The last time Congress disgorged billions of dollars to treat a national emergency, some of the money went to an evening reception for housing counselors who enjoyed strawberry shortcake martinis and were served from a carved beef station.
Such questionable spending would be a plum target for watchdogs charged with monitoring the $2 trillion coronavirus relief voted by Congress. But first they’ll have to be assigned to the job. Three weeksafter Congress set the spending in motion, and with money beginning to flow to thousands of businesses and millions of households, there’s little progress on naming overseers for the cascade of spending.
Congress is out of town until next month, while a congressional panel that is to have five members limps along with one appointee, who has no staff and can wieldlittle more than a Twitter account. President Donald Trump has signaled hostility to oversight, sidelining the inspector general named to monitor all pandemic spending, and clashing with Democrats over how much independence to grant the overseers.
“The money is already out the door, and there’s no one watching where it’s going,” said Danielle Brian, executive director of the Project on Government Oversight, a group that monitors government spending. “There’s been a lot of talk but nothing has happened with any of the oversight mechanisms.”
The sooner oversight begins, the better, according toChristy Goldsmith Romero, special inspector general for the Troubled Asset Relief Program — the program known as TARP that Congresspassed in 2008 to help recover from what was then the worst slump since the Great Depression. In its decade-plus of work, Romero’s office has brought investigationsresulting in the recovery of $11 billion, and 300 defendants sentenced to prison, according to its tally.
Early in TARP’s life, the inspector general’s office helped ensure aid money flowed quickly, offering advice on loosening overly strict credit-eligibility criteria and cutting needless regulations, Romero said.
“The other thing that’s really important to jump on right away are the scams,” Romero said in an interview. “There’s bound to be fraud whenever there’s that much money going out the door.”
Already, the Small Business Administration said a $349 billion relief program for small businesses hasrun out of money after approving more than 1.6 million applications. Direct paymentsare flowing to tens of millions of households. And the Treasury andFederal Reserve havejoined forces to push $4.5 trillion in stimulus to combat the coronavirus crisis, with the central bank lending directly to main street businesses for the first time since the Great Depression.
The overlapping oversight entities have yet to gain traction.
No confirmation hearing has been set in theSenate for Trump’s choice for special inspector general for pandemic relief, Brian Miller, a White House lawyer. The Republican chairman of the Banking Committee, Idaho Senator Mike Crapo, said in a statement Thursday that he would convene a hearing “as soon as can be safely done.”
Miller has started interviewing candidates to start building his team, according to a person familiar with the matter. He is looking to hire lawyers, experts in financial forensics and legislative experts, the person said.
Separately, House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnellare exchanging names of candidates to lead the congressional panel. Pelosi on Thursday said she would have an announcement soon, and called the need “important” and “immediate.”
Responsibilities of the special inspector general include overseeing disbursements by the Treasury Department — money flowing to big businesses includingairlines.
Similarly, nobody’s been named to head the Pandemic Relief Accountability Committee, a body made up of inspectors general from throughout the government. It was to be headed by an inspector general who drew praise from Democrats beforebeing removed by Trump.
The sole person named to the congressional commission, Bharat Ramamurti, isdoing what he can. In a letter to Federal Reserve Chairman Jerome Powell on Wednesday, Ramamurti asked for information on the trillions in emergency loans that the central bank plans to extend to businesses.
“Money is moving around in the blink of an eye,” Ramamurti wrote, “and it’s not at all clear what it all means and who it’s helping.”
The coronavirus relief law terminates the special inspector general’s office in five years. That temporary nature is one barrier to attracting and retaining staff, said Neil Barofsky, the first special inspector general for the Troubled Asset Relief Program. The coronavirus legislation lets retirees keep benefits if they join the office, and that’s a help, he added.
“You are asking good people to leave their existing jobs or come out of retirement to work for a temporary agency,” Barofsky said. “The IG needs the flexibility and authority to attract talent.”
Romero said the post she holds is to continue as long as the Troubled Asset Relief Program is spending money. The lack of a deadline helps when mounting complex investigations, she added.
“Investigations can take a long time, particularly criminal investigations, to be able to investigate and then work with DOJ or others to prosecute,” Romero said, referring to the Department of Justice. “So it’s been very helpful for us that we’ve been able to have the time we need.”
The Troubled Asset Relief Program is still spending money —including $1.8 billion in its most recent fiscal year, with funds going to banks includingWells Fargo & Co.,JPMorgan Chase & Co., andBank of America Corp.
Prosecutions for misdeeds continue, too. In February an Illinois bankerreceived a five-year prison term after he admitted to conspiring to receive loans to projects in which he held a personal financial interest, including a real estate project with a golf course and surrounding residential lots.
Otherrecent cases include embezzlement and wire fraud charges.
Last year, in an audit requested by Senator Chuck Grassley, an Iowa Republican, Romero’s team found that the Treasury Department didn’t enforce safeguards around a program aimed at preventing foreclosures.
In 2010, before a single dollar flowed to homeowners, theNorth Carolina Housing Finance Agency acting as middleman for federal funding, staged an evening reception for housing counselors, according to theMarch 2019 audit. Charges included $855 for the carved beef station with an additional $153 for serving by a uniformed chef; $346 on cake bites; strawberry shortcake martinis, and “mousse shooters of the season”; $507 on imported and domestic cheeses; and $415 on fruits and berries with a dipping sauce, according to the report.
The culture at the housing finance agency was such that officials could use almost any justification to charge TARP for barbecues, parties, celebrations, restaurant outings, gifts, gym memberships, regular employee meals, and employee cash bonuses, according to the audit that questioned almost $130,000 in spending.
The agency “disagreed with much of the criticism” yet also agreed to return $54,000,Connie Helmlinger, a spokeswoman, said in an interview.
Counselors were at a day-long training session, and “if you have them stay all day, you’re going to feed them,” Helmlinger said. She said the controversy obscures good work by the agency, which helped 30,000 state residents avoid foreclosure.
Spending by the agency included $2,500 for a speaker on Motivation by Chocolate, according to the audit. Helmlinger declined to discuss specific expenditures.
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