On July 8, the heads of the U.S. Treasury Department (UST), Federal Reserve and Federal Deposit Insurance Corporation (FDIC) jointly announced the launch of the Legacy Securities Program and named the nine initial asset managers for the program. The Legacy Securities Program is one-half of the Public Private Investment Program (PPIP) meant to help U.S. financial institutions cleanse their balance sheets of troubled residential and commercial mortgage-related assets. Although the PPIP was originally meant to be a $500 billion to $1 trillion program targeting both loans and securities, the Legacy Loans Program to be run by the FDIC has been put on indefinite hold, and the UST will now initially only contribute $30 billion to the Legacy Securities Program. The nine initial asset managers for the Public Private Investment Funds (PPIFs) to be formed with equity contributions and debt-financing from UST, will be, in alphabetical order, (i) AllianceBernstein, LP and its sub-advisors Greenfield Partners, LLC and Rialto Capital Management, LLC; (ii) Angelo, Gordon & Co., L.P. and GE Capital Real Estate; (iii) BlackRock, Inc.; (iv) Invesco Ltd.; (v) Marathon Asset Management, L.P.; (vi) Oaktree Capital Management, L.P.; (vii) RLJ Western Asset Management, LP.; (viii) The TCW Group, Inc.; and (ix) Wellington Management Company, LLP.
Katten is preparing a Client Advisory, to be published early next week, summarizing details of the terms of the Legacy Securities Program, including the provisions of the equity and debt term sheets published by UST on July 8.
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