In October 2008, in response to what many economists believe to be the worst financial crisis since the Great Depression,1 Congress passed the Emergency Economic Stabilization Act (EESA).2 In turn, the EESA created the Troubled Asset Relief Program (TARP) which authorized the Department of Treasury to spend up to $700 billion to provide funds to qualified financial institutions and purchase or insure “troubled assets,” such as mortgages, to stabilize and strengthen the nation’s financial system. Testifying before the Senate Judiciary Committee, Special Inspector General for TARP Neil Barofsky stated, “[W]e stand on the precipice of the largest infusion of Government funds over the shortest period of time in our Nation’s history. Unfortunately, history teaches us that an outlay of so much money in such a short period of time will inevitably draw those seeking to profit criminally.”3

Noting that federal programs historically lose 5 to 10 percent of their budgets to fraud, the Obama administration estimated that upwards of $50 billion of TARP funds may be at risk. The director of the FBI opined that the funds are “inherently vulnerable to bribery, fraud, conflicts of interest, and collusion.” This is especially true of the TARP stimulus package because almost all of the money is transferred electronically.4

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