Category — Treasury Department

On September 10, 2009, the Department of the Treasury issued guidance regarding communications with outside persons regarding Emergency Economic Stabilization Act funds (EESA) and Recovery Act funds. EESA is the implementing statute for the Troubled Asset Relief Program (TARP). The new guidance closely follows guidance issued by the Office of Management and Budget (OMB) on July 24, 2009, (see previous client alert here) and seeks to preserve consistency between Treasury guidance and OMB guidance.

The new guidance clarifies that communications between federal agency officials and outside persons, including federally registered lobbyists, concerning general logistical questions about Recovery Act funding or implementation are unrestricted. That is, requests for a meeting, inquiries concerning the status of an action, inquiries concerning the deadlines or logistics of Recovery Act funding opportunities or other similar administrative requests that do not involve advocacy concerning Recovery Act policy or a particular project or application for funding under the Recovery Act are not subject to restriction and need not be publicly disclosed.

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On June 17, 2009, the U.S. Department of the Treasury released a proposal for legislative and regulatory changes that, if adopted, would effect major change to the U.S. financial system. Most, but not all, of the components of the proposal derive from, or relate to, the crisis that has beset the global economy. Legislation and regulations to implement the proposal are being drafted and considered by Congress and the relevant departments and agencies. The goal of the Obama administration and Democratic leaders is to have such legislation and regulation enacted and adopted by the end of the year.

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On June 10, 2009, Treasury Department Secretary Timothy Geithner announced the Obama administration’s initiatives on executive compensation reform.  These initiatives, which are intended to apply not just to financial institutions but to all public companies, consist of several broad-based principles for companies to consider when designing and implementing their executive compensation programs, as well as proposals for Congress to pass “say-on-pay” legislation and legislation giving compensation committees greater independence.  In addition to the Treasury Department’s statement, SEC Chairman Mary Schapiro issued a statement on June 10, identifying several new executive compensation proxy disclosure rules that the SEC is actively considering.  If these reforms move forward, they will likely have a major impact on executive compensation practices at all U.S. public companies.

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In his Quarterly Report to Congress submitted on April 21, 2009, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) made recommendations to address what the SIGTARP identified as “inherent vulnerabilities” in the Department of the Treasury’s Public-Private Investment Program (PPIP).

Of particular concern to the SIGTARP is the ability of Public-Private Investment Funds (PPIFs), formed pursuant to the Legacy Securities Program, to purchase legacy residential mortgaged-backed securities (RMBS) through the Term Asset-Backed Securities Loan Facility (TALF). The Treasury has previously announce that it will co-invest up to 50 percent of the equity in such PPIFs, and that, in addition, such PPIFs will be eligible to borrow from the Treasury an amount equal to up to 50 percent of the PPIF’s total equity.

Read the full alert here.