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On March 27, 2020, the President signed into law H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act, otherwise known as the CARES Act.1 The CARES Act provides $2 trillion of financial relief for businesses and individuals affected by the coronavirus outbreak.  This includes $500 billion of loans and other assistance to big businesses and $377 billion to small companies.  

Like the Emergency Economic Stabilization Act of 2008, which established the Troubled Asset Relief Program (TARP), the CARES Act contains various procedural safeguards to ensure that loans, loan guarantees, and investments disbursed under the Act are spent appropriately.  More than a decade after the passage of the 2008 bailout measure passed in the midst of the Great Recession, the Special Inspector General for the TARP Program (SIGTARP) continues to investigate and refer for prosecution alleged fraud related to funds allocated under TARP.2 If the activities of SIGTARP are any indication, similar oversight provisions in the CARES Act are likely to lead to an aggressive enforcement regime targeting alleged fraud and abuse of funds.

The CARES Act establishes three oversight bodies.  Like the SIGTARP, the CARES Act provides for the appointment of a Special Inspector General.  Additionally the CARES Act establishes the Pandemic Response Accountability Committee (the "Committee") to conduct oversight of funds made available under the Act.  The CARES Act also establishes a Congressional oversight committee. 

These bodies are sure to conduct years of investigations, and recipients of CARES Act funds would be wise to have systems in place to ensure compliance with all funding requirements.  For example, the CARES Act imposes different obligations on different types of businesses that receive loans, loan guarantees, or investments under the law.  Those include limitations on stock buybacks3, dividend payments4, executive compensation5, and employment levels6 for companies receiving direct loans.  Additionally, nonprofit organizations and businesses between 500 and 10,000 employees are subject to additional criteria, such as limitations on the outsourcing of jobs and requirements intended to protect organized labor.7 Companies and other organizations that receive funding through the CARES Act should ensure compliance with the requirements set forth in the statute.  They should also pay close attention to the issuance of regulations and guidance by the Treasury Department and other federal agencies.  These regulations will impose additional requirements on those organizations receiving funds under the CARES Act.  Entities that receive funds should also have effective compliance programs in place to detect and prevent fraud and misappropriation of these funds.

The Special Inspector General for Pandemic Response

Section 4018 of the CARES Act establishes the Office of the Special Inspector General for Pandemic Response (SIGPR) within the Department of the Treasury.  The SIGPR is appointed by the President with the advice and consent of the Senate8, and removable by the President.9 The CARES Act provides the SIGPR with $25 million in funding.10

The role of the SIGPR is to "[c]onduct, supervise, and coordinate audits and investigations of the making, purchase, management, and sale of loans, loan guarantees, and other investments made by the Secretary of the Treasury" under programs established pursuant to the CARES Act.  The duties of the SIGPR will include gathering and summarizing information related to loans or other investments made under the Act, including the entities receiving the loan and the reasons why the Secretary determined to make each loan or loan guarantee under the Act, "including a justification for the price paid for, and other financial terms associated with, the applicable transaction."  See sec. 4018(c)(1).  Such information shall be reported to Congress quarterly.11

The Act specifically states that the SIGPR shall have the powers and duties set forth in the Inspector General Act of 1978 (5 U.S.C. App).12 Pursuant to the Inspector General Act of 1978, the SIGPR has the power to investigate the administration of CARES Act programs and make reports, subpoena the production of records and enforce those subpoenas in any federal court, and to take testimony under oath.13 The Inspector General Act also allows inspectors general, like the SIGPR, and their special agents to make arrests and execute warrants for the search and seizure of property.14 Importantly, the Inspector General Act will require the SIGPR to report to the Attorney General whenever the SIGPR reasonably believes there has been a violation of federal criminal law.15

The Act states that "[u]pon request" of the Special Inspector General for information or assistance from any department or agency of the federal government, the head of that department "shall" furnish such information or assistance.16 If such information or assistance is unreasonably withheld, the SIGPR shall make a report to Congress.17  18

The Pandemic Response Accountability Committee

The CARES Act also establishes the Committee, which is charged with promoting transparency and conducting oversight of funds made available under the CARES Act, the Coronavirus Preparedness and Response Appropriations Act of 2020 (P.L. 116-123), the Families First Coronavirus Response Act (P.L. 116-127), and any other act that make appropriations for the Coronavirus response (the "Covered Funds").19 The Committee is established within the Council of Inspectors General on Integrity and Efficiency20 to "conduct and coordinate oversight" of Covered Funds and "prevent and detect fraud, waste, abuse, and mismanagement" or Covered Funds.21 Like the SIGPR, the Committee is directed to report to the Attorney General any time the Committee has reasonable grounds to believe that there has been a violation of federal criminal law.

The members of the Committee will include the Chairperson as well as the Inspectors General of the Departments of Defense, Education, Health & Human Services, Homeland Security, Justice, and Treasury.  The Committee will also include the Treasury Inspector General for Tax Administration and any other Inspector General, as designated by the Chairperson, from an agency that expended or obligated Covered Funds or is otherwise involved in the Coronavirus response.22

While this Committee is similar in form to the Financial Stability Oversight Board (FSOB) established as part of the 2008 Emergency Economic Stabilization Act, the Committee has considerably more power than the FSOB.  And, while the FSOB was charged with assessing the effectiveness of the programs developed to combat the Great Recession23, the role of the Committee more narrowly focuses on integrity and preventing waste, fraud, and abuse of covered funds.  Like the SIGPR, the Committee shall have the authority to subpoena documents and testimony to carry out its objectives.24 The Committee may also hold public hearings.25 These tools were not made available to the FSOB. Accordingly, the CARES Act creates a new and powerful oversight body that was not a part of the oversight of the TARP program.

Congressional Oversight Commission

The third oversight body created by the CARES Act is the Congressional Oversight Commission (the "Oversight Commission").26 Each of the Speaker of the House of Representatives, the minority leader of the House of Representatives, the majority leader of the Senate and the minority leader of the Senate shall appoint a member to the Oversight Commission.27 The fifth member shall be appointed as chairperson by the Speaker of the House and the majority leader of the Senate, after consultation with the minority leaders of the House and Senate.28 

The Oversight Commission will conduct oversight on the implementation of the CARES Act, and submit reports to Congress on the implementation of the law and the impact and effectiveness of the loans and investments made under the Act.29 The Oversight Commission may hold hearings and take evidence, and may obtain data and information from any department of agency of the United States.30

The powers and duties of the Oversight Commission are nearly identical to those provided to the Congressional Oversight Panel created to supervise TARP.31 The TARP Oversight Panel was created to oversee the effectiveness of TARP and other efforts by the federal government to mitigate the impact of the 2008 financial crisis, and was directed to report on the impact of the government’s efforts.32 Like the Oversight Commission, the TARP Oversight Panel had the power to issue reports, hold hearings, take evidence, and procure information from federal agencies and departments.33 

Key Takeaways

The federal government’s creation of the $700 billion TARP program in the wake of the 2008 financial crisis led to years of investigations and prosecutions of entities that received TARP funds or related organizations.  To oversee $2 trillion in aid, the CARES Act has created a tri-partite oversight regime that is similar to and, in some ways, more powerful than that created to oversee TARP.

While much depends on the individuals chosen to fill key roles in this oversight regime, businesses and individuals should expect the government to aggressively pursue alleged fraud and other criminal activity related to CARES Act funds.  The first SEC enforcement action related to TARP was brought in January of 2009, a mere three months after the Emergency Economic Stabilization Act of 2008 was signed into law.34 Prosecutors and other government entities are likely to bring enforcement actions sooner rather than later.

  1. See CARES Act, Pub. L. No. 116-136.
  2. SIGTARP investigations led to the recovery of nearly $900 million in fiscal year 2019 alone.  See About Us,, (last visited April 1, 2020), SIGTARP has recovered more than $11 billion in TARP funds over the past twelve years and assisted in investigations that led to 300 defendants sentenced to prison.  See Letter from the Special Inspector General: SIGTARP’s Quarterly Report (October 1, 2019 – December 31, 2019),
  3. See P.L. No. 116-136 § 4003(c)(2)(E).
  4. See id. § 4003(c)(2)(F).
  5. See id. § 4004.
  6. See id. § 4003(c)(2)(G).
  7. See id. § 4003(c)(3)(D).
  8. See id. § 4018(b)(1).
  9. See id. § 4018(b)(3) (referencing the Inspector General Act of 1978); and 5 U.S.C. App, Inspector General Act of 1978 § 3(b) (stating that Inspectors General under the act are removable by the President, but requiring the President to “communicate in writing the reasons for any such removal or transfer to both Houses of Congress, not later than 30 days before the removal or transfer”).
  10. See Pub. L. No. 116-136 § 4018(g)(1).
  11. See id. § 4018(f)(1).
  12. See id. § 4018(d). 
  13. See 5 U.S.C. App, Inspector General Act of 1978 § 6(a)(2)-(5).
  14. See Pub. L. No. 116-136 § 4018(d)(2) and 5 U.S.C. App, Inspector General Act of 1978 § 6(f)(1).
  15. See 5 U.S.C. App, Inspector General Act of 1978 § 4(d).
  16. See Pub. L. No. 116-136 § 4018(e)(4). 
  17. See id.
  18. When the President Trump signed CARES Act into law, he included a signing statement that he would not enforce this provision.  While the President’s interpretation of this subsection may weaken the SIGPR’s ability to procure information from federal agencies, it is unclear the extent to which this will hamper its ability to investigate and detect alleged fraud perpetrated by private parties.  See Signing Statement, The White House, Statement by the President, (Mar. 27, 2020),
  19. See Pub. L. No. 116-136 § 15010(a)(6).
  20. The Council of the Inspectors General on Integrity and Efficiency is established under section 11 of the Inspector General Act of 1978 (5 U.S.C. App) and includes 72 inspectors general as well as personnel from other federal agencies and offices, including the Federal Bureau of Investigation and the Office of Management and Budget.
  21. See id. §§ 15010(a)(4), (b), (d)(1)(A). 
  22. See id. § 15010(c)(2).
  23. See 12 U.S.C. 5241(a).
  24. See Pub. L. No. 116-136 § 15010(e)(3)(A); 5 U.S.C. App., Inspector General Act of 1978 § 6(a)(2)-(5). 
  25. See Pub. L. No. 116-136 § 15010(e)(4). 
  26. See id. § 4020. 
  27. See id. § 4020(c). 
  28. See id.
  29. See id. § 4020(b)(1). 
  30. See id. § 4020(e). 
  31. See 12 U.S.C. 5233. 
  32. See id. § 5233(b). 
  33. See id. § 5233(e).
  34. Press Release, Securities and Exchange Commission, SEC Charges Nashville-Based Financial Planner With Fraud Involving Purported Investments in TARP (Jan. 28, 2009),