Financial Crisis News Center

TARP Executive Compensation Rulings Issued

This story appeared in Bank Digest.

The Special Master for TARP Executive Compensation has issued an opinion that a subsidiary of American International Group will no longer be considered to be a TARP recipient after the subsidiary's sale to MetLife, Inc.

GAO Assesses TALF Risks to TARP

This story appeared in Bank Digest.

The Government Accountability Office has issued a report assessing the risk posed by the Term Asset-Backed Securities Loan Facility (TALF) to the Troubled Asset Relief Program (TARP). TALF was created by the Federal Reserve Board to help meet consumer and small business credit needs by supporting issuance of asset-backed securities and commercial mortgage backed securities (CMBS). The GAO report also examines the Treasury Department’s role in decision making for TALF and the condition of securitization markets before and after TALF.

Treasury Department Extending TARP to October 2010

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Treasury Secretary Timothy Geithner, in a letter to Congressional leadership, said the administration plans to extend the Troubled Asset Relief Program (TARP) to Oct. 3, 2010, in order to continue to implement programs to address housing markets and small business needs, and to be able to respond to unforeseen threats.

“The recovery of our financial system remains incomplete…near-term shocks to that system could undermine the economic recovery we have seen to date,” the secretary wrote.

Credit Rating Agency Eligibility Process for TALF Adopted

This story appeared in Bank Digest.

The Federal Reserve Board has adopted a final rule that would establish a process by which the Federal Reserve Bank of New York may determine the eligibility of credit rating agencies for the Term Asset-Backed Securities Loan Facility (TALF). The rule establishes criteria for determining the eligibility of agencies to issue credit ratings on asset-backed securities (ABS), other than those backed by commercial real estate, to be accepted as collateral for the TALF. The criteria include registration as a nationally recognized statistical rating organization with the Securities and Exchange Commission and experience issuing credit ratings specific to the types of assets accepted as collateral in the TALF. The final rule is substantively the same as the proposed rule announced on Oct. 5, 2009. The Fed has also issued TALF Frequently Asked Questions.

Grassley Holds Treasury Accountable for Safeguarding Bailout Funds

This story appeared in Bank Digest.

Sen. Chuck Grassley, R-Iowa, ranking member of Senate Finance, has asked Treasury Secretary Tim Geithner to account for the Treasury Department not implementing numerous recommendations to safeguard tax dollars dedicated to the Term Asset-Backed Securities Loan Facility (TALF) program. Grassley said the outstanding recommendations were detailed in the recent quarterly report to Congress made by the Special Inspector General for the Troubled Asset Relief Program. “After a little over a year, it’s pretty clear that neither the former nor the current Treasury Department has made it a priority to facilitate transparency and the accountability it helps to brings about when it comes to the massive taxpayer-sponsored bailout programs,” Grassley said. “It should be the other way around, with the Treasury Department acting as a pro-active trustee of these tax  dollars.”

http://finance.senate.gov/press/Gpress/2009/prg111309.pdf

Fed Proposes Changes to Valuation of TALF Collateral

This story appeared in Bank Digest.

The Fed has announced two changes to the procedures for evaluating asset-backed securities (ABS) pledged to the Term Asset-Backed Securities Loan Facility (TALF). First, it has proposed a rule that would establish criteria for the Federal Reserve Bank of New York(FRBNY) to determine the Nationally Recognized Statistical Rating Organizations (NRSROs) whose ratings are accepted for determining the eligibility of ABS to be pledged as collateral at the TALF. According to the Fed, the proposed rule, which would require a certain minimum level of experience in rating deals of any particular type, would likely result in an expansion of TALF-eligible NRSROs for ABS. It is intended to promote competition among NRSROs and ensure appropriate protection against credit risk for the U.S. taxpayer.

Bernanke Discusses Diversity Efforts

This story appeared in Bank Digest.

Appearing before the Congressional Black Caucus Foundation’s Annual Legislative Conference in Washington, D.C., Federal Reserve Board Chairman Ben S. Bernanke noted, “The Federal Reserve System remains committed to diversity and inclusion in our programs and  activities.” The Fed Chairman then cited specific examples regarding the Fed’s efforts to seek diversity in its programs, especially the Term Asset-Backed Securities Loan Facility, or TALF.

http://www.federalreserve.gov/newsevents/speech/bernanke20090925a.htm

TALF Agents Granted Limited Exchange Act Exemption

This story appeared in Bank Digest.

The Securities and Exchange Commission has granted to any broker-dealer designated by the Federal Reserve Bank of New York as a Term Asset-Backed Loan Facility (TALF) agent a limited exemption pursuant to Section 36 of the Exchange Act from the prohibitions on arranging for the extension or maintenance of credit contained in Section 11(d)(l) of the Exchange Act solely with respect to such broker-dealer's facilitation of extensions and maintenance of nonrecourse credit on behalf of the FRBank to purchasers of asset-backed securities pursuant to the TALF.

New Schedule of Margins Announced

This story appeared in Bank Digest.

The Federal Reserve Board has announced a new schedule of margins applicable for collateral pledged by depository institutions to secure discount window and Term Auction Facility loans and for payment system risk purposes. The new margins are part of the Fed's continuing efforts to ensure effective risk management policies and procedures in its lending programs to depository institutions. They reflect data and methodological improvements that better account for differences in various risk characteristics across collateral types.

TALF to Be Extended

This story appeared in Bank Digest.

The Treasury Department and Federal Reserve Board have approved an extension to the Term Asset-Backed Securities Loan Facility (TALF) and announced that they do not anticipate any further additions to the types of collateral that are eligible for the facility. The Treasury announcement stated that, although conditions in financial markets have improved considerably in recent months, the markets for asset-backed securities (ABS) backed by consumer and business loans and for commercial mortgage-backed securities (CMBS) are still impaired and seem likely to remain so for some time. Therefore, to promote the flow of credit to businesses and households and to facilitate the financing of commercial properties, the Fed and Treasury have approved extending TALF loans against newly issued ABS and legacy CMBS through March 31, 2010.