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Public-Private Investment: A Three Prong Program for Legacy Assets

March 23, 2009

By Erica Berg, Chris Daniel, Nicole Ibbotson and Kevin Petrasic

After weeks of anticipation and predictions, the U.S. Treasury Department (Treasury) today announced its plans to address the troubled real estate-related assets that have been a significant source of the recessionary forces overhanging the U.S. economy. Treasurys approach to these legacy assets is three pronged: (1) a legacy loan purchase program (Legacy Loans Program) using guarantees by the Federal Deposit Insurance Company (FDIC); (2) an expansion of the Federal Reserve Boards (FRB) Term Asset-Backed Securities Loan Facility (TALF), and (3) the establishment of public-private investment funds to tackle legacy securities (Legacy Securities Program). Collectively, this three-prong program is referred to as the Public Private Investment Program (PPIP).