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October 2008
Treasury must issue program guidelines describing the mechanism for the purchase of troubled assets,
pricing and valuing troubled assets, the procedures for the selection of asset managers and the criteria for
deciding which troubled assets to purchase. Treasury must take steps to prevent unjust enrichment of
financial institutions, including preventing resale of troubled assets to Treasury at a higher price than what
the seller paid to purchase the assets.
Section 102 – Insurance of Troubled Assets
Requires Treasury to establish a program to guarantee troubled assets of financial institutions, and it is
required to establish risk-based premiums for such guarantees sufficient to cover anticipated claims.
Premiums collected will be deposited into a Troubled Asset Insurance Fund.
Section 103 – Considerations for Use of the Program
Requires Treasury to consider the following in exercising the authorities granted by the EESA: (1)
protecting the interests of taxpayers, (2) providing stability and preventing disruption to financial markets,
(3) the need to help families keep their homes and to stabilize communities, (4) in determining whether to
purchase assets, the long-term viability of the financial institution, (5) ensuring that all financial
institutions are eligible to participate without discrimination based on size, geography, form of
organization or the size, type and number of assets eligible for purchase, (6) providing financial assistance
to financial institutions that have assets less than $1 billion that were well capitalized before the
conservatorship of the GSEs, (7) the need to ensure stability for public instrumentalities, such as counties
and cities, (8) protecting the retirement security of Americans by purchasing troubled assets held by or on
behalf of certain retirement plans, and (9) the utility of purchasing other real estate owned and instruments
backed by mortgages on multifamily properties.
Section 104 – Oversight Board
Creates a Financial Stability Oversight Board (the “Board”) consisting of the Federal Reserve Chair,
Secretary of Treasury, SEC Chair, HUD Secretary, and Director of the Federal Housing Finance Agency.
The Board’s purpose is to review Treasury’s exercise of authority, including appointing financial agents,
designating asset classes to be purchased, and plans for the structure of vehicles that will be used to
purchase troubled assets. The Board is also to review EESA’s effect on preserving homeownership,
protecting taxpayers, and the stability of financial markets. The Board is also responsible for reporting
fraud, and malfeasance to the Special Inspector General under the Act. The Board may also appoint a
Credit Review Committee to evaluate the exercise of purchase authority. Finally, the Board is required to
report to the appropriate Committees of Congress and the Congressional Oversight Panel at least
quarterly.
Section 105 – Reports
Within 60 days of exercising its authority under the EESA, Treasury is required to report to the
appropriate committees of Congress on actions taken, funds expended, detailed financial statement of
exercise of authority (all agreements, insurance contracts, transaction and parties, assets purchased,
operating expenses, valuation and pricing methods, projected costs and liabilities, and vehicles used in
exercise of authority).
AMERICAN BANKERS ASSOCIATION 2