The Department of the Treasury today released a joint statement by Secretary Henry M. Paulson, Jr., Federal Reserve Chairman Ben S. Bernanke, and FDIC Chairman Sheila C. Bair describing actions being taken "to protect the U.S. economy, to strengthen public confidence in our financial institutions, and to foster the robust functioning of our credit markets."  

The joint statement (1) announces the creation of a voluntary Capital Purchase Program for U.S. financial institutions; (2) announces a temporary FDIC guaranty of the senior debt of all FDIC-insured institutions and their holding companies, as well as of deposits in non-interest-bearing accounts; and (3) provides further details on the Federal Reserve's Commercial Paper Funding Facility, which is to be expanded to include the purchase of commercial paper of three-month maturity from "high-quality" issuers. 

Please click here to read the joint statement.

Under the Capital Purchase Program, the Treasury will purchase up to $250 billion of senior preferred shares in participating companies. In addition to the senior preferred shares, the Treasury will also receive warrants to purchase common stock in each participating company having an aggregate market price equal to 15 percent of the senior preferred investment in such company. Companies participating in the Capital Purchase Program will be required to adopt the Treasury Department's standards for executive compensation and corporate governance. The $250 billion for this program would be funded as part of the $700 billion Troubled Asset Relief Program (TARP), created pursuant to the Economic Stabilization Act of 2008. 

Please click here to read the Treasury's TARP Capital Purchase Program Description. 

Please click here to read a Statement by Secretary Henry M. Paulson, Jr. 

For further information on the Emergency Economic Stabilization Act, please contact:

Dominic De Simone, Practice Leader, Commercial Real Estate Recovery
Joseph Fanone, Public Finance
Thomas Hauser, Business and Finance Department
Alan Kaplinsky, Consumer Financial Services
Vincent Marriott III, Bankruptcy, Reorganization and Capital Recovery Group
Brian Pinheiro, Employee Benefits and Executive Compensation Group

Prior Alerts

Remarks on TARP to Institute of International Bankers - October 13, 2008

Secretary Paulson Statement - October 8, 2008

Emergency Economic Stabilization Act of 2008/TARP - October 7, 2008

Employee Benefits and Executive Compensation Issues Connected to Emergency Economic Stabilization Act of 2008 - October 6, 2008

Emergency Economic Stabilization Act of 2008 - October 6, 2008


Copyright © 2008 by Ballard Spahr LLP.
www.ballardspahr.com
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This newsletter is a periodic publication of Ballard Spahr LLP and is intended to alert the recipients to new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and specific legal questions you have.