Posted on December 31, 2008 by Hunton & Williams LLP Print This Article

Treasury Department Responds to Congressional Oversight Panel Report

The Treasury Department released today responses to questions raised by the Congressional Oversight Panel's first report to Congress on December 10, 2008 regarding the implementation of the Emergency Economic Stabilization Act. The Congressional Oversight Panel, created when Congress passed the Emergency Economic Stabilization Act, is charged with reporting to Congress on the use of TARP funds. The Treasury Department responds to questions relating to, among other things, their strategy to stabilize financial markets and its decisions regarding which institutions receive TARP funds. Click here for the Treasury Department's answers, and click here for Hunton & Williams' prior posting on the Congressional Oversight Panel's report on December 10, 2008.

Posted on December 30, 2008 by Hunton & Williams LLP Print This Article

Federal Reserve to Begin Purchasing Mortgage-Backed Securities

The Federal Reserve announced today that it expects to begin operations in early January under the previously announced program to purchase mortgage-backed securities. Under the MBS purchase program, the Federal Reserve will purchase MBS backed by Fannie Mae, Freddie Mac, and Ginnie Mae. The program is designed to support the mortgage and housing markets and to foster improved conditions in financial markets more generally. Click here for the Federal Reserve's press release, and click here for the Federal Reserve's frequently asked questions regarding the details of the program.

Posted on December 30, 2008 by Hunton & Williams LLP Print This Article

Treasury Invests in GMAC and Lends to GM

The Treasury Department announced that it will purchase $5 billion in senior preferred equity from GMAC as part of a broader program to assist the domestic automotive industry.  The Treasury requires that GMAC comply with the executive compensation and corporate governance requirements of the Stabilization Act as a condition to the Treasury's investment.
 
Additionally, the Treasury has agreed to lend up to $1 billion to General Motors so that GM can participate in a rights offering in support of GMAC's reorganization as a bank holding company. This commitment is in addition to the assistance previously announced for GM on December 19. The level of funding under this facility will be depend on the level of current investor participation in the rights offering, and the loan is exchangeable, at the Treasury's option, for GMAC equity interests acquired by GM in the rights offering.  The preferred stock purchase and the loan to support GMAC's rights offering are part of an auto industry-focused TARP program that will include the $17.4 billion in assistance for domestic automakers announced earlier this month.

Posted on December 23, 2008 by Hunton & Williams LLP Print This Article

$170 Billion Spent Through the Capital Purchase Program, According to Latest Report

The Treasury Department has released the latest transaction report for the Capital Purchase Program under TARP. Over $170 billion has now been spent providing financial institutions liquidity in exchange for shares held by the Treasury Department since the first purchases on October 28, 2008.  The report provides information on transactions made by the Treasury Department on December 19, 2008.  The latest purchases range from $967 million for shares in Synovus Financial Corp., in Columbus, Georgia to $1.8 million for shares in Monadnock Bancorp, Inc. in Peterborough, New Hampshire, according to today's Treasury Department report.
 
Click here for the latest Capital Purchase Program transaction report.

Posted on December 19, 2008 by Hunton & Williams LLP Print This Article

TARP Funds Used For GM and Chrysler

The Treasury Department announced today that by creating a $17.4 billion loan program for both Chrysler and General Motors it had allocated the first half of the $700 billion TARP fund.  A formal request must now be made to Congress to access the remaining $350 billion in TARP funds.  Click here to read the Treasury Department's term sheet for Chrysler, and click here for the General Motors' term sheet.  To read all of Treasury Secretary Paulson statement on the use of TARP funds to stabilize the automotive industry, click here.

Posted on December 16, 2008 by Hunton & Williams LLP Print This Article

Federal Reserve Lowers Overnight Lending Rate to Virtually Zero

The Federal Reserve lowered the target range of overnight lending rates for federal funds to between 0 and .25 percent.  Banks use the rate to base what rate they will each charge when lending to one another.  Click here to read the Federal Reserve's entire statement and rationale.

Posted on December 10, 2008 by Hunton & Williams LLP Print This Article

Congressional TARP Panel Issues Report and FDIC Reiterates Deposit Insurance Pledge

The Congressional Oversight Panel issued its first report to Congress today on the Treasury Department's use of funds under TARP (click here for the full report).  Among the report's questions is whether the Treasury Department has received the same terms under the Capital Purchase Program when investing in financial institutions as Warren Buffett and the Abu Dhabi Investment Authority.  The Panel, created when Congress passed the Emergency Economic Stabilization Act, testified before the House Financial Services Committee today along with Interim Assistant Treasury Secretary for Financial Stability Neel Kashkari, who focused his remarks on oversight and measuring TARP's results (click here for Mr. Kashkari's remarks).
 
Meanwhile, the FDIC reiterated its guarantee of Federal Deposit Insurance for accounts in federally insured financial institutions up to $250,000 per account.  The previously raised limit of $250,000 does not return to $100,000 until January 1, 2010.  The FDIC issued its assurance after a CNBC/Portfolio.com survey showed that about a third of those questioned about their confidence level as to the safety of money held in federally insured bank accounts answered only somewhat confident, or not confident (click here for the FDIC's press release).

Posted on December 9, 2008 by Hunton & Williams LLP Print This Article

$165 Billion Spent Through the Capital Purchase Program, According to Latest Report

The Treasury Department has released the latest transaction report for the Capital Purchase Program under TARP. Over $165 billion has now been spent providing financial institutions liquidity in exchange for shares held by the Treasury Department since the first purchases on October 28, 2008. The report provides an update to the transactions detailed to Congress by the Treasury Department this past Friday, December 5, 2008. The latest purchases range from $935 million for shares in Popular, Inc., in San Juan, Puerto Rico to $1.7 million for shares in Manhattan Bancorp in El Segundo, California, according to today's Treasury Department report.
 
Click here for the latest Capital Purchase Program transaction report.

Click here for Hunton & William's prior posting on the Treasury Department's TARP Report to Congress.

Posted on December 8, 2008 by Hunton & Williams LLP Print This Article

Treasury Department Sends TARP Report to Congress

Interim Assistant Treasury Secretary for Financial Stability Neel Kashkari today addressed the TARP oversight concerns outlined by the GAO last week. Today's speech addressed the Treasury Department's actions taken since the inception of TARP to bring the program and program participants into compliance (Click here to read the entire speech). Specifically, the Emergency Economic Stabilization Act requires the Treasury Department to provide Congress with a detailed report within 60 days of the Treasury Department's first action under TARP. The report was delivered to Congress on Friday, December 5, 2008, and you can click here to read it. The report includes a complete list of transactions under the Capital Purchase Program, which provides financial institutions liquidity in exchange for shares held by the Treasury Department, from October 28, 2008 through November 25, 2008.

Click here for Hunton & William's prior posting on the GAO Report.

Posted on December 5, 2008 by Hunton & Williams LLP Print This Article

Treasury Department Defends Capital Purchase Program

Interim Assistant Treasury Secretary for Financial Stability Neel Kashkari today cited the role played by the Capital Purchase Program under TARP in preventing the collapse of the U.S. financial system. The Capital Purchase Program, which provides financial institutions liquidity in exchange for shares held by the Treasury Department, has disbursed $151 billion since the end of October, according to the Treasury Department. 
 
Mr. Kashkari said, "People often ask: how do we know our program is working? First, we did not allow the financial system to collapse. That is the most direct, important information. Second, we know the system is more stable than it was when Congress passed the legislation. While it is difficult to isolate one program's effects given regulators' numerous actions, one indicator that has pointed to reduced risk in the system is the average credit default swap spread for the eight largest U.S. banks, which has declined almost 207 basis points since before Congress passed the EESA. Another key indicator of perceived risk that we are tracking is LIBOR: 1 month LIBOR has declined 217 basis points and 3 month LIBOR 202 basis points." 
 
Click here for Mr. Kashkari's complete remarks.
 

Posted on December 3, 2008 by Hunton & Williams LLP Print This Article

GAO Report Calls for More TARP Safeguards

The GAO has released a report calling for more TARP oversight.  Although the GAO acknowledged that TARP is less than 60 days old, it singled out the Capital Purchase Program as lacking the necessary mechanisms to monitor compliance on such issues as executive compensation and dividend payments.  The GAO released both a full report and a two page summary, which contains a useful timeline detailing key Treasury activities related to TARP.  See below for links to both the GAO summary, including the timeline, and the full report. 

GAO TARP Summary/Timeline
GAO Full TARP Report

Posted on December 3, 2008 by Hunton & Williams LLP Print This Article

Holding Company Participation in FDIC Guarantee Program

The FDIC altered significantly the specifications for holding company participation in the Temporary Liquidity Guarantee Program. The main impetus for the change was the strong support the Federal Reserve Board gave to expanding the FDIC guarantee of holding company leverage as a means to increase bank liquidity.

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Posted on December 2, 2008 by Hunton & Williams LLP Print This Article

Hunton & Williams Represents First "Shelf Charter" Banks

With the number of banks failing in the U.S. rising sharply this year, the Federal Deposit Insurance Corporation (FDIC) is once again building its approved “bidder’s list.” This list is the tool used by the FDIC to contact potential buyers when a bank will soon fail. If your name is not on the list, you probably won’t be contacted by the FDIC to bid on a failed bank.

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