Legacy Asset Task Force: Public-Private Investment ProgramReturn to Practice Areas Main Page

New Federal Programs for Toxic ("Legacy") Financial Assets
Opportunities for Financial Institutions, Investors and Service Providers

White and Williams LLP attorneys practicing in real estate finance, securities, workouts and financial restructuring have formed a Legacy Asset Task Force to inform and assist companies and investors interested in opportunities presented by the federal government's Public-Private Investment Program (PPIP). This brief overview is intended to introduce you to these opportunities. We invite you to contact us with questions since these programs are still being developed and additional information becomes available frequently.

Public-Private Investment Program Overview

The PPIP is one of a series of initiatives being implemented by the U.S. Treasury Department this spring in an effort to stabilize the financial markets, increase the availability of credit, and repair the balance sheets of financial institutions. The PPIP itself consists of two programs designed initially to enable financial institutions to dispose of "toxic" (now "legacy") mortgage-backed loans and securities. A brief description of some key components of these programs and the opportunities they present follows.

Legacy Securities Program

 Legacy Loans Program
  • Investment funds will be organized by private managers chosen by the Treasury to purchase eligible mortgage-backed securities from financial institutions.

  • Each initial fund will be expected to raise a minimum of $500 million of private equity from eligible investors.

  • The Treasury will provide matching equity capital and may leverage the public and private equity capital with matching non-recourse loans, subject to certain conditions.
  • Investment funds will be organized to purchase eligible commercial and residential mortgage loans from banks and savings associations.

  • The FDIC will auction pools of loans to private investors.

  • Investors will bid for the opportunity to contribute 50% of the equity to an investment fund and the Treasury will match the equity contribution of the winning bidder.

  • The initial private capital may be leveraged with debt guaranteed by the FDIC up to a 6 to 1 debt-to-equity ratio.

Opportunities Presented by PPIP

  • For financial institutions to dispose of toxic loans and securities.
  • For financial service firms to partner with or provide services to investment funds under the two programs:
    • Asset managers
    • Fund managers
    • Loan and special servicers
    • For investors to provide equity capital to investment funds.

The Treasury and the FDIC will encourage participation in the programs by small, veteran-, minority-, and women-owned businesses either as an asset manager, an equity partner, a fund-raising partner or as a provider of financial services, such as trade execution or valuation.

For more information, please contact our Legacy Asset Task Force representatives.
Practice Areas Legacy Asset sidebar - Law Firm White and Williams LLP Attorneys Philadelphia, Pennsylvania
Our White and Williams LLP attorneys practicing in real estate finance, securities, workouts and financial restructuring have formed a Legacy Asset Task Force to inform and assist companies and investors interested in opportunities presented by the federal government's Public-Private Investment Program (PPIP).

FOR MORE INFORMATION ABOUT THE LEGACY ASSET TASK FORCE, CONTACT:
Joan C. Rosoff
215-864-7192 rosoffj@whiteandwilliams.com

Anthony J. Krol
215-864-7041 krola@whiteandwilliams.com


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