The Emergency Economic Stabilization Act of 2008 (the “Stabilization Act”) was signed into law on Friday, October 3, 2008, in substantially the same form as discussed in our prior alert, with the most notable addition being an increase until December 31, 2009 of the cap on federal deposit insurance coverage from $100,000 to $250,000 per depositor. Our focus now turns to how the Treasury Department will implement its powers under the Stabilization Act.
Rapid Treasury Implementation
On Monday, October 6, 2008, Treasury Secretary Henry Paulson took an initial step toward implementing his powers under the Stabilization Act by appointing Neel Kashkari Interim Assistant Secretary of the Treasury for Financial Stability to direct the Troubled Asset Relief Program (“TARP”). Mr. Kashkari will oversee a portfolio of up to $700 billion worth of mortgage-related and other financial assets under TARP. Several questions will need to be addressed promptly, including the Treasury’s method for selection of assets for purchase and the means and timing of valuation and disposition of those assets.
On Monday evening, the Treasury published solicitations for financial agents who will perform the key functions of TARP: (1) Custodian, Accounting, Auction Management, and Other Infrastructure Services; (2) Securities Asset Management Services; and (3) Whole Loan Asset Management Services. Responses to these solicitations, which require lengthy disclosure and detailed proposals, are due this Wednesday, October 8, 2008, at 5:00 pm EDT. The Treasury plans to announce initial selections as early as next week.
For your convenience, we have provided links to the Treasury’s solicitations: