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TARP Police! Step Away From the Bailout Money!

Wednesday, 9 Mar 2011 | 12:33 PM ET

Early this week, a request for proposal for police car upgrades by the Special Inspector General of the TARP bank bailout programbegan circulating in Washington.

Source: The Star Banner

That prompted a lot of head scratching around town: Huh? You mean the mild-mannered auditors who mind the taxpayer money in the $700-plus billion TARP program? What do they need police car upgrades for?

It may come as a surprise to people in the financial industry — it certainly did to me — but TARP's inspector general (SIGTARP) is not just a financial watchdog. Under its outgoing leader, Neil Barofsky, it has quietly built itself into a full-fledged financial law enforcement agency.

It has 45 investigators who are empowered to carry guns and badges, and 27 vehicles with sirens and lights spread out in its branch offices across the country. SIGTARP agents are empowered to make arrests, and they’ve done just that 23 times, according to a spokeswoman. The agency says it is engaged in 142 ongoing criminal and civil investigations, and that it has already recovered assets worth $151.8 million.

"We’re an independent law enforcement agency. We were set up by Congress to do our own investigations." -SIGTARP Spokesperson, Kris Belisle

It’s a law enforcement agency with an expiration date, though — by law, the agency expires as soon as all taxpayer dollars under TARP have been repaid, although that could be years from now.

As early as last summer, SIGTARP agents were participating in raids alongside other law enforcement agencies. They worked with FBI agents in a raid on Colonial Bank in Orlando, Florida in an investigation into possible TARP-related fraud. Witnesses saw armed law enforcement officers in the familiar oversized blue “raid jackets” with yellow lettering on the back. But the jackets didn’t say “FBI.”

Instead, they were stenciled with the words: “Federal Agent SIGTARP.”

The fact that there’s a brand new law enforcement agency in Washington has cause some angst inside rival agencies, where officials grumble that it doesn’t need gun-carrying agents — and wonder out loud, if off the record, under what possible circumstances financial fraud investigators would ever need to use their cars’ brand-new sirens.

SIGTARP's Secrets
CNBC's Eamon Javers has uncovered something most people probably don't know about SIGTARP, the auditor of TARP. SIGTARP has 45 investigators making sure no one takes advantage of TARP, and they're a lot like other Federal agents.

In fact, there’s been a lot of scrutiny of those cars, with skeptics noting that the agency's recent call for contracting services noted that it would need to upgrade between one and 35 vehicles at each of its five field offices, including in Washington, New York, Atlanta, Long Beach, and San Francisco.

The agency says it is outfitting those vehicles with police-style sirens lights and radios, and that the 35 cars per field office is a theoretical maximum, not the actual number of cars the agency has in the field.

“That’s the standard way you outfit a law enforcement vehicle,” said Kris Belisle, Director of Communications at SIGTARP. “We’re an independent law enforcement agency. We were set up by Congress to do our own investigations.”

And that much is clear. Congress laid out in the original TARP bailout legislation that the agency would have all of the powers of a federal inspector general—one of which has traditionally been hiring people who carry guns and badges, known in federal personnel jargon as “1811s.”

Said one Capitol Hill aide Tuesday, “I just don’t think you can have too much oversight of TARP — that’s hundreds of billions of taxpayer dollars.”

In case that wasn’t clear enough, Congress returned to the subject of just what exactly the agency is authorized to do in new legislation in March of 2009 that explicitly stated it had “law enforcement authority.”

And that means, guns, badges, sirens and radios.

Old Washington hands, who asked to remain anonymous for fear of publicly engaging in bureaucratic turf wars, called the agency's cars and sirens “ridiculous,” and “ludicrous.”

And not everyone has been paying attention to the emergence of the new police powers. One person who was involved with the creation of TARP expressed surprise when told of SIGTARP’s gun-wielding agents.

“Really?” the person asked. “Holy ----.”

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