Treasury Implemented Most of Our Recommendations, but a Few Related to CPP and MHA Have Not Been Fully Addressed

As of August 22, 2016, our performance audits of the TARP programs  resulted in 74 recommendations to Treasury. Five recommendations remain open. Treasury partially implemented  three of the recommendations (that is, took some steps toward  implementation) and had not taken any steps to implement the  remaining two recommendations. Seven recommendations have been closed as not implemented  because we determined that they were outdated and no longer  applicable due to the evolving nature of the programs. Three of these seven recommendations were related  to CPP and two to MHA programs. However, Treasury has been winding down CPP. Treasury has taken some actions to address three of the open  recommendations directed at the MHA programs:  In June 2010, we recommended that Treasury expeditiously report  activity under PRA, including the extent to which servicers determined  that principal reduction was beneficial to investors but did not offer it,  to ensure transparency in the implementation of this program feature  across servicers. Thus, we continue to maintain  that Treasury should take action to fully implement this  recommendation. In March 2016, we recommended that Treasury deobligate funds that  its review showed likely would not be expended. Treasury’s most  recent estimates identified $4.7 billion in potential excess funds, of  which Treasury has deobligated $2 billion as of August 22, 2016. Finally, Treasury has not taken action to address two open  recommendations directed at MHA:  In February 2014, we recommended that Treasury require its MHA  compliance agent to take steps to assess the extent to which  servicers established internal control programs that effectively  monitored compliance with fair lending laws applicable to MHA  programs. In July 2015, we recommended that Treasury develop and implement  policies and procedures to better ensure that changes to TARP- funded housing programs are based on evaluations that  comprehensively and consistently met the key elements of benefit- cost analysis. Treasury also noted that, given the  scheduled application deadline for MHA on December 30, 2016, it did  not anticipate making significant policy changes to the MHA  programs. We will  continue to assess the status of these recommendations considering  program activity and actions taken by Treasury. Appendix I: Status of Troubled Asset Relief Program (TARP) Performance Audit Recommendations, as of August 22, 2016

The following table summarizes the status of our TARP performance  audit recommendations as of August 22, 2016. We classify each  recommendation as implemented, partially implemented (the agency took  steps to implement the recommendation but more action would be  required to fully implement it), open (the agency had not taken steps to  implement the recommendation), and closed, not implemented (the  agency decided not to take action to implement the recommendation and  we no longer consider the recommendation relevant).
Why GAO Did This Study

The Emergency Economic Stabilization Act of 2008 (EESA) authorized the creation of TARP to address the most severe crisis that the financial system had faced in decades. Treasury has been the primary agency responsible for TARP programs. EESA provided GAO with broad oversight authorities for actions taken under TARP and included a provision that GAO report at least every 60 days on TARP activities and performance.
This 60-day report describes the status of GAO's prior TARP performance audit recommendations to Treasury as of August 2016. In particular, this report discusses Treasury's implementation of GAO's recommendations focusing on two programs: CPP and MHA. GAO's methodologies included assessing relevant documentation from Treasury, interviewing Treasury officials, and reviewing prior TARP reports issued by GAO.

What GAO Found

As of August 2016, GAO's performance audits of the Troubled Asset Relief Program (TARP) activities have resulted in 74 recommendations to the Department of the Treasury (Treasury). Treasury has implemented 62 of the 74 recommendations, some of which were aimed at improving the transparency and internal controls of TARP. Five recommendations remain open, all pertaining to the Making Home Affordable (MHA) program, a collection of housing programs designed to help homeowners avoid foreclosure. Of the five:
Treasury has partially implemented three open MHA recommendations—that is, it has taken some steps toward implementation but needs to take more actions. For example, in March 2016, GAO recommended that Treasury deobligate funds that its review showed would likely not be expended. Treasury's most recent estimates identified $4.7 billion in potential excess funds, of which Treasury has deobligated $2 billion as of August 2016.
Two additional MHA recommendations remain open—that is, Treasury has not taken steps to implement them. GAO recommended that Treasury take steps to assess the extent to which servicers have established internal control programs that monitor compliance with fair lending laws applicable to MHA programs. GAO also recommended that Treasury establish a standard process to better ensure that changes to TARP-funded MHA programs are based on comprehensive cost-benefit analyses. Treasury told GAO they would consider this recommendation but has noted that it plans no major program policy changes given the December 30, 2016, application deadline for the MHA program.
Seven recommendations have been closed but were not implemented. Five were related to the Capital Purchase Program (CPP) and MHA and two to other TARP activities. Generally, these recommendations were closed because GAO determined that the recommendations were no longer applicable.

What GAO Recommends

GAO continues to maintain that Treasury should take action to fully implement the three partially implemented and two open MHA recommendations. GAO will continue to assess the status of these recommendations considering new program activity and any further actions taken by Treasury.