Today the Treasury Department released guidelines and a description for the Targeted Investment Program used for the Treasury Department's investment in Citigroup on November 23, 2008. Although there is no deadline for participation in the Targeted Investment Program, and inclusion is on a case-by-case basis for Financial Institutions as defined in the Emergency Economic Stabilization Act, the guidelines do provide eligibility considerations for the Treasury Department. Those considerations include, but are not limited to, the extent to which destabilization of such a Financial Institution could threaten the viability of creditors and counterparties exposed to the Financial Institution. Also, like the Treasury Department's Capital Purchase Program, the Targeted Investment Program requires that the Treasury Department receive warrants for shares, or another form of consideration, in return for the investment. Click here for the Targeted Investment Program's details and click here for Hunton & Williams' prior posting on the Treasury Department's investment in Citigroup.
The Treasury Department also released a report today outlining to Congress how it is considering using of the Asset Guarantee Program, created under the Emergency Economic Stabilization Act, to fulfill the guarantee provisions of the Treasury Department's November, 23, 2008 agreement with Citigroup. Under the Asset Guarantee Program the Treasury Department assumes a loss position on certain insured assets held by "systemically significant financial institutions", according to the Treasury Department. However, the report notes to Congress the Asset Guarantee Program would be used with "extreme discretion," on a case-by-case basis, and it is "not anticipated that the program will be made widely available." Click here for the Treasury Department's press release, and click here for the full report.
