Category — Credit Crisis & Government Intervention

…a comprehensive update on the Treasury Department’s progress in implementing the Troubled Asset Relief Program (TARP), which is a major component of the overall coordinated effort by the Federal Government to restore confidence in our financial system and ensure that credit continues to be available to consumers and businesses. (full article)

The FDIC has created this program to strengthen confidence and encourage liquidity in the banking system by guaranteeing newly issued senior unsecured debt of banks, thrifts, and certain holding companies, and by providing full coverage of non-interest bearing deposit transaction accounts, regardless of dollar amount.  (full article)

As the country and the globe struggle to restore stability to the financial sector and businesses contend with the contractions in our economy, primary attention of all will be focused on transactions, financing and restructuring. At the same time, however, neither government nor private interests will forget the belief that the culprits of the economic meltdown were greedy individuals gaming the system. Thus, as you concentrate on protecting and restoring your company and its business, keep your perspective broad enough to consider the exposure to blame that may be developing behind the scenes.  [Read more →]

The Treasury Department is continuing comprehensive actions to strengthen public confidence in our financial institutions and restore functioning of our credit markets. (full article)

It has been well documented that the current crisis has eroded bank capital, created stresses on bank liquidity, threatened credit quality, strained the infrastructure and resources of the banking institutions, increased their administrative costs due to the need to conduct more and better underwriting and due diligence, and sharpened the focus on collection efforts.  During this crisis, bank supervisory agencies will increase their supervisory efforts rather than focus on public enforcement actions.  [Read more →]

In an unprecedented move, the United States Department of the Treasury (“Treasury”) announced the implementation of a Capital Purchase Program (“CPP” or “Program”) with the goal of encouraging U.S. financial institutions “to be build capital to increase the flow of financing to U.S. businesses and consumers and to support the U.S. economy.”  [Read more →]

With the initial US credit crisis rapidly evolving into a global credit crisis, the US Secretary of the Treasury (the “Secretary”), the G-7, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and other central banks have taken aggressive steps to calm markets and encourage investors to provide needed capital to banks worldwide. While the Secretary’s recent announcement that he plans to make direct equity investments into US banks and bank holding companies has received the most media attention, a recent change of policy by the Federal Reserve will likely have the most lasting and beneficial impact on investor opportunity to invest in the US banking system. [Read more →]

The Emergency Economic Stabilization Act of 2008 (the “Act’) was signed in to law on October 3, 2008. This legislation is the most significant economic intervention by the United States Government in the nation’s financial services industry since the Great Depression. The primary component of the legislation is the Troubled Asset Relief Program (“TARP”) which authorizes the Secretary (the “Secretary”) of the U.S. [Read more →]

The national, now global, financial crisis is driving state and federal regulators to dig much more deeply and examine far more broadly the practices and portfolios of all businesses engaged in financial transactions.  The Justice Department, FBI and state attorneys general are joining in; and Congress is demanding that federal authorities find and punish the culprits.  Banks, thrifts, securities firms, insurance companies, mortgage companies, mortgage brokers and other financial institutions, their directors and officers, are prime targets of this regulatory and law enforcement surge.  Each federal agency with regulatory jurisdiction will be maneuvering to prove its forceful effects.  While the SEC will take the lead with major public companies, OCC, FDIC, OTS, the Federal Reserve and the FTC will concentrate their scrutiny on all companies with any impact in the financial industry, searching for evidence of bank fraud, deceptive, unsafe and unsound practices, and violations of consumer protection laws.  [Read more →]