The new special inspector general for the Troubled Asset Relief Program is not fresh to the agency or to the business of uncovering fraud. Though she was officially sworn in on April 9, Christy Romero has already worn many hats at SIGTARP.
Most recently, she had been filling in as acting special inspector general since Neil Barofsky left the agency a year ago. Barofsky was SIGTARP’s first leader, appointed by President Bush to keep track of the $700 billion in bailout money that was authorized for shoring up the banking industry in 2008.
Romero was serving as counsel at the Securities and Exchange Commission when she heard the news of TARP’s creation in 2008.
“Coming from my background, I was very concerned that people would try to take advantage of the money going out the door so fast and that there would be fraud committed,” Romero said.
Someone told her to put her money where her mouth was, and she sent her resume to SIGTARP cold with no connections. She was called back for an interview in an office so new she had no place to sit down. By August 2009, Romero was part of an “all hands on deck” team frantically tracking each dollar distributed by TARP.
Since then, TARP has changed significantly; Romero’s job will look considerably different from the one Barofsky was hired to do. For one, the program shrank. By the time Barofsky left in March 2011, the Congressional Budget Office estimated that $432 billion would be dispersed through TARP and taxpayers would be on the hook for $19 billion of that. And the big banks have since gotten out of the program.
Romero will focus her attention on getting 434 community banks and credit unions out of the program before their dividends increase at the end of the year. Mortgage-refinancing programs have been extended. President Obama announced that the Home Affordable Modification Program would continue until 2018 and TARP would continue to monitor the way banks use the allotted funds. Meanwhile, a slew of fraud cases have been uncovered.
Romero frequently calls upon her experience as an investigator at the SEC.
“In the last year’s time that I have been leading the agency, I have made criminal investigations the highest priority,” Romero said. “SIGTARP will protect taxpayers against any and all crime related to TARP.”
Most recently, an employee of the failed Bank of the Commonwealth in Virginia was charged with concealing nonperforming assets, costing the TARP-funded bank $41 million. In the three and a half years of TARP, SIGTARP has criminally charged 79 individuals and companies with misuse of funds. Forty-nine of those charges came in the past year when Romero was acting special inspector general. As a result, SIGTARP has returned $4 billion to the government or the victims of fraud.
Perhaps one reason why Romero has to focus so heavily on fraud and abuse is because preventing waste requires the cooperation of the Treasury. The relationship between those who oversee and those who allocate TARP money is unbalanced. Ultimate authority lies with the Treasury. SIGTARP can only make recommendations.
Romero said she meets with senior Treasury officials weekly to discuss ways to make TARP funds more accessible to homeowners, rid small banks of their debts to TARP, and decrease waste overall. But of the 96 recommendations SIGTARP has issued, the Treasury has only implemented about a third of them.
“Treasury should explain why they are not adopting recommendations that could prevent waste, fraud, and abuse in TARP,” Romero said. “Whatever their reason, it’s not good enough.”
Romero said there are many misconceptions about the funds she oversees: that TARP has ended, that TARP is making a profit, that all the banks have paid back their loans. Romero sees herself as a protectorate of TARP’s legacy and wants to set the record straight.
For now, she has a clear message to send to everyone who thinks they may have gotten away with misusing taxpayer dollars: “SIGTARP will be on the watch for a long time.”
This article appears in the April 27, 2012, edition of National Journal Daily.