Minnesota Law Review

Fiduciary-Based Standards for Bailout Contractors: What the Treasury Got Right and Wrong in TARP

Congress authorized the Treasury Department to use outside entities (contractors and financial agents) to implement the TARP bailout program. Treasury embraced this authority, engaging in the wholesale delegation of the administration of TARP to these outsiders. While outsourcing government work is common, one aspect of Treasury’s outsourcing is not: its imposition of fiduciary-based ethics standards on these outsiders.

The Article examines Treasury’s imposition of ethics standards on its contractors and financial agents. It identifies one provision in Treasury’s agreements with these outsiders that until now has escaped scrutiny: the requirement that outsider personnel submit manuscripts relating to their TARP work to Treasury prior to publication, even if the manuscript does not contain any confidential information. This requirement for pre-publication review is unusual outside the intelligence field. The Article recommends that before imposing additional ethics standards on government contractors, the federal government should examine the Treasury’s own experience more closely to determine the costs and benefits of imposing such standards.

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De Novo

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