Category — Credit Crisis & Government Intervention

On March 23, 2009, the Treasury – in conjunction with the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve – announced the initial details of its Public-Private Investment Program (PPIP) which is designed to (i) remove toxic real estate loans and securities from the balance sheets of U.S. depositary institutions, which include banks and thrifts (Participant Banks), (ii) rejuvenate real estate credit markets and (iii) restart the real estate loan securitization market. PPIP is divided into two programs, (a) the Legacy Loans Program dealing with residential and commercial real estate loans held by Participant Banks and (b) the Legacy Securities Program dealing with commercial mortgage backed securities (CMBS) and residential mortgage backed securities (RMBS). [Read more →]

On March 23, 2009, the Treasury – in conjunction with the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve – announced the initial details of its Public-Private Investment Program (PPIP) which is designed to (i) remove toxic real estate loans and securities from the balance sheets of U.S. depositary institutions, both large and small, which are insured by the FDIC (Participant Banks), (ii) rejuvenate real estate credit markets and (iii) restart the real estate loan securitization market. PPIP is divided into two programs, (a) the Legacy Loans Program dealing with residential and commercial real estate loans held by Participant Banks, and (b) the Legacy Securities Program dealing with residential and commercial mortgage backed securities which were originally issued prior to 2009 and are presently held by Participant Banks. [Read more →]

On March 23, 2009, Treasury announced details of its two-part Public-Private Partnership Investment Program aimed at relieving financial institutions of toxic loans and securities.  The program will use the collective resources of the Treasury, the Federal Reserve, and the FDIC, together with private funding and management, to remove from bank balance sheets whole loans and pre-2009 residential and commercial mortgage-backed securities, collectively referred to as Legacy Assets.  This Public-Private Partnership Investment Program will be funded with $75 – $100 billion in TARP capital in addition to capital from private investors to create $500 billion to $1 trillion in Legacy Asset Purchases.  [Read more →]

The new Stimulus Bill, styled the American Recovery and Reinvestment Act of 2009 (ARRA), appropriates over $780 Billion to stimulate the economy through federal, state and private activity.  It uses at least 10 federal agencies, all state and local governments willing to participate, and as many private businesses as qualify for the contracts, grants, loans and loan guarantees funded by the Act. [Read more →]

Treasury Secretary Timothy Geithner announced on February 10, 2009 the Financial Stability Plan.*  This Plan includes provisions to enhance bank capitalization, supervision, and public disclosure; a public-private bad asset investment and disposition program; initiatives for consumer and business lending; and a program for foreclosure avoidance.  Many of these programs will be funded through additional TARP and related bailout funding.  Significant details regarding the Financial Stability Plan are included in a Fact Sheet also released today by Treasury.  [Read more →]

Pursuant to authority granted under Section 111 of the Emergency Economic Stabilization Act of 2008 (EESA), the U.S. Treasury Department has announced a voluntary Capital Purchase Program (CPP) to encourage eligible U.S. financial institutions to build capital to increase the flow of financing to U.S. businesses and consumers and to support the U.S. economy.  Under the CPP, Treasury will purchase senior preferred stock (along with common stock warrants for publicly traded institutions and preferred stock warrants for non-publicly traded institutions) from participating financial institutions.  [Read more →]

With the credit crisis showing no signs of slowing, the Office of the Comptroller of the Currency (the “OCC”) publicly released its first ever conditional preliminary approval of an application to establish a national bank to facilitate new equity investments in troubled banks.  In its announcement the OCC emphasized that it was attempting to “expand the pool of potential buyers available to buy troubled institutions, and in particular the new equity capital available to bid on troubled institutions through the Federal Deposit Insurance Corporation’s bid process.”  [Read more →]

While much of the press reports during the credit crisis has focused on the United States Treasury’s Troubled Asset Relief Program and the financial woes of Bear Stearns, Lehman Brothers, Washington Mutual (“WaMu”), Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”), Wachovia National Bank, American International Group (“AIG”) and the automobile industry, little notice has been paid to the aggressive actions that have been taken by state Attorneys General. [Read more →]

On November 17, 2008, the Treasury released the term sheet and related FAQs for non-publicly traded financial institutions participating in the TARP Capital Purchase Program (“CPP”).   This term sheet applies to (1) non-publicly traded Bank Holding Companies and Savings and Loan Holding Companies, (2) U.S. banks and U.S. savings associations that are neither publicly traded nor controlled by a Bank Holding Company or Savings and Loan Holding Company, and (3) U.S. banks and U.S. savings associations that are not publicly traded and are controlled by a Savings and Loan Holding Company that is not publicly traded and does not engage solely or predominately in activities that are permitted for financial holding companies.  [Read more →]

On October 31, 2008, the U.S. Department of the Treasury (the “Treasury”) provided additional information for publicly traded financial institutions seeking to participate in the Troubled Assets Relief Program (“TARP”) Capital Purchase Program (the “Program”) as authorized under the Emergency Economic Stabilization Act of 2008 (the “Act”). Specifically, the Treasury published form documentation for the issuance of preferred stock and warrants by such publicly traded financial institutions. [Read more →]