U.S. Treasury Department Unveils New Financial Stability Plan
On February 10, 2009, the U.S. Department of the Treasury announced a new plan to overhaul federal efforts to stabilize, and lead to the ultimate recovery of, U.S. financial institutions and to address the credit crisis. The Financial Stability Plan has several key components, including (1) the creation of a Public-Private Investment Fund to address the so-called "toxic" assets held by many financial institutions, (2) a coordinated effort with the Federal Reserve to dramatically expand the Term Asset-Backed Securities Loan Facility, and (3) the establishment of a new Financial Stability Trust to provide for and manage capital investments in financial institutions, accompanied by "stress tests" for the largest financial institutions and new requirements and conditions for the receipt and use of capital assistance. The attached memorandum provides background on the Financial Stability Plan.