated in the act, including where the FSOB is "established" within the federal government, whether it is covered by a variety of general management laws, whether it is to be provided information from federal departments or agencies, whether a majority of its members must be present to take action, and how the FSOB is to be funded and staffed. Some aspects of the COP are also unclear (e.g., how the chairperson is selected), and neither entity appears to have the power to compel agencies to provide needed information. The act is also unclear regarding certain aspects of the Special IG for the TARP. For example, although the act requires the Special IG to be provided $50 million from the proceeds of the sale of securities such as Treasury bills and savings bonds, it does not indicate when or how those funds are to be provided to the Special IG. Also, the act does not indicate where the Office of the Special IG is to be "established" or housed, and there is no specific requirement in the act that it be provided with office space or facilities. The act indicates that the Office of the Special IG and the CG's responsibilities terminate on the date that the last troubled asset is sold or the last insurance contract expires, so it is unlikely that their final reports will reflect all transactions. Several specific requirements in the act appear to contemplate that the "troubled assets" being purchased and insured are residential or commercial mortgages and instruments based on those mortgages. However, recent proposals to deal with the financial crisis are different than these mortgage-based transactions. While the oversight and audit responsibilities of the COP, the FSOB, the CG, and the Special IG still apply, the nature of their specific responsibilities may need to be reconsidered and redefined in light of the type of "troubled assets" that are initially being purchased. It is also unclear how effective all of these oversight and audit requirements will be in ensuring transparency and a balance of power between Congress and the executive branch. This report will be updated when additional information or perspectives become available regarding the act's oversight mechanisms.
