Alert April 10, 2009

Treasury Refines Public-Private Investment Program

The Treasury Department also recently provided guidelines for its Public-Private Investment Program ("PPIP"), a component of its ambitious Financial Stability Plan. PPIP targets "legacy assets" – distressed loans and mortgage-backed securities originated prior to 2009. Treasury plans to allocate $75 to $100 billion of TARP funds to Public-Private Investment Funds ("PPIFs"). When combined with private capital and FDIC guarantees, Treasury hopes the PPIFs will generate at least $500 billion to purchase targeted legacy assets. TARP investments will be split between the Legacy Loans Program, which targets distressed real estate loans held on the balance sheets of eligible banks, and the Legacy Securities Program, which expands the Term Asset-Backed Securities Loan Facility and provides guidance regarding the formation of PPIFs for distressed mortgage-backed securities.