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October 2008
foreclosure mitigation, financial market stability, and tax payer protection. GAO also has oversight
authority for the internal workings of the TARP, including transactions, prices paid, terms and conditions,
and future commitments. Additionally, GAO is to evaluate contracting procedures, including inclusion of
minorities and women, and it is authorized to audit audited TARP financial statements, program activities,
receipts, expenditures, and financial transactions. GAO is required to submit reports on its findings under
this section to the appropriate Congressional committees and the TARP Special Inspector General at least
every 60 days.
The TARP is required to establish and maintain internal controls that ensure effective and efficient
operation, and reliable financial reporting.
Section 117 – Study and Report on Margin Authority
GAO is required to determine to what extent leverage and deleveraging of financial institutions caused the
present crisis, and to submit a report with recommendations to the House Financial Services and Senate
Banking Committees by June 1, 2009. The analysis is to include a review of the SEC, Federal Reserve,
and other Federal banking agencies and their role in monitoring leveraging activity, including any use of
margin authority by the Federal Reserve.
Section 118 – Funding
The costs of the EESA are to be funded through the U.S. Government’s borrowing authority.
Section 119 – Judicial Review and Related Matters
Any action by Treasury authorized by the EESA is subject to judicial review under the Administrative
Procedures Act (APA) and can be set aside if it is found to be arbitrary, capricious or an abuse of
discretion. However, injunctions or other forms of equitable relief are not allowed with respect to
Treasury’s purchase or insurance of troubled assets, actions to manage or sell troubled assets or to
mitigate foreclosures (Sections 101, 102, 106 and 109) except to remedy a violation of the Constitution.
Any injunction is to be considered on an expedited basis. Actions by persons that sell assets to Treasury
are limited to judicial review under the APA except where expressly provided for in a written contract
with Treasury. Homeowners’ rights are preserved for residential mortgages sold to Treasury. Servicers
that make a determination whether modification of loans would provide a greater net recovery than
foreclosure are deemed to be acting in the best interests of all investors if they agree to a modification or
work out plan except as established otherwise by contract.
Section 120 – Termination of Authority
Treasury’s authority to purchase and provide insurance for troubled assets terminates on December 31,
2009. Treasury may extend this authority for a period not later than two years from the date of enactment
(on or about October 2010).
Section 121 – Special Inspector General for the Troubled Asset Relief Program
Requires the President to appoint a Special Inspector General (SIG) as soon as practicable after enactment
with the advice and consent of the Senate. The SIG will be responsible for conducting and supervising
audits and investigations regarding the purchase and sale of assets and authority used under the TARP.
AMERICAN BANKERS ASSOCIATION 6