On March 23rd, the Treasury Department issued details about the Public-Private Investment Fund (“PPIF”), a part of the Treasury's Financial Stability Plan. The PPIF plan is intended to help cleanse financial institutions' balance sheets of "legacy assets, using a mechanism that allows private sector buyers to determine the price for current troubled and previously illiquid assets, like residential and commercial real estate loans held directly on the balance sheets of banks (“legacy loans”) and securities backed by real estate loan portfolios held by financial institutions (“legacy securities”). These legacy securities are believed to be hindering financial recovery because they are difficult to value and investors are encoutering great difficulties obtaining private financing to purchase them.
The PPIF consists of both a Legacy Loans Program and a Legacy Securities Program. The Legacy Securities Program also contains an expansion of the Term Asset-Backed Securities Loan Facility (“TALF”) program to include both residential and commercial backed mortgage securities. Dechert has crafted an excellent summary of both programs, laying out relatively straight forward explanations of each, including helpful charts comparing the programs, and a brief discussion of tax considerations, for those so inclined.
Dechert's summary of the PPIF is available at: http://www.dechert.com/library/FRE_03-09_17_Analysis_of_the_Public-Private_Investment.pdf
Treasury's whitepaper and announcement of the PPIF are available at: http://www.treas.gov/press/releases/tg65.htm
Treasury's overview of the PPIF is available at: http://www.treas.gov/press/releases/reports/ppip_whitepaper_032309.pdf