In a June 2012 article published in The American Banker, we noted the that the Office of the Special Inspector General for the Troubled Asset Relief Program ("SIGTARP") had taken an expansive view of its jurisdiction in investigating offenses affecting financial institutions. As that piece noted, SIGTARP's opinion – and practice – has been that an institution's mere receipt of TARP funds sufficed to provide the agency with jurisdiction to conduct an investigation and recommend charges (despite its vast resources, SIGTARP cannot file charges on its own – it must convince a federal prosecutor to do so). Using this approach, the agency was able to move forward on a substantial number of charges where TARP funds were not misused, threatened, or even involved.
A recent article in the Washington Post builds on this premise by recapping SIGTARP's recent activity, noting that the agency's efforts have resulted in the filing of charges against over 100 senior bank officers since its creation in 2008, and the imposition of a number of lengthy terms of imprisonment. These results are particularly noteworthy, as the FBI and Secret Service have typically handled financial institution fraud cases, particularly by insiders.
SIGTARP appears committed not only to taking a seat at the table, but also making sure the industry is aware of its intentions.
While SIGTARP is likely to have a finite existence, those in the financial industry should expect the agency to continue to be a major investigative player over the next few years. For those institutions who received TARP funds, that means increased scrutiny, at least in the near term.
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