Thursday, July 23, 2009

IG Barofsky TARP Report to Congress: Full Text and Breakdown

The following is a breakdown of Inspector General Neil Barofsky's report before the House Committee on Financial Services, Subcommittee on Oversight and Investigations, ending June 30, 2009. Don't run away. You need to know this. Rep. Barney Frank (D-MA) is the chairman of the House Committee on Financial Services. Rep. Dennis Moore (D-KS) is the chairman of the Subcommittee on Oversight and Investigations. I do not see this report linked on the webpages. Perhaps it is there, but I have not found it. The following is the essence of the report, in my estimation. Below the "essence" is the full text. When you see text in between brackets [ ], those are my comments. I have used some short cuts in the "essence" but have not changed the meaning in anyway (you can check that for yourself as I have provided the page numbers. Note that I have interchanged SIGTARP (Special Inspector General TARP) with "we." Page 3 Transparency: ...repeatedly failed to adopt recommendations believed essential to providing basic transparency. Use of Funds Generally: Other than in a few agreements...Treasury has declined to adopt this recommendation, calling any such reporting "meaningless"... Valuation of the TARP Portfolio: Treasury has retained asset managers and is receiving such valuation data...but has not committed to providing such information except on the statutorily required annual basis [does that mean no valuations have been provided as TARP is not yet a year old?] Page 3 and 4 Regular disclosure of PPIF Activity, Holdings, and Valuation: ...the taxpayer will be providing a substantial portion of the funds that will be used to purchase toxic assets in the Public-Private Investment Funds (PPIF)...all trading activity, holdings, and valuations of assets...Not only should the disclosure be required as a matter of basic transparency in light of the billions of taxpayer dollars at state,...but the disclosure would serve well one of Treasury's stated reasons for the program in the first place: the promotion of "price discovery" in the illiquid market. Treasury has indicated that it will not require such disclosure. In the need to balance transparency...Treasury's default position should always be to require more disclosure rather than less...provide the American taxpayers as much information about what is being done with their money as possible. Unfortunately, in rejecting basic transparency recommendations, TARP has become a program in which taxpayers (1) are not being told what most of the TARP recipients are doing with their money, (ii) have still not been told how much their substantial investments are worth, and (iii) will not be told the full details of how their money is being invested.... Imposition of Information Barriers, or "Walls," in PPIP: we noted conflicts of interest and collusion vulnerabilities were inherent in the design of PPIP...PPIF managers will have significant power to set prices in a largely illiquid market...PPIF managers having an incentive to overpay significantly for assets or otherwise using the valuable, proprietary PPIF trading information to benefit not the PPIF, but rather the manager's non-PPIF business interests. We made recommendation to impose strict conflicts of interest rules....Treasury adopted many of the recommendations...HOWEVER, Treasury has declined to adopt on of our most fundamental recommendations - the requirement for imposition of an informational barrier or "wall" between the PPIF fund managers making investment decisions on behalf of the PPIF and those employees of the fund management company who manage non-PPIF funds. Treasury has deceided not to impose such a wall...despite that it has been done in other Government bailout-related programs...the risk is the reputational risk that Treasury could face if a PPIF manager should generate massive profits in its non-PPIF funds as a result of an unfair advantage...leaving Treasury vulnerable to an accusation that has already been leveled against it...that Treasury is using TARP to pick winners and losers...benefiting a chosen few at the expense of the dozens of firms that were rejected, of the market as a whole, and of the American taxpayer...putting in jeopardy the fragile trust the American people have in TARP and the government. Pages 5 - 8 Discussion that $643.1 billion of the $700 billion will be spent in 12 programs. To date, $643.1 billion has been committed, $441 billion has actually been spent. There is a chart on page 6 of Total Potential Funds Subject to SIGTARP Oversight as of June 30, 2009. On page 7 is a chart of Incremental Financial System Support, by Federal Agency.

Details the Special Inspector General's Investigations Division and the misdeeds of programs around the country who have taken client's monies while falsely identifying themselves as TARP. Through June 30, 2009, SIGTARP has 35 ongoing criminal and civil investigations. These investigations include complex issues concerning suspected accounting fraud, securities fraud, insider trading, mortgage servicer misconduct, mortgage fraud, public corruption, false statements, and tax investigations. Two of SIGTARP’s investigations have recently become public: [see the list inside the document below
Page 9 Future Audits - Assessment of use of fund by TARP recipients, including the Making Home Affordable Mortgage Modification Program Page 9 and 10 [We're told how the IG's office is putting people to work in America - expecting that final number to be 160 new hires] [That's 160 people just to watchdog the hundreds already being paid to do so, including Joe Biden] SIGTARP did not know their own budgetary needs when the FY2010 budget was put together, and have asked for a budget of $23,300,000.00. THAT'S TWENTY THREE MILLION, THREE HUNDRED THOUSAND DOLLARS! [Don't get me wrong, the Inspector Generals are the good guys in this scenario and if they can make Treasury be transparent, and then put those in prison who deserve to be in prison, if and when fraudulent and criminal, then $23,300,000.00 is a bargain, I guess.]
Page 10 Ends with making nice and saying that basically Treasury has cooperated with SIGTARP's information requests - AND while SIGTARP and Treasury have disagreed "vociferously,"...SIGTARP believes that Treasury has engaged actively in consulting with SIGTARP about it's concerns. [Problem is, as you can see above, Treasury has consulted and then rejected the consultations.] Follows Statement of Neil Barofsky, Special Inspector general Troubled Asset Relief Program: Barofsky Testimony
FOR OFFICIAL USE ONLY UNTIL RELEASED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS STATEMENT OF NEIL BAROFSKY SPECIAL INSPECTOR GENERAL TROUBLED ASSET RELIEF PROGRAM BEFORE THE HOUSE COMMITTEE ON FINANCIAL SERVICES SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS July 22, 2009 Chairman Moore, Ranking Member Biggert and Members of the Committee, I am honored to appear before you today to deliver to this Committee my quarterly report to Congress. In the nine months since the Emergency Economic Stabilization Act of 2008 (“EESA”) authorized creation of the Troubled Asset Relief Program (“TARP”), the U.S. Department of the Treasury (“Treasury”) has created 12 separate programs involving Government and private funds of up to almost $3 trillion. From programs involving large capital infusions into hundreds of banks and other financial institutions, to a mortgage modification program designed to modify millions of mortgages, to public-private partnerships using tens of billions of taxpayer dollars to purchase “toxic” assets from banks, TARP has evolved into a program of unprecedented scope, scale, and complexity. Moreover, TARP does not function in a vacuum but is rather part of the broader Government efforts to stabilize the financial system, an effort that includes dozens of inter-related programs operated by multiple Federal agencies. WARRANTS Pursuant to one of the initial TARP programs, the Capital Purchase Program (“CPP”), Treasury allocated $250 billion to provide funds to qualified financial institutions to build capital, increase the flow of financing, and support the economy. As of March 2009, Treasury forecast spending only $218 billion in this program. The economic terms of the CPP transactions were that, in exchange for the TARP infusions, Treasury received senior preferred stock of the banks that pays a 5% dividend for five years and 9% thereafter. Consistent with the terms of EESA, Treasury also received warrants – option to purchase additional stock. For publicly traded banks, Treasury received warrants of common stock; for privately held banks, Treasury received warrants for additional preferred shares, which were immediately exercised. As banks repurchase their CPP investments, they have the option to purchase the warrants. How those warrants are valued is an important matter that greatly affects the taxpayers’ return on these investments. As a part of SIGTARP’s oversight efforts, we have been coordinating our efforts with other agencies to avoid duplication, and it has been my pleasure to work with my co-panelist from the Government Accountability Office (“GAO”), Thomas McCool, and with the Congressional Oversight Panel (“the Panel”), chaired by co-panelist, Professor Elizabeth Warren. As a part of this coordination, on June 10, 2009, SIGTARP entered into a special coordinated effort with the Panel to examine the pricing of warrants in the context of the return of CPP funds by TARP-recipients. The Panel issued a July 10, 2009, report valuing the warrants that Treasury had bought to date. SIGTARP plans to conduct an audit of the warrant repurchase/sale process and will have the benefit of the Panel valuations as context. SIGTARP’s audit will examine several key questions, including exanimation of the process Treasury has established to value the warrants for re-purchase, whether Treasury follows a clear and consistent process in considering potentially differing valuations of warrants, and the extent to which Treasury has established an objective basis for its ultimate valuation decisions. SIGTARP, if appropriate, will issue recommendations with the report of this audit. OTHER AREAS OF INTEREST SIGTARP has made a variety or recommendations concerning the TARP program and has worked hard to advance the general understanding of the TARP. With respect to recommendations, one of SIGTARP’s most important oversight responsibilities is to provide recommendations to Treasury so that TARP programs can be designed or modified to facilitate effective oversight and transparency and to prevent fraud, waste, and abuse. SIGTARP’s reports detail these recommendations and provide updates on their implementation. Two categories of recommendations, however, are worth highlighting in particular: Transparency in TARP Programs Although Treasury has taken some steps towards improving transparency in TARP programs, it has repeatedly failed to adopt recommendations that SIGTARP believes are essential to providing basic transparency and fulfill Treasury’s stated commitment to implement TARP “with the highest degree of accountability and transparency possible.” SIGTARP’s July 21, 2009, Quarterly Report includes one new recommendation and there are several other additional unadopted recommendations from prior quarterly reports: • Use of Funds Generally: One of SIGTARP’s first recommendations was that Treasury require all TARP recipients to report on the actual use of TARP funds. Other than in a few agreements (with Citigroup, Bank of America, and AIG), Treasury has declined to adopt this recommendation, calling any such reporting “meaningless” in light of the inherent fungibility of money. SIGTARP continues to believe that banks can provide meaningful information about what they are doing with TARP funds — in particular what activities they would not have been able to do but for the infusion of TARP funds. That belief has been supported by SIGTARP’s first audit, in which nearly all banks were able to provide such information. Valuation of the TARP Portfolio: SIGTARP has recommended that Treasury begin reporting on the values of its TARP portfolio so that taxpayers can get regular updates on the financial performance of their TARP investments. Notwithstanding that Treasury has now retained asset managers and is receiving such valuation data on a monthly basis, Treasury has not committed to providing such information except on the statutorily required annual basis. Disclosure of TALF Borrowers Upon Surrender of Collateral: In TALF, the loans are non-recourse, that is, the lender (Federal Reserve Bank of New York) will have no recourse against the borrower beyond taking possession of the posted collateral (consisting of assetbacked securities (“ABS”)). Under the program, should such a collateral surrender occur, TARP funds will be used to purchase the surrendered collateral. In light of this use of TARP funds, SIGTARP has recommended that Treasury and the Federal Reserve disclose the identity of any TALF borrowers that fail to repay the TALF loan and must surrender the ABS collateral. Regular Disclosure of PPIF Activity, Holdings, and Valuation: In the PPIP Legacy Securities Program, the taxpayer will be providing a substantial portion of the funds (contributing both equity and lending) that will be used to purchase toxic assets in the Public- • • • Private Investment Funds (“PPIFs”). SIGTARP is recommending that all trading activity, holdings, and valuations of assets of the PPIFs be disclosed on a timely basis. Not only should this disclosure be required as a matter of basic transparency in light of the billions of taxpayer dollars at stake, but such disclosure would also serve well one of Treasury’s stated reasons for the program in the first instance: the promotion of “price discovery” in the illiquid market for MBS. Treasury has indicated that it will not require such disclosure. Although SIGTARP understands Treasury’s need to balance the public’s transparency interests, on one hand, with the interests of the participants and the desire to have wide participation in the programs, on the other, Treasury’s default position should always be to require more disclosure rather than less and to provide the investors in TARP — the American taxpayers — as much information about what is being done with their money as possible. Unfortunately, in rejecting SIGTARP’s basic transparency recommendations, TARP has become a program in which taxpayers (i) are not being told what most of the TARP recipients are doing with their money, (ii) have still not been told how much their substantial investments are worth, and (iii) will not be told the full details of how their money is being invested. In SIGTARP’s view, the very credibility of TARP (and thus in large measure its chance of success) depends on whether Treasury will commit, in deed as in word, to operate TARP with the highest degree of transparency possible. Imposition of Information Barriers, or “Walls,” in PPIP In the April 21, 2009, Quarterly Report, SIGTARP noted that conflicts of interest and collusion vulnerabilities were inherent in the design of PPIP stemming from the fact that the PPIF managers will have significant power to set prices in a largely illiquid market. These vulnerabilities could result in PPIF managers having an incentive to overpay significantly for assets or otherwise using the valuable, proprietary PPIF trading information to benefit not the PPIF, but rather the manager’s non-PPIF business interests. As a result, SIGTARP made a series of recommendations in the April Quarterly Report, including that Treasury should impose strict conflicts of interest rules. Since the April Quarterly Report, Treasury has worked with SIGTARP to address the vulnerabilities in PPIP, and SIGTARP made a series of specific recommendations, suggestions, and comments concerning the design of the program. Treasury adopted many of SIGTARP’s suggestions and has developed numerous provisions that make PPIP far better from a compliance and anti-fraud standpoint than when the program was initially announced. However, Treasury has declined to adopt one of SIGTARP’s most fundamental recommendations — that Treasury should require imposition of an informational barrier or “wall” between the PPIF fund managers making investment decisions on behalf of the PPIF and those employees of the fund management company who manage non-PPIF funds. Treasury has decided not to impose such a wall in this instance, despite the fact that such walls have been imposed upon asset managers in similar contexts in other Government bailout-related programs, including by Treasury itself in other TARPrelated activities, and despite the fact that three of the nine PPIF managers already must abide by similar walls in their work for those other programs. If nothing else, the reputational risk that Treasury and the program could face if a PPIF manager should generate massive profits in its non-PPIF funds as a result of an unfair advantage, even if that advantage is not strictly against the rules, justifies the imposition of a wall. Failure to impose a wall, on the other hand, will leave Treasury vulnerable to an accusation that has already been leveled against it — that Treasury is using TARP to pick winners and losers and that, by granting certain firms the PPIF manager status, it is benefitting a chosen few at the expense of the dozens of firms that were rejected, of the market as a whole, and of the American taxpayer. This reputational risk is not one that can be readily measured in dollars and cents, but is rather a risk that could put in jeopardy the fragile trust the American people have in TARP and, by extension, their Government. TARP in Context During the last 36 hours there has been considerable media coverage and interest in section 3 of SIGTARP’s July Quarterly Report, which attempts to place the TARP into context in terms of how it has evolved and of the greater government-wide effort. TARP, as originally envisioned in the fall of 2008, would have involved the purchase, management, and sale of up to $700 billion of “toxic” assets, primarily troubled mortgages and mortgage-backed securities (“MBS”). That framework was soon shelved, however, and TARP funds are being used, or have been announced to be used, in connection with 12 separate programs that, as set forth in Table 1 below, involve a total (including TARP funds, loans and guarantees from other agencies, and private money) that could reach nearly $3 trillion. Through June 30, 2009, Treasury has announced the parameters of how $643.1 billion of the $700 billion would be spent through the 12 programs. Of the $643.1 billion that Treasury has committed, $441 billion has actually been spent. TOTAL POTENTIAL FUNDS SUBJECT TO SIGTARP OVERSIGHT, AS OF 6/30/2009 ($ BILLIONS) Total Projected Funding at Risk ($) $218.0 ($70.1) Projected TARP Funding ($) $218.0 ($70.1) Program Capital Purchase Program (“CPP”) Brief Description or Participant Investments in 649 banks to date; 8 institutions total $134 billion; received $70.1 billion in capital repayments GM, Chrysler, GMAC, Chrysler Financial; received $130.8 million in loan repayments (Chrysler Financial) Government-backed protection for auto parts suppliers Government-backed protection for warranties of cars sold during the GM and Chrysler bankruptcy restructuring periods Purchase of securities backed by SBA loans Automotive Industry Financing Program (“AIFP”) 79.3 79.3 Auto Supplier Support Program (“ASSP”) 5.0 5.0 Auto Warranty Commitment Program (“AWCP”) 0.6 0.6 Unlocking Credit for Small Businesses (“UCSB”) Systemically Significant Failing Institutions (“SSFI”) Targeted Investment Program (“TIP”) Asset Guarantee Program (“AGP”) Term Asset-Backed Securities Loan Facility (“TALF”) Making Home Affordable (“MHA”) Program Public-Private Investment Program (“PPIP”) 15.0 15.0 AIG investment 69.8 69.8 Citigroup, Bank of America investments Citigroup, ring-fence asset guarantee FRBNY non-recourse loans for purchase of asset-backed securities Modification of mortgage loans 40.0 301.0 1,000.0 40.0 5.0 80.0 75.0 50.0 Disposition of legacy assets; Legacy Loans Program, Legacy Securities Program (expansion of TALF) Capital to qualified financial institutions; includes stress test Potential additional funding related to CAP; other programs 500.0 – 1,000.0 75.0 Capital Assistance Program (“CAP”) TBD TBD New Programs, or Funds Remaining for Existing Programs Total 131.4 131.4 $2,365.0 – $2,865.0 $699.0 Note: See Table 2.1 in Section 2 for notes and sources related to the information contained in this table. As massive and as important as TARP is on its own, it is just one part of a much broader Federal Government effort to stabilize and support the financial system. Since the onset of the financial crisis in 2007, the Federal Government, through many agencies, has implemented dozens of programs that are broadly designed to support the economy and financial system. In our most recent quarterly report, we summarize these programs and the total potential support to the financial system as of 6/30/09, there is approximately $3.0 trillion outstanding, $4.7 trillion is the total support to date, including money that has been paid pack and programs that have ended. In total, the potential federal support through all of these programs is approximately $23.7 trillion, as indicted below: INCREMENTAL FINANCIAL SYSTEM SUPPORT, BY FEDERAL AGENCY SINCE 2007 ($ TRILLIONS) Maximum Total Potential Current Balance Federal Reserve FDIC Treasury — TARP (including Federal Reserve, FDIC components) Treasury — Non-TARP Other: FHFA, NCUA, GNMA, FHA, VA Total $1.4 0.3 0.6 0.3 0.3 $3.0 Balance as of 6/30/2009 $3.1 0.3 0.6 0.3 0.3 $4.7 Support Related to Crisis $6.8 2.3 3.0 4.4 7.2 $23.7 Notes: Numbers affected by rounding. Amounts may include overlapping agency liabilities, “implied” guarantees, and unfunded initiatives. Total Potential Support does not account for collateral pledged. See the “Methodology for Estimating Government Financial Exposure” discussion in this section for details on the methodology of this chart. Other agencies include: FHFA, National Credit Union Administration (“NCUA”), Government National Mortgage Association (“GNMA”), Federal Housing Administration (“FHA”), and U.S. Department of Veterans Affairs (“VA”). For a full description of the backup for these numbers and the methodology for calculating them see Section 3 of our July Quarterly report. Oversight Activities of SIGTARP The oversight activities discussed above and all other SIGTARP efforts to date are detailed in SIGTARP’s reports dated February 6, 2009, 1 April 21, 2009,2 and July 21, 2009. Additionally, on July, 20, 2009, SIGTARP issued an audit report concerning how recipients of CPP funds reported their use of such funds.3 In February 2009, SIGTARP sent survey letters to more than 360 financial 1 See http://www.sigtarp.gov/reports/congress/2009/SIGTARP_Initial_Report_to_the_Congress.pdf. See http://www.sigtarp.gov/reports/congress/2009/April2009_Quarterly_Report_to_Congress.pdf. 2 3 See http://www.sigtarp.gov/reports/audit/2009/SIGTARP_Survey_Demonstrates_That_Banks_Can_Provide_Meaningfu_%20Information_On_Their_Use_Of_TARP_Funds.pdf. and other institutions that had completed TARP funding agreements through January 30, 2009. The audit report finds that, although most banks reported they did not segregate or track TARP fund usage on a dollar-for-dollar basis, they were able to provide insights into their actual or planned future use of TARP funds. For some respondents the infusion of TARP funds helped to avoid a “managed” reduction of their activities; others reported that their lending activities would have come to a standstill without TARP funds; and others explained that they used TARP funds to acquire other institutions, invest in securities, pay off debts, or that they retained the funds to serve as a cushion against future losses. In light of the audit findings, SIGTARP renews its recommendation that the Secretary of the Treasury require all TARP recipients to submit periodic reports to Treasury on their use of TARP funds. SIGTARP’s Investigations Division has developed rapidly and is quickly becoming a sophisticated white-collar investigative agency. Through June 30, 2009, SIGTARP has 35 ongoing criminal and civil investigations. These investigations include complex issues concerning suspected accounting fraud, securities fraud, insider trading, mortgage servicer misconduct, mortgage fraud, public corruption, false statements, and tax investigations. Two of SIGTARP’s investigations have recently become public: • Federal Felony Charges Against Gordon Grigg: On April 23, 2009, Federal felony charges were filed against Gordon B. Grigg in the U.S. District Court for the Middle District of Tennessee, charging him with four counts of mail fraud and four counts of wire fraud. The charges are based on Grigg’s role in embezzling approximately $11 million in client investment funds that he garnered through false claims, including that he had invested $5 million in pooled client funds toward the purchase of the TARP-guaranteed debt. Grigg pleaded guilty to all charges and is scheduled for sentencing on August 6, 2009. FTC Action Against Misleading Use of “MakingHomeAffordable.gov”: On May 15, 2009, based upon an action brought by the Federal Trade Commission (“FTC”), a Federal district court issued an order to stop an Internet-based operation that pretended to operate “MakingHomeAffordable.gov,” the official website of the Federal Making Home Affordable program. According to the FTC’s complaint, the defendants purchased sponsored links as advertising on the results pages of Internet search engines, and, when consumers searched for “making home affordable” or similar search terms, the defendants’ ads prominently and conspicuously displayed “MakingHomeAffordable.gov.” Consumers who clicked on this link were not directed to the official website, but were diverted to sites that solicit applicants for paid loan modification services. The operators of these websites either purport to offer loan modification services themselves or sold the victims’ personally identifying information to others. SIGTARP is providing assistance to FTC during the investigation. • More than 50% of SIGTARP’s ongoing investigations were developed in whole or in part through tips or leads provided on SIGTARP’s Hotline (877-SIG-2009 or accessible at www.SIGTARP.gov). Over the past quarter, the SIGTARP Hotline received and analyzed more than 3,200 tips, running the gamut from expressions of concern over the economy to serious allegations of fraud. Further, SIGTARP is in the process of completing audit reports concerning executive compensation restriction compliance, controls over external influences on the CPP application process, selection of the first nine participants for funds under CPP (with a particular emphasis on Bank of America), AIG bonuses, and AIG counterparty payments. In addition, SIGTARP is undertaking a series of new audits, as follows: • Follow-up Assessment of Use of Funds by TARP Recipients: This audit will examine use of funds by recipients receiving extraordinary assistance under the Systemically Significant Failing Institutions program, the Automotive Industry Financing Program, as well as insurance companies receiving assistance under CPP. Governance Issues Where U.S. Holds Large Ownership Interests: The audit, being conducted at the request of Senator Max Baucus, will examine governance issues when the U.S. Government has obtained a large ownership interest in a particular institution, including: (i) What is the extent of Government involvement in management of companies in which it has made sizeable investments, including direction and control over such elements as governance, compensation, spending, and other corporate decision making? (ii) To what extent are effective risk management, internal controls, and monitoring in place to protect and balance the Government’s interests and corporate needs? (iii) Are there performance measures in place that can be used to track progress against long-term goals and timeframes affecting the Government’s ability to wind down its investments and disengage from these companies? (iv) Is there adequate transparency to support decision making and to provide full disclosure to the Congress and the public? Status of the Government’s Asset Guarantee Program with Citigroup: The audit examining the Government’s Asset Guarantee Program (“AGP”) with Citigroup, based upon a request by Representative Alan Grayson, will address a series of questions about the Government’s guarantee of certain Citigroup assets through the AGP such as: (i) How was the program for Citigroup developed? (ii) What are the current cash flows from the affected assets? and (iii) What are the potential for losses to Treasury, the Federal Deposit Insurance Corporation, and the Federal Reserve under the program? Making Home Affordable Mortgage Modification Program: This audit will examine the Making Home Affordable mortgage modification program to assess the status of the program, the effectiveness of outreach efforts, capabilities of loan servicers to provide services to eligible recipients, and challenges confronting the program as it goes forward. • • • Operational Status Regarding SIGTARP’s operational status, we continue to filling out our ranks. As of July 20, 2009, we have hired 70 personnel, and have several new hires to begin over the coming weeks. Currently, SIGTARP’s senior and upper-level management ranks are for the most part in place, and, thus, we anticipate that hiring will proceed rapidly. SIGTARP’s efforts have been assisted by dual compensation and direct hire authorities that it has been provided via statute and regulation. We are very pleased with our progress, and we are confident that SIGTARP will achieve its current goal of approximately 160 full-time employees by the second quarter of FY 2010. Nonetheless, section 121(j) of EESA, as amended, provided $50 million for SIGTARP, but this figure will not be sufficient to fund SIGTARP’s activities through FY 2010. SIGTARP had not been established when Treasury submitted its initial FY 2010 budget request to the Office of Management and Budget (“OMB”), during the summer of 2008. Additionally, SIGTARP was not in a position to definitively project its FY 2010 needs when OMB reopened the FY 2010 budget in the early spring of 2009 (i.e., SIGTARP’s key management and budget personnel either had not yet been hired or had just arrived). Thus, SIGTARP was effectively precluded from submitting a substantive request for additional funds when the budget was reopened. SIGTARP, accordingly, submitted to Treasury a request for an amendment of the FY2010 budget request in the amount of $23,300,000. Cooperation In spite of accounts in the media, to date, Treasury has cooperated with SIGTARP’s information requests. Moreover, although SIGTARP and Treasury have disagreed, sometimes vociferously, over the design and implementation of TARP programs, SIGTARP believes that Treasury has engaged actively in consulting with SIGTARP about its concerns. Chairman Moore, Ranking Member Biggert and Members of the Committee, I want to thank you again for this opportunity to appear before you, and I would be pleased to respond to any questions that you may have.
President Obama says he sees a lack of humility among bankers today. He said the industry "should be more focused on products we're providing consumers. Let's make sure we're operating in a more secure, safe fashion." Weigh that against the Treasury's lack of humility and their complete failure to operate in a "more secure, safe fashion." Rush has interesting commentary.

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