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CARES Act Economic Stabilization Package—Oversight Mechanisms & Anti-Fraud Provisions

March 31, 2020
Firm Memoranda

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed by Congress and signed into law by the President. The Act provides over US$ 2 trillion in emergency aid to deal with the coronavirus pandemic, covering assistance to workers, families, small and large businesses, states and municipalities, and the healthcare system in the United States.

The largest single portion of the Act—a US$ 500 billion Economic Stabilization package to support financial programs or facilities as well as specified industries—bears a strong resemblance to the Troubled Asset Relief Program (TARP) enacted in 2008 to support financial institutions during the subprime mortgage crisis. The Economic Stabilization package and other CARES Act programs are more targeted at Main Street and individuals, reflecting how the current crisis originates from almost all sectors of the economy, as the country goes into quarantine and shutdowns to slow the spread of the virus. Similar to the TARP, however, the Economic Stabilization package involves oversight from a Special Inspector General and a Congressional Oversight Commission (for the TARP, the body was called the Congressional
Oversight Panel), both of which are granted strong audit or investigative powers, as well as specific investigative and reporting responsibilities assigned to the U.S. Comptroller General. Additionally, the Act also creates a Pandemic Response Accountability Committee under the Council of the Inspectors General on Integrity and Efficiency, granting it investigative and subpoena powers to detect fraud, waste, abuse, and mismanagement in relation to all programs under the Act and any other program that forms a part of the federal government’s coronavirus response.

This alert covers an overview of the CARES Act’s oversight mechanisms, its specific anti-fraud provisions, U.S. Department of Justice (DOJ) commitment to pursuing fraud relating to the pandemic, and what the regulated community can expect going forward. Based on the elaborate enforcement that the bill creates, the prior example of enforcement under the TARP, and statements by political actors involved with this process, we believe that aggressive enforcement and oversight are likely.

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If you have any questions about the issues addressed in this memorandum, or if you would like a copy of any of the materials mentioned in it, please do not hesitate to reach out to:

Sam Williamson
Phone: +1 212 849 7455

Christopher Tayback
Phone: +1 213 443 3170

Kristin Tahler
Phone: +1 213 443 3615

Christopher Porter
Phone: +1 713 221 7007

Jonathan Bunge
Phone: +1 312-705-7476

Mike Lyle
Phone: +1 202 538 8166