Inside Financial Services

Another Immortal Bureaucracy

The financial crisis ended years ago, but the TARP inspector general’s office marches on

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Government bureaucracies never seem to die:

The U.S. has largely ended its financial-system rescue program and exited from the lion’s share of its investments, yet the watchdog created to oversee the Troubled Asset Relief Program continues to grow.

The White House, in its budget request sent to Congress on Monday, is seeking a $48 million budget for the special inspector general for TARP. That amount would be a $2 million increase over this year’s estimated spending level. [Emph. added]

You remember TARP. It was hatched in 2008 at the depths of the financial crisis and played a major role in shoring up confidence in the country’s financial system. Of the $426 billion disbursed to banks, virtually all has been paid back. The ten largest banks repaid their TARP investments over five years ago. By now, the Wall Street Journal reports, only 100 or so institutions still have TARP money outstanding, the largest being several housing-assistance programs. SNL Financial indicates that just $350 million in TARP capital is still outstanding.

So the program is basically over and has been for years. Given that, why in the world does the TARP’s office of inspector general even still exist and, more to the point, why is its annual budget actually being increased?  You know the answer.  That’s how government bureaucracies work:

The inspector general, which employed more than 150 people and had offices in five cities at the end of 2014, says its usefulness shouldn’t be tied to the amount of money left in TARP. Instead, it has shifted much of its resources away from audits and into civil and criminal investigations, where it says it expects to dedicate about 78% of its funding in the 2016 fiscal year.

“Right now, I can tell you we are very, very busy,” said Christy Romero, who heads the watchdog, in an interview. “It takes time to find crime.”

Ms. Romero said she expects the special inspector general to stick around until 2023 . . .

I love that: “It takes time to find crime.” Of course it does—especially since your initial mission is now over and, to justify your existence, you have to poke around and come up with new things to do. I’ll even grant you that the 100 or so remaining TARP institutions do indeed merit federal monitoring. In a sane world, that monitoring would happen by folding the TARP IG’s office into a broader Treasury oversight function, firing most of the IG’s 150 employees, and shuttering its offices in all five of those cities. But this is not a sane world. This is Washington D.C.—now the country’s third-richest city, where incomes are zooming even as they fall just about everywhere else. And so the TARP IG’s office marches on, its budget slightly fattened, with plans to keep at it until at least 2023–by which time the financial panic will presumably be a distant memory. No matter. Crises come and go, but bureaucracies are forever.

Insane.

What do you think? Let me know!

9 Responses to “Another Immortal Bureaucracy”

    • Stays 72

      $48 million dollars is nothing in a $3 trillion federal budget. If you transfer TARP oversight to Treasury, there will still be a cost, and the likelihood of effectiveness will decline. So you’ll still have a taxpayer expense, but it will be less effective at achieving its redirected purpose of investigating civil and criminal prosecutions. So, how is your recommendation any better?

      • Milkweed

        I think I can live with a less effective witch hunt.

  1. Don

    Hello? Spanish Inquusition here. What? Our mission is over? No, no, no. As long as there is the faintest hope of finding SOMETHING, we must carry on the mission.

  2. Chicago

    How can anyone possibly disagree with this post? Why do you get Tom’s updates if you so vehemently disagree with his rational thought process?

    • Arindam

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