Federal programs sometimes live long after the events that inspired them. Remember the Troubled Asset Relief Program, TARP? It was launched as one of the responses to the housing financial crisis of 2008, near the end of the George W. Bush administration. Well it’s still going. TARP Special Inspector General Christy Goldsmith Romero joined the Federal Drive with Tom Temin with an update, and what it’s like to oversee something like this.
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Tom Temin: Miss Goldsmith Romero, good to have you on.
Christy Goldsmith Romero: Oh, it’s my pleasure to be on thanks for following this.
Tom Temin: And do you ever feel like you are in the ultimate backwater here dealing with something that predates so many other horrible crises that have hit the nation since then?
Christy Goldsmith Romero: It’s amazing how the tail on some of these crisis really affect people who can’t recover as fast as some of the larger institutions and so we’re happy to help in any way we can.
Tom Temin: So tell us about the TARP program review briefly what it specifically is, and how it works.
Christy Goldsmith Romero: Yeah, so if you recall, back in 2008, there was this domino effect as Wall Street financial institutions were failing one after another. So treasury secretary and the fed chairman come into Congress and they asked for a $700 billion federal rescue emergency relief, because these financial institutions on Wall Street were so interconnected to each other that it was causing the domino effect. But one of the things they say at the time was they had not realized how interconnected Wall Street was to main street, because people have retirement savings and college savings and mortgages and small business loans. And so what ends up happening is Treasury and the Federal Reserve tell Congress that if they can provide this relief to banks, it’ll stabilize them so that they can stabilize lending to main street and also ensure that there’s no losses. So Congress votes TARP down. And that’s really important. And Congress says, I want two things. First, dedicated oversight through a special inspector general that finds fraud, waste, and abuse and make sure these programs are working right. That’s us. The second is Congress says, Treasury, you cannot just bail out banks and Wall Street. There’s a foreclosure crisis going on, so you’ve got to address that. And so that’s what’s really largely TARP today. It’s these homeowner assistance programs that still exist today and will for years. Now the silver lining is like you said, here we’re in another crisis related to the pandemic. So it’s actually these programs are helping a lot of people who are struggling stay in their homes.
Tom Temin: And therefore what is left of TARP, what is the scope of it, and what specific aspects of TARP do you spend most of your time overseeing?
Christy Goldsmith Romero: There’s a few banks left but really there’s two main housing assistance programs. The one is called HAMP. It’s been around since 2009. And there are 700,000 people throughout the nation who are participating it. So with that, they get a lowered mortgage payment to one that’s affordable and sustainable. And that will go on for several more years. There’s a second program called the Hardest Hit Fund. And it used to be a Hardest Hit Fund due to the financial crisis. That’s a grant like program that gives federal TARP dollars to a number of different states that help put those dollars towards homeowners mortgage payments. In April, I said, look, there’s a COVID crisis to Treasury, you need to switch this to hardest hit by the COVID crisis. And that is exactly what has happened. You know, if someone is suffering a hardship and can’t pay their mortgage due to COVID unemployment or underemployment or illness, that program’s there to health. Now, the reason why these programs still exist, is because the money wasn’t spent. There wasn’t really the focus on speed and urgency and getting the money out during the crisis in the years after. And so it’ll continue to be available as long as those funds are available. So one of the things we do is we identify roadblocks to what is stopping those funds from going out the door. We’re trying to speed the distribution of these rescue funds. So just one example is sort of the work we did with Congressman John Lewis, we told them in Georgia, they just weren’t getting the money out. And so he worked with us and said, could you do a deep dive and we ended up finding out that the Georgia state agency was what they called guarding the funds, or what they called responsible homeowners. But what it meant was, if you were in DeKalb County, Fulton County or Cobb County, in these minority neighborhoods, you weren’t getting it. There were all these roadblocks put up and we work with legal aid to try to figure that out, but it was things like you couldn’t give copies of your tax returns. You had to go to the IRS and get tax transcripts in 30 days, which is nearly impossible. So we really work to fix that program. So that’s one of the things we do and the other thing is, you know, we’re a law enforcement office that’s working on investigations and working with Department of Justice to bring prosecution.
Tom Temin: We’re speaking with Christy Goldsmith Romero, special inspector general for the Troubled Asset Relief Program. So then this program, unlike some SIGs, CIGs or special inspectors general, there’s no sunset date, like there is for, say Afghanistan, in Iraq before that.
Christy Goldsmith Romero: Yeah. So I think Congress learned its lesson on that, and so what they did was they said, the sunset is you’re around as long as the program is around, which makes sense, because you know, we’re the experts in the program and know how to find where there’s going to be fraud or where it’s not operating at its best.
Tom Temin: And you answered, I think in part, weren’t my next question and that is, there is still congressional interest in this program from time to time. They haven’t forgotten about it.
Christy Goldsmith Romero: Absolutely, and I’m constantly on the Hill talking to members of Congress. Remember that that relief is out there. And so Congress is very interested in making sure that it’s running smoothly. There’s people participating in every single state, so they want it to go well, they don’t want to have fraud, waste, and abuse that ends up hurting people and hurting the ability to get these funds out to people.
And where in the government do these programs live? They’re in Treasury, right?
Christy Goldsmith Romero: Yeah, they’re in Treasury. And I think one of the things that needs to happen is the new treasury secretary coming in is going to have to look at those and prioritize. I don’t think people often even know that they exist, or know the good that they’re doing to help, particularly in this time of COVID.
Tom Temin: So if someone wanted to get a HAMP loan, or a hardest hit program help, you can still get it, if you can demonstrate need, and so on.
Christy Goldsmith Romero: So on the Hardest Hit Fund, depending on your state, you can still get it, and HAMP, it’s right now it’s locked for the 700,000 people that are in it, but they’ve got about $2 billion that they’re still spending. Now when we’re looking at, for example, we do law enforcement, right? So we are looking backwards as to fraud, crime, other things that may have happened. So the work we’ve done has already led to criminal prosecutions against 450 defendants. We also worked with DOJ to bring the civil actions against basically all of the largest banks for homeowner consumer abuse. So our focus right now, after we had done a lot of the work related to bankers being criminally prosecuted, and being sentenced to prison, we still have a few of those. But our highest priority right now is really trying to find illegal actions by financial institution, the large banks, the large non bank mortgage servicers in HAMP, that ultimately hurt homeowners because they end up in foreclosure.
Tom Temin: Interesting. And because of the nature of the work, have you been approached for advice or anything by say, the people overseeing the SBAs PPP COVID relief loans, they were business loans, and the has a Payroll Protection Program, and also personal loans to people, not so much that programs are all that alike, but the mechanisms and the oversight needs seem to be similar?
Christy Goldsmith Romero: Absolutely. And there’s lessons learned that directly apply. Like one of the things we were doing is in the first several years, we’re really focused on bank fraud because most of the money was going to banks. All of a sudden, we start seeing scammers, and the scammers are going after homeowners who are trying to get into these programs and get assistance. And the stories from the victims are really just heartbreaking. So one of the things we do is we do as many criminal prosecutions as possible. So we expand from working just with DOJ to state prosecutors, we even work with Kamala Harris, who as California Attorney General prosecuted some of these cases. But one of the things I was very focused on was how to prevent these scams in the first place. This is directly relevant to what’s happening now. And so we knew that a lot of people were being scammed and learning about these on the internet. So what we did was we worked with Google and Yahoo and Bing to shut down websites that were the hallmarks of the fraud. But we wanted to get behind the people have those websites, so that they didn’t just open a new website. So we worked with them to shut down, you know, about 1000 names associated with those websites. Then we formed a task force in government where we tried to educate homeowners as to what’s a hallmark of a fraud, what should they be suspicious about? So if someone tells you, oh, there’s a fee to get into this program, or don’t talk to your lender, don’t talk to your bank, you know, and that’s all stuff that’s directly relevant now. But taking this 360 degree approach, preventing fraud, preventing scams, and then investigating and prosecuting them. That’s the benefit of an IG. That’s a direct lessons learned for the programs right now.
Tom Temin: Yeah. So these fraudsters, in some ways, share characteristics of those that are peddling phony vaccines right now.
Christy Goldsmith Romero: Right, and also the phony PPE equipment, you know, all of that. Or if someone tries to get the loans through their lender, but someone’s saying, don’t go through your lender go through me, I can get you through the program. That’s exactly the same thing we saw. I mean, look, ultimately, crisis related crimes are crimes of opportunity. So because we’re experts, we sort of see where those opposites are and we’re constantly assessing this threat, the same thing has to happen now.
Tom Temin: So if you see an offer for a hardest hit loan on Groupon, maybe go somewhere else.
Christy Goldsmith Romero: You know, a lot of times it’s the banners that when you’re on the internet or the things that pop up when you’re on your email or social media. So it’s really about going directly to the source. So if it’s a Hardest Hit Fund, it should be a state housing finance agency, you know, as opposed to somebody else and we’ve seen those scams as well.
Tom Temin: Christie Goldsmith Romero is special inspector general for the Troubled Asset Relief Program. Thanks so much for joining me.
Christy Goldsmith Romero: Thanks. I really appreciate you putting a focus on this. This is really important program going on during this COVID crisis, so it’s good for people to know that it’s still there and available.