On October 14, the Treasury Department requested public input on an insurance program for troubled assets which is required by the Emergency Economic Stabilization Act of 2008 (EESA). The purpose of the program is to restore liquidity and stability to the financial system by guaranteeing principal of, and interest on, troubled assets originated or issued prior to March 14, 2008, while attempting to minimize the potential negative impact on taxpayers. Although the program may take any form and may vary by asset class, it must be voluntary and self-funding.
The Treasury Department is seeking comments on how the program should be structured to minimize adverse selection, including what events should trigger insurance payout, what form that payout should take, how premiums should be calculated, and which institutions and assets should be eligible. Comments are also being requested on technical considerations, including what legal, accounting, or regulatory issues would arise and what administrative challenges the program will create. The comment period extends until October 28, 2008.