Public-Private Investment Program Fund Managers Announced

Nine fund managers were named for the Legacy Securities Public-Private Investment Program (commonly referred to as "PPIP"), according to today's joint press release by the Treasury Department, the Federal Reserve, and Federal Deposit Insurance Corporation.  PPIP is "initially" designed to "participate in the market for commercial mortgage-backed securities and non-agency residential mortgage-backed securities," by enabling the Treasury Department to "invest up to $30 billion of equity and debt in PPIFs [PPIP funds] established with private sector fund managers and private investors for the purpose of purchasing legacy securities," according to today's press release.  The press release further details both how PPIP works and the qualification criteria for the securities. 

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Public-Private Investment Program Oversight Legislation Enacted

On May 19, 2009, the House of Representatives approved S.896 (the “Helping Families Save Their Homes Act of 2009”) by a margin of 367–54 and, on May 20, 2009, President Obama signed the bill into law. The bill includes legislation known as the “Public-Private Investment Program Improvement and Oversight Act of 2009” (the “Act”), which will impose significant duties on fund managers under the Public-Private Investment Program (“PPIP”) announced by the U.S. Department of the Treasury (“Treasury”). These provisions may limit managers’ interest in participating in the PPIP. A copy of S.896 is available here.

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Obama's Revenue Proposals Impact Private Investment Funds

On May 11, 2009, the U.S. Treasury released its General Explanations of the Administration’s Fiscal Year 2010 Revenue Proposals (the “Revenue Proposals”). The Revenue Proposals include several provisions affecting private investment funds, such as private equity funds, hedge funds and venture capital funds, and their managers.

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Public-Private Investment Program Oversight Legislation Passed by Senate

On May 6, 2009, the Senate approved S. 896, the “Helping Families Save Their Homes Act of 2009” by a margin of 95–1. The legislation includes amendments by Senators Barbara Boxer (D-CA) and John Ensign (R-NV) (collectively, the “Amendments”) to provide additional oversight over the Public-Private Investment Program (“PPIP”) announced by the U.S. Department of the Treasury (“Treasury”). The Amendments impose significant duties on PPIP fund managers, including an obligation to acknowledge fiduciary duties to investors, which may limit managers’ interest in participating in the PPIP. A copy of S.896 is available here.

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Navigating the Public-Private Partnership Investment Program

On March 23, 2009 the U.S. Department of Treasury (“Treasury”), in conjunction with the Federal Deposit Insurance Company (the “FDIC”) and the Federal Reserve (the “Fed”), announced the latest piece of its Financial Stability Plan: the Public-Private Partnership Investment Program for Legacy Assets (the “Program”). The Program consists of two separate plans, addressing two distinct asset groups: the Legacy Loan Program and the Legacy Securities Program. Treasury explained that the exact requirements and structure of the Loan Program will be subject to notice and comment rulemaking, but announced no timetable. On the other hand, the Securities Program requires any interested asset manager to submit by April 10th, an extensive application to serve as a Fund Manager under the Securities Program. Treasury is expected to select five Fund Managers by May 1st. In addition, Treasury expanded the Term Asset-Backed Securities Loan Facility (“TALF”) program to include Legacy Securities.

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