Caution! SIGTARP Approaching

Troubled Asset Relief Program (“TARP”) fund recipients in the financial services and other sectors should be closely monitoring the words and actions of the new officer on the beat, Neil Barofsky (“Barofsky”), the Special Inspector General for the Troubled Asset Relief Program (a.k.a. “SIGTARP”). Legal departments and ethics and compliance officers of TARP fund recipients must act now to ensure companies are not found in the cross-hairs of SIGTARP, the Securities and Exchange Commission (“SEC”), Department of Justice (“DOJ”), and other regulatory bodies. Mr. Barofsky is on a mission to protect bailout funds distributed by the Department of Treasury (“Treasury”) through TARP. Just four short months into his tenure, Barofsky is barreling full-steam ahead. He has established a fully operational office staffed with former prosecutors and law enforcement agents. He has testified six times before Congress, issued two lengthy reports, initiated detailed audits of TARP fund recipients, opened 20 criminal investigations, and obtained the first TARP-related federal criminal charges, along with a quick guilty plea. 

This article is a primer for those who have received or anticipate receiving TARP funds. TARP fund recipients must recognize that the heightened scrutiny and accountability imposed by Barofsky and his office will require instituting transparent accounting controls and compliance measures to avoid becoming a SIGTARP target. Indeed, Barofsky has made this expectation patently clear, stating “to the extent that any financial institution is deciding not to seek TARP funds because we’re asking them to account for how they’re using that money – good. We’re happy for that. We believe that any financial institution that for some reason is afraid to tell the American people how they’re using that money, then we’re better off without them.”[1] It is important to note that it is not only SIGTARP with whom TARP fund recipients must contend, but also with individual state attorney generals, the DOJ and the SEC. Companies should take proactive measures now to ensure they successfully pass SIGTARP audits and address allegations of fraud, waste, abuse, and wrongdoing with regard to TARP funds.

A. The Creation of SIGTARP

In an effort to infuse capital into the American financial system and to shore-up a sagging U.S. economy, Congress passed the Emergency Economic Stabilization Act of 2008 (“EESA”) on October 3, 2008.[2] TARP was created as part of EESA to purchase distressed assets, particularly troubled mortgages and mortgage-backed securities. According to the Government Accountability Office (“GAO”) as of March 27, 2009, over $300 billion in TARP funds have been disbursed.[3] In examining the first six months of TARP, EESA’s Congressional Oversight Panel reported that “while Treasury has spent or committed $590.4 billion of TARP funds...the Federal Reserve Board has expanded its balance sheet by more than $1.5 trillion in loans and purchases of government-sponsored enterprise securities.”[4] In addition to its swelling purse, TARP’s scope has expanded to include 12 separate programs ranging from the Capital Purchase Program (“CPP”) and Systemically Significant Failing Institutions (“SSFI”) program, which funded investments into American International Group, Inc. (“AIG”) to the Automotive Industry Financing Program (“AIFP”) and the Making Home Affordable Program (“MHA”).[5]

SIGTARP was created as part of the EESA to protect TARP funds from fraud and abuse. President Bush appointed Barofsky, a former federal prosecutor from the Southern District of New York, as the first Special Inspector General for TARP. Barofsky has a reputation as an aggressive prosecutor known for high stakes and high profile matters and has commented that “[w]hether it was attacking the FARC in the jungles of Colombia or Refco on Wall Street, all I’ve done is go after those who violate the law, and I will take that same tenacity and dedication to this job.”[6] Barofsky’s speedy confirmation in December 2008 signaled Congress’s intent to ensure there was a watchdog with an unprecedented scope of authority to scrutinize the use of TARP funds. This concept was captured in a statement by Finance Committee Chairman Sen. Max Baucus (D-MT) at Barofsky’s confirmation hearing: “I want you to assume that you do have [the authority to act] and you go ahead until someone raises a ruckus and says no, and even then I want you to continue and assume that you have it. . . . I want you to have the tenacity of a mongoose or, as some say, the tenacity to be as mean as a junkyard dog.”[7]

Congress certainly found its “junkyard dog” with Barofsky. Since his confirmation, Barofsky has rapidly established himself and SIGTARP as a force to be reckoned with. 

B. SIGTARP Up and Running

SIGTARP Structure

Within the first 53 days of his confirmation, Barofsky undertook the following:

• staffed SIGTARP with former federal prosecutors and law enforcement agents;
• created a Hotline for reporting fraud, waste, abuse, mismanagement or misrepresentations regarding TARP funds;
• formed liaisons and partnerships with other federal agencies, such as the Federal Reserve, SEC, Treasury, Department of Housing and Urban Development (“HUD”) and the Federal Deposit Insurance Corporation (“FDIC”);
• consolidated his own authority to enforce the manner in which TARP funds are used; and
• issued SIGTARP’s first report to Congress.[8]

In his February 6, 2009 Initial Report to Congress, Barofsky boldly stated that SIGTARP’s mission was to “conduct, supervise, and coordinate audits and investigations of the purchase, management, and sale of assets under TARP.” He pledged to carry out SIGTARP’s mission by “robust criminal and civil enforcement against those, whether inside or outside of government, who waste, steal, or abuse TARP funds.”[9] In executing this mission, Barofsky organized SIGTARP into three divisions: Audit, Investigations and Administration.

From Barofsky’s first hires and his partnerships with several law enforcement agencies, it is evident that he views the Investigations Division as the driving force at SIGTARP and criminal and civil enforcement actions as a top priority.[10] As of press time, the office consists of:

• Kevin Puvalowski, Chief of Staff. Like Barofsky, Puvalowski is a former federal prosecutor from the Southern District of New York, with extensive experience in financial fraud investigations and prosecutions.
• Christopher Sharpley, Deputy SIG for Investigations. Sharpley previously supervised the Office of Investigations and Inspections for the Department of Energy Inspector General’s Office.
• Richard Rosenfeld, Chief Investigative Counsel. He is a former senior counsel with the SEC.
• Scott Rebein, Special Agent-in- Charge. Rebein supervises federal law enforcement agents assigned to the Investigations Division.
• Barry Holman, Deputy SIG for Audit. Holman, a career civil servant, most recently served as Deputy Assistant Inspector General for Auditing for the Special Inspector General for Iraq Reconstruction from August 2007 to January 2009.[11]

Interagency Coordination

Further demonstrating his intention to police the use of TARP funds vigorously, Barofsky joined the President’s Corporate Fraud Task Force and has met with prosecutors from the DOJ and several United States Attorney’s Offices to forge criminal and civil enforcement partnerships. SIGTARP also made a formal request to the DOJ to receive briefings on all investigations involving entities that have received TARP funds.

Barofsky formed and chairs the TARP Inspector General Council (“TARP-IGC”) composed of Inspector Generals from eight federal agencies, including HUD, Tax Administration, and the U.S. Comptroller’s Office.[12] The TARP-IGC serves to coordinate cooperation among the various inspector generals to ensure comprehensive oversight of TARP.

Initial Recommendations

In his first 53 days, Barofsky demonstrated the premium he places on transparency regarding the manner in which TARP funds are allocated and being used, coupled with the significant degree of accountability he expects of TARP fund recipients. Barofsky first recommended that all TARP agreements, whether with TARP fund recipients or vendors, be posted on Treasury’s website.[13] Treasury agreed and launched www.FinancialStability.gov, which lists all TARP agreements and provides a chronological log of TARP fund recipients starting with the $15 billion provided to Bank of America Corporation on October 28, 2008 through to the $20.3 million given to Market Street Bancshares, Inc. on May 15, 2009.[14]

Second, SIGTARP recommended that TARP contract language include a term sheet in which the recipient acknowledges SIGTARP’s oversight role and expressly grants SIGTARP access to all relevant documents and personnel.[15] SIGTARP suggested that the “appropriate senior official” for each TARP fund recipient be required to certify in writing that all internal controls required under the TARP agreement have been established and implemented. This language has been incorporated into subsequent agreements, including those with GMAC, General Motors, Chrysler and Citigroup.[16]

Audits

After Treasury determined that it would be too arduous to seek details regarding an individual recipient’s use of TARP funds, SIGTARP undertook the audit process in early February 2009 by issuing Use of Funds audit letters to 364 TARP fund recipients.[17] The letter required TARP fund recipients to explain the manner in which they were spending or planned to spend TARP money. Audit letters required recipients to include a narrative explanation supported by documentation, plus a description of the manner in which the recipient will comply with restrictions on executive compensation, and a “certification by a duly authorized senior executive officer...as to the accuracy of all statements, representations, and supporting information provided.”[18]

To provide clarification and direction to TARP fund recipients, SIGTARP posted on its website “Questions & Answers Regarding the February 6, 2009 SIGTARP Letter.”[19] SIGTARP explained that it expected recipients to use “good faith” efforts to explain the anticipated and actual use of TARP funds, including the retention of relevant supporting documentation and the recipient’s plan for addressing executive compensation requirements. Most importantly, SIGTARP clarified that it was not asking for a certification of compliance with TARP but rather a certification of the accuracy of the statements, representations, and supporting information provided to SIGTARP in the recipient’s audit response.

This was just the beginning. As set forth below, Barofsky has continued rapidly to forge ahead to consolidate his authority and police the use of TARP money.

C. SIGTARP On The Move

Expanded Powers

Further extending Barofsky’s reach, Congress unanimously passed the Special Inspector General for Troubled Asset Relief Protection Act of 2009 (the “SIGTARP Act”), which provides Barofsky with additional authority that no other inspector general has under the IG Act. The SIGTARP Act expands EESA’s already broad scope for SIGTARP by:

• providing SIGTARP with the authority, with limited exceptions, to conduct, supervise, and coordinate audits and investigations into...any action taken under EESA;
• clarifying that SIGTARP can undertake law enforcement functions without first obtaining Attorney General approval;
• giving SIGTARP the responsibility to coordinate and cooperate with other inspectors general on oversight of TARP-related activities;[21] and
• permitting Barofsky to hire former government officials and staff without being delayed by the normal time-consuming civil service process.[22]

Investigations

Barofsky clearly views SIGTARP as the primary law enforcement agency for TARP funds and its Hotline as a critical tool in rooting out fraud and abuse.[23] As of April 21, 2009, the SIGTARP Hotline had received and analyzed approximately 200 tips, which coupled with other sources have resulted in SIGTARP initiating nearly 20 preliminary and full criminal investigations.[24] Barofsky stated that a third of the criminal investigations launched from SIGTARP were derived from Hotline tips.[25]

According to Barofsky, the criminal investigations involve securities fraud, insider trading, mail fraud, public corruption, and mortgage-modification fraud. As if to prove his point, the day after Barofsky issued his second report to Congress, the U.S. Attorney’s Office for the Middle District of Tennessee, in conjunction with SIGTARP, issued the first TARP-related criminal charges against Franklin Financial Adviser Gordon B. Grigg for mail fraud and wire fraud.[26] As part of Mr. Grigg’s fraudulent investment scheme, he represented to potential clients that he had committed $5 million to purchase TARP guaranteed debt. Another investigation Barofsky is pursuing, in conjunction with the New York Attorney General’s Office, involves the end-of-the-year bonuses handed out by Merrill Lynch as the struggling company was being taken over by Bank of America.[27]

Concerned about the fraud vulnerabilities of the Term Asset-Backed Securities Loan Facility (“TALF”), Barofsky organized and leads a multi-agency TALF Task Force to deter, detect, and prosecute fraud.[28] SIGTARP’s TALF Task Force is designed to combine the agencies’ shared expertise in securities fraud investigations, to maximize resources to deter potential criminals, to identify and stop fraud schemes before they can fully develop, and to bring to justice those seeking to commit fraud through TALF.[29]

Audits

On the Audit side, Barofsky reported “a 100 percent response rate” to the Use of Funds audit letters issued to TARP fund recipients.[30] SIGTARP expects to issue a preliminary report summarizing its analysis of the responses in June 2009, with additional reports focused specifically on the use of funds and executive compensation to be completed by summer 2009.[31]

Additional audits also are underway. The Executive Compensation Compliance audit is examining how TARP fund recipients implement controls regarding executive compensation restrictions. The Bank of America audit is examining the review and approval processes associated with TARP assistance to Bank of America, including Treasury’s role in connection with the bank’s acquisition of Merrill Lynch. The External Influences audit is examining the possible influence exerted on the Treasury or bank regulators regarding a recipient’s application for TARP funding. The AIG Bonuses audit is examining executive compensation and large bonuses paid to AIG employees. Finally, the AIG Counterparty Payments audit is examining AIG’s payments to counterparties at 100% of face value, and whether efforts were made to negotiate reductions in those payments.

Recommendations to Treasury

Barofsky’s recommendations to Treasury Secretary Geithner signal where SIGTARP is likely to focus its law enforcement energies. SIGTARP’s most urgent recommendation is for Treasury to develop and implement a system to determine the value of the shares the government now owns from the CPP program.[33] The valuation of government shares increasingly is becoming more important with the Administration considering converting preferred shares into common shares.[34]

Barofsky is sounding an alarm regarding the recent announcement to expand the $200 billion TALF program with increased lending of up to $1 trillion, supported by $80 billion of TARP funds in the event of default.[35] Barofsky is particularly concerned about what he perceives as the danger of allowing investors to use government monies to purchase potentially unsound mortgage-backed securities. According to Barofsky, purchasing asset-backed securities can be a risky business, because many of the underlying loans have been “overvalued due to fraud or lax underwriting.”[36]

TALF is not the only TARP program which concerns Barofsky. SIGTARP has recommended that efforts be taken to safeguard the new Public-Private Investment Program (“PPIP”). This would require barring conflicts of interest among participants to prevent collusion and shoring up the program’s vulnerabilities to money laundering.”[37] Barofsky also voiced concerns with the fledgling Mortgage Modification Program (“MMP”). To help combat fraud in this area, SIGTARP provided Treasury with detailed recommendations to address MMP concerns. Several of the recommendations attempt to ensure that loan modifications are based on accurate information, including the verification of residences, income levels and of individuals through the creation and maintenance of a global database tracking MMP participants.[38]

It is clear that Barofsky believes SIGTARP’s mission is to advance economic stability through transparency, coordinated oversight, and robust enforcement to root out waste, theft, or abuse of TARP funds.  

D. Proceed with Caution

Responding to Audits       

TARP fund recipients should be prepared to provide accurate, full, and detailed accountings of their use of TARP funds. SIGTARP’s February 2009 Use of Funds audit letters make clear that TARP fund recipients must pay particular attention to accounting, management, and use of TARP monies. Based on the Use of Funds audit letters, Barofsky intends every recipient of TARP money to:

• delineate the anticipated use of the funds;
• segregate the funds from other institutional funds;
• account for the anticipated and actual use of funds;
• justify any executive compensation derived from the funds;
• ensure such compensation is consistent with Treasury guidelines;
• segregate and preserve TARP-related documents; and
• make available to SIGTARP all documents, including e-mail, accounting records, budgets, internal memoranda, media statements, and shareholder statements pertaining to the management, accounting and use of the funds.

Potential Liability

The TARP fund recipient should respond carefully to SIGTARP, as any false or misleading response to audit letters can potentially lead to liability. TARP fund recipients should work closely with their advisors, outside counsel, and internal and external auditors, to name a few, in responding to these audit letters. False or fraudulent statements provided to SIGTARP or any other regulator can expose the TARP fund recipient to criminal, civil and SEC violations. 

False Statements

In addition to the audit responses themselves, the certification can lead to liability for senior executives. As previously noted, a senior executive will be required to certify “the accuracy of all statements, representations, and supporting information...subject to the requirements and penalties set forth in Title 18, United States Code, Section 1001,” submitted to SIGTARP. The Section 1001, federal false statement certification must be taken seriously by anyone certifying the accuracy of information provided to SIGTARP because false, fraudulent or fictitious statements and representations, and the concealment of material facts can result in criminal liability. Violations of the statute can subject the certifier to imprisonment of up to five years for each false statement, omission or misrepresentation, as well as to monetary penalties.

Barofsky also has stated that he intends to use criminal statutes involving securities fraud, tax fraud, insider trading, public corruption, and mortgage-modification fraud to combat TARP fraud and abuse.

A false statement to SIGTARP does not simply carry with it criminal liability, but can subject the recipient to civil liabilities and penalties under the False Claims Act.[39] The False Claims Act permits both the government and a whistleblower to file a civil complaint, which can subject the TARP fund recipient to treble damages, civil penalties ranging from $5,500 to $11,000 per claim, and attorney’s fees and costs. A collateral consequence for individuals and companies found criminally or civilly liable for submitting false claims or making false statements to the government is the potential suspension, debarment or exclusion from participating in federally-funded programs.

Collusion

Special attention will be paid to prevent collusion between investors or banks with possible kickbacks among bidders or sellers. For example, Barofsky will be looking at indicators that a bank created a phony subsidiary to bid up the value of its own troubled loans or that a network of banks conspired to bid up one another’s assets, kicking back profits to one another.[40]

Securities Law Violations

Securities fraud violations will focus on, among other things, the antifraud, reporting, books and records, and internal controls provisions. For SEC registrants, not only must information provided in response to a SIGTARP inquiry be accurate, but also consistent with information contained in SEC filings and public disclosures. Given the partnership between SIGTARP and the SEC, it is likely that government investigators and auditors will closely examine the completeness of toxic asset disclosures, including comparing past disclosures with more recent disclosures or information used to obtain TARP funds or to describe the use of TARP funds. The valuation of assets also will be scrutinized to determine whether valuation models and changes to valuation models were accurately disclosed to investors or manipulated to reach a desired result or to ensure maximum or minimum receipt of TARP funds.

As Barofsky’s announced investigation of AIG executive bonuses make clear, TARP fund recipients also should prepare for heightened scrutiny of their disclosures concerning executive compensation or the restructuring of such compensation, including golden parachutes and bonuses.

Insider Trading

SIGTARP, along with the SEC and DOJ, surely will pay close attention to the timing of trades by insiders and their relatives, hedge funds, and others associated with them. Intense scrutiny, among other things, may be placed on the timeframe in which disclosures were made concerning the need for or receipt of TARP funds. Both the SEC and SIGTARP will examine trading volume of certain financial institutions to determine whether there are noticeable increases in trading patterns prior to certain TARP related announcements, filings or government requests. Investors can expect this same type of scrutiny around the TALF program and the release of the information concerning bank stress tests.

E. Proactive Steps

To reduce the risk of becoming a SIGTARP target, recipients of TARP funds should implement an accurate and segregated accounting system and a comprehensive document management and retention system. Companies should consider enhanced employee training and compliance programs about the receipt, recordation, segregation, and use of TARP funds, including standards of conduct and procedures for employees to report concerns about the manner in which TARP funds are being used. None of this should await a SIGTARP investigation; nor is a brand new system required. Rather, companies can use what is already in place as a result of the Sarbanes-Oxley Act, such as their whistleblower or ethics hotlines to reduce cost. Employees should be encouraged to report concerns regarding fraud, waste and abuse of TARP funds in the already existing whistleblower and ethics hotlines framework. Such prophylactic measures will enhance the TARP fund recipient’s ability to respond to any inquiry from SIGTARP or law enforcement.

It is far better for the TARP fund recipient to receive and address an internal complaint about the accounting and use of TARP funds than for a disgruntled employee to contact SIGTARP. A complaint to SIGTARP can result in a lengthy government investigation involving multiple agencies, including SIGTARP, the SEC, DOJ and state attorney generals, and the significant expenditure of funds to respond to such investigations. If fraud, waste and abuse are alleged or detected, recipients are encouraged to have a system and structure in-place for reporting the misconduct to management, including in-house counsel, and procedures for evaluating, remedying and self-reporting the alleged misconduct to the government. When misconduct is alleged or detected, it is highly advisable to enlist the assistance of outside counsel to determine the next steps to be taken, such as establishing the basis of the allegation, the need for an internal investigation, whether it is necessary to self-report and the manner in which to do so. 

F. Looking Ahead . . .

In addition to SIGTARP’s oversight, TARP fund recipients should expect heightened scrutiny from both the DOJ and SEC. With the appointments of Eric Holder as the Attorney General and Lanny Breuer as the Chief of DOJ’s Criminal Division, coupled with the selection of Robert Khuzami, the new SEC Enforcement Chief, the Obama Administration has assembled a group of seasoned federal prosecutors with significant white collar crime experience. With this new federal law enforcement team now in place, TARP fund recipients must pay close attention to the accounting and management of TARP funds.

[1] Bailout Overseer Reports Progress to Congress, 04/21/09, www.npr.org.

[2] Emergency Economic Stabilization Act of 2008, P.L. 110-343, 10/03/2008.

[3] GAO, Testimony Before the Committee on Finance, U.S. Senate: Troubled Asset Relief Program, 03/31/09, www.gao.gov. According to Treasury Secretary Tim Geithner, as of April 21, 2009 $134.6 billion in resources under EESA remain available. See Treasury Secretary Tim Geithner Written Testimony Congressional Oversight Panel, 04/21/09,
www.financialstability.gov.

[4] Congressional Oversight Panel, April Oversight Report: Assessing Treasury’s Strategy: Six Months of TARP, 04/07/09, http://cop.sentate.gov/.

[5] 04/21/09 SIGTARP Quarterly Report to Congress, pg. 38.

[6] Bailout Watchdog Nominee
Touts Experience, 11/17/08,
www.govexec.com.

[7] Id.

[8] 02/06/09 SIGTARP Initial Report to Congress.

[9] Id. at pg. 3.

[10] EESA gives SIGTARP the authorities listed in Section 6 of the Inspector General Act of 1978, Title 5, United States Code, Appendix 6, (the “IG’s Act”) including the power to obtain documents, and other information from Federal agencies and to subpoena reports, documents, and other information from persons or entities outside of government. The Act does not provide Barofsky power to bring criminal charges, however. Thus, as described later in this article, he actively has entered into partnerships with other law enforcement agencies.

[11] About Us, Senior Staff, www.sigtarp.gov.

[12] SIGTARP also formed liaisons with several TARP oversight entities, including the Financial Stability Oversight Board, Congressional Oversight Panel, and the General Accounting Office.

[13] Barofsky, Testimony to the Senate Committee on Banking, Housing, and Urban Affairs, 02/05/09,
www.sigtarp.gov.

[14] Treasury, Transactions Report, 04/20/09, www.financialstability.gov.

[15] 02/06/09 SIGTARP Initial Report to Congress, pg. 97.

[16] A listing of all contracts are available at www.financialstability.gov under the “About” section addressing “Transparency & Accountability.”

[17] The letters were sent to all TARP fund recipients who received funds as of January 31, 2009.

[18] A sample of SIGTARP’s “Use of Funds Request Letter” can be found on its website at www.sigtarp.gov.

[19] Questions and Answers Regarding the February 6, 2009 SIG TARP Letter, 02/25/09, www.sigtarp.gov.

[20] Questions and Answers Regarding the February 6, 2009 SIG TARP Letter, 02/25/09, www.sigtarp.gov.

[21] http://thomas.loc.gov/.

[22] The SIGT ARP Act was signed into law by President Barack Obama on April 24, 2009.

[23] 04/21/09 SIGTARP Quarterly Report to Congress, pg. 16; SIGTARP Hotline www.sigtarp.gov.

[24] 04/21/09 SIGTARP Quarterly Report to Congress, pg. 18.

[25] Bank Bailout Needs Makeover, 02/05/09, www.money.cnn.com.

[26] Press Release, 04/22/09, United States Attorney’s Office Middle Dist. of Tennessee, “Mail and Wire Fraud Charges Filed Against Franklin Financial Advisor Gordon B. Grigg.” On April 29, 2009 Mr. Grigg plead guilty to all eight counts under a plea agreement that should net him no more than eight years in prison

instead of facing 20 years on each count if convicted.

[27]Bank Bailout Needs Makeover, 02/05/09, www.money.cnn.com.

[28] In addition to SIGTARP, the TALF Task Force includes the Federal Reserve Board IG, FBI, Treasury’s Financial Crimes Enforcement Network (“FinCEN”), and the U.S. Immigration and Customs Enforcement (“ICE”), IRS-CI, SEC, and the U.S. Postal Inspection Service (“USPIS”). 04/21/09 SIGTARP Quarterly Report to Congress, pg. 17.

[29] 04/21/09 SIGTARP Quarterly Report to Congress, pg. 17.

[30] Bailout Overseer Reports Progress to Congress, 04/21/09, www.npr.org.

[31] 04/21/09 SIGTARP Quarterly Report to Congress, pg. 21.

[32] Statement of Neil Barofsky, SIGTARP, Before the U.S. House of Representatives Committee on Ways and Means Subcommittee on Oversight, 03/19/09, www.sigtarp.gov.

[33] Bailout Cop Busy on the Beat, 04/21/09, www.money.cnn.com.

[34] Bailout Cop Busy on the Beat, 04/21/09, www.money.cnn.com.

[35] 04/21/09 SIGTARP Quarterly Report to Congress, pg. 14.

[36] Bank Bailout Needs Makeover, 02/05/09, www.money.cnn.com.

[37] 04/21/09 SIGTARP Quarterly Report to Congress, pg. 148-50.

[38] Other recommendations include heightened closing procedures such as notarized signatures and thumb prints of each applicant paired with verbal and written warnings regarding fees; delayed payment of 90 days to the modification servicer ensuring that the homeowner has made several payments on the modified mortgage; and education regarding foreclosure rescue scams. 04/21/09 SIGTARP Quarterly Report to Congress, pg. 154-58.

[39] 31 U.S.C. § 3729 et seq.

[40] 04/21/09 SIGTARP Quarterly Report to Congress.