| Financial Markets Stability Resource Center Spotlight
Recent TARP Developments
December 5, 2008: Interim Assistant Secretary for Financial Stability Neel Kashkari Remarks on Financial Markets and TARP Update
Read Kashkari's remarks.
December 2, 2008: United States Department of the Treasury Third Tranche Report to Congress
Read the report.
November 25, 2008: Term Asset-Backed Securities Loan Facility (TALF) Terms and Conditions
On Tuesday, November 25, Treasury announed the allocation of $20 billion from the TARP to back the creation of the a $200 billion Term Asset-Backed Securities Loan Facility (TALF) at the Federal Reserve Bank of New York. This facility will support the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA), reducing the cost of credit to consumers and small businesses vital to our economy.
Read the Terms and Conditions.
Read Secretary Paulson's Remarks.
November 25, 2008: Federal Reserve to Purchase the Direct Obligations of Housing-Related Government-Sponsored Enterprises (GSEs)
On Tuesday, November 25, The Federal Reserve announced it will initiate a program to purchase the direct obligations of housing-related government-sponsored enterprises (GSEs)--Fannie Mae, Freddie Mac, and the Federal Home Loan Banks--and mortgage-backed securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally.
Read the release.
November 25, 2008: TARP AIG SSFI Investment and Capital Purchase Program Transaction Report
Read the report.
November 20, 2008: FDIC Releases Loan Modification Program Tools
On Thursday, November 20, FDIC released the "Mod in a Box" program tools for the implementation of the systematic and streamlined loan modification program modeled after a similar program at IndyMac Federal Bank. The program aims to modify mortgages that are 60 days delinquent or more by making the payments more affordable and sustainable for homeowners as well as rehabilitate troubled mortgages into performing loans. The program will provide loan modifications with a maximum 38 percent down to 31 percent housing-to-income ratio through the use of interest rate reductions, amortization term extension and in certain cases, principal deferment. The program not only gives borrowers an affordable mortgage payment but it also improves the values troubled mortgages held by investors.
Week of November 17, 2008: EESA Congressional Oversight Panelist Chosen
During the week of November 17, 2008, Senate Republican Leader Mitch McConnell (R-KY) and House Republican Leader John Boehner (R-OH) appointed Senator Judd Gregg (R-NH) and Representative Jeb Hensarling (R-TX) as Congressional Oversight Panel members. The panel, which was formed as a requirement of the Emergency Economic Stabilization Act (EESA), must issue a special report analyzing the current state of the regulatory system and its effectiveness at overseeing the participants in the financial system, as well as protecting consumers. The panel must also provide recommendations for improvements and evaluate whether there are any gaps in existing consumer protections. This review is due no later than January 20, 2009.
November 18, 2008: NCUA's Share Insurance Fund to Guarantee Unsecured Debt
On Tuesday, November 18, the National Credit Union Administration (NCUA) published in the Federal Register a notice about NCUA's Temporary Corporate Credit Union Liquidity Guarantee Program. The notice announced that NCUA Share Insurance Fund will guarantee certain unsecured debt of participating corporate credit unions issued from October 16, 2008 to June 30, 2009, including federal funds purchased, promissory notes, commercial paper and unsubordinated unsecured notes. Qualifying debt will remain guaranteed until it is fully repaid.
November 12, 2008: Treasury Secretary Abandons Initial TARP Program
On Wednesday, November 12, Treasury Secretary Henry Paulson announced plans to suspend the program authorized by the Emergency Economic Stabilization Act (EESA) that would enable Treasury to purchase troubled assets directly from financial institutions. Secretary Paulson cited that implementation of the plan would not be the most effective use of resources. At present, the Treasury has committed $250 billion of the $700 billion allotted in EESA to purchase preferred stock in various banking institutions. Secretary Paulson stated that the remaining funds should be used to address three priorities that include: reinforcing the stability of the financial systems, supporting the markets for securitizing credit outside the banking system and reducing the rate of foreclosures. In addition to the action already being taken by the administration, Secretary Paulson discussed further strategies to build capital in financial institutions, support consumer access to credit outside the banking system and mitigate mortgage foreclosures. Read Paulson's Remarks.
November 13, 2008: FDIC, FRB, OCC and OTS Encourage Lending to Creditworthy Borrowers
On Thursday, November 13, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) issued interagency guidance to promote prudent lending practices by financial institutions. The guidance was issued as a complement to several agency programs initiated to promote financial stability and mitigate the negative pro-cyclical effects of the U.S. economy. The Interagency statement promotes several principles that all financial institutions are expected to adhere to, including: providing credit in a safe and sound manner; increasing foreclosure prevention and loss mitigation efforts by adopting "systematic, proactive and streamlined mortgage loan modifications protocols;" maintaining strong capital positions by taking risks into account; and evaluating management compensation policies to deter "perverse" incentives.
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