Recipients of TARP Bailout Funds Could Be Targeted in Criminal Cases

The Troubled Asset Relief Program has only been in effect a few months. But already it is the subject of potential criminal probes, as a special inspector general also announced what amounts to a rewrite of TARP rules requiring recipients of bailout funds to certify, under penalty of law, that their applications and claimed use of taxpayer money are truthful.

Appointed two months ago, Special Inspector General Neil Barofsky was to release a 188-page report today on his work so far and "said he would conduct wide-ranging investigations of the process by which TARP recipients were selected and the uses they made of the money," reports the Los Angeles Times. "He said he would announce one audit target today. Any lies or misrepresentations found in applications for TARP funds would also be grounds for criminal prosecution, he said."

Meanwhile, the chair of a five-member oversight panel told the Senate Banking Committee today that assets purchased by the U.S. Treasury Department under the $700 billion TARP program may have been significantly overvalued, reports Dow Jones Newswires.

Elizabeth Warren, a Harvard Law School professor, told the committee that a report to be released tomorrow by her group analyzing 10 TARP transactions and then extrapolating that data to all of the program's 2008 purchases suggests, as the news agency puts it, that "Treasury paid $254 billion for preferred stock and warrants worth approximately $176 billion, a shortfall of $78 billion."

Additional coverage:

Emac's Stock Watch (Fox News): "Crackdown on Wall Street"

ABAJournal.com: "Pressure Grows for Bipartisan Probe of Regulatory Lapses Behind Financial Crisis"

ABAJournal.com: "Lenders Wary of TARP Regs Even Before Plan for $500K Pay Cap"

ABAJournal.com: "Horrified By $20B Bonus Bonanza, Sen. Dodd Calls for Wall Street to Repay "