Lawmakers want to shake out TARP fraud with tech

Some in Congress hope analytics technology can provide better oversight

Although the Troubled Asset Relief Program (TARP) played a significant role in bringing the financial system back from the brink of collapse, it is unlikely that taxpayers will see a full return on the $700 billion in spending, according to a report by a Treasury Department independent watchdog.

Certain TARP programs, such as the mortgage modification component of the $50 billion Making Homes Affordable program, will yield no direct return, according to the report released Oct. 21 by the Office of the Special Inspector General for TARP.

For other programs, “including the extraordinary assistance to American International Group Inc. and the auto companies, full recovery is far from certain,” the report states.

As money continues to be spent under TARP, some members of the House hope to amend the program to direct Treasury to use technology to detect fraud, according to industry experts that advised Congress about the technology. Credit card companies, using such tools, can call a customer as soon as a suspicious transaction takes place because the software detects activity that doesn't match a customer’s normal behavior, said Stephen Horne, vice president of master data management and integration services at Dow Jones.

Similar technology could alert federal government officials about fraudulent spending under TARP, Horne said at a recent panel discussion.

Reps. Carolyn Maloney (D-N.Y.) and Peter King (R-N.Y.) introduced a bill, H.R. 1242, earlier this year that is now in the House Financial Services Committee. It has 40 co-sponsors from both parties.

The bill is only for TARP spending, but Maloney said it could be a model for transparency in other areas of government.

“We can only hope that normalizing our databases, as my TARP Data bill would do, will spread to other government programs,” Maloney said.

The measure would require Treasury to create a centralized, Web-accessible public database system that has a standardized format so that TARP funds are easily visible and traceable, Maloney said.

Treasury would be required to combine the reported government data with data collected by independent sources, including corporate press releases, news articles, indexes, corporate profiles and other nongovernment financial information, Maloney said. 

Technologies such as data mining are well suited to discover fraud in TARP, said Tom Kimner, risk manager the SAS Institute's Americas Risk Practice. Kimner testified before a congressional committee about the role data mining can play in TARP oversight.

“Analytic technologies can help identify patterns and anomalies, optimize where the funds are applied, and pinpoint use and abuse of funds,” Kimmer said. “Before you reach that point, though, you must have confidence in the accuracy of the data. Technologies supporting data collection, integration and quality are critical in that effort.”

Because the bill would require the database to be public, it could be a boon for private developers that come up with new ways to use the data, Maloney said.

“We all live in an information economy now,” Maloney said. “Those who build a better mousetrap to present existing information in a new way can often profit from their insight; it’s truly the American way.”

About the Author

Doug Beizer is a staff writer for Federal Computer Week.

FCW in Print

In the latest issue: Looking back on three decades of big stories in federal IT.


  • Anne Rung -- Commerce Department Photo

    Exit interview with Anne Rung

    The government's departing top acquisition official said she leaves behind a solid foundation on which to build more effective and efficient federal IT.

  • Charles Phalen

    Administration appoints first head of NBIB

    The National Background Investigations Bureau announced the appointment of its first director as the agency prepares to take over processing government background checks.

  • Sen. James Lankford (R-Okla.)

    Senator: Rigid hiring process pushes millennials from federal work

    Sen. James Lankford (R-Okla.) said agencies are missing out on younger workers because of the government's rigidity, particularly its protracted hiring process.

  • FCW @ 30 GPS

    FCW @ 30

    Since 1987, FCW has covered it all -- the major contracts, the disruptive technologies, the picayune scandals and the many, many people who make federal IT function. Here's a look back at six of the most significant stories.

  • Shutterstock image.

    A 'minibus' appropriations package could be in the cards

    A short-term funding bill is expected by Sept. 30 to keep the federal government operating through early December, but after that the options get more complicated.

  • Defense Secretary Ash Carter speaks at the TechCrunch Disrupt conference in San Francisco

    DOD launches new tech hub in Austin

    The DOD is opening a new Defense Innovation Unit Experimental office in Austin, Texas, while Congress debates legislation that could defund DIUx.

Reader comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

More from 1105 Public Sector Media Group