Application for Treasury Investment in a Legacy Securities Public-Private Investment Fund

This application (this “Application”) is for private assets managers (“Applicants”) to apply to the 

U.S. Department of the Treasury (“Treasury”) to be pre-qualified to serve as a manager (a “Fund 

Manager”) of a Legacy Securities Public-Private Investment Fund (each, a “Fund”) that will invest 

in legacy securities (“Eligible Assets”) on behalf of taxpayers and private investors pursuant to 

terms set forth in Attachment I. 

Fund Managers will be pre-qualified based upon criteria that are anticipated to include: 

• Demonstrated capacity to raise at least $500 million of private capital. 

• Demonstrated experience investing in Eligible Assets, including through performance 

track records. 

• A minimum of $10 billion (market value) of Eligible Assets currently under management. 

• Demonstrated operational capacity to manage the Funds in a manner consistent with 

Treasury’s stated Investment Objective while also protecting taxpayers. 

• Headquarters in the United States. 

All Applications must be submitted in PDF format via email no later than 5:00 p.m. ET on April 

24, 2009. 

I INFORMATION REQUIRED 

This section identifies the primary information the Applicant must provide. 

A. Qualifications and Performance History

1. Organizational Background. The Applicant must provide information and/or charts 

showing its business entities or units, with particular detail on entities or units that currently 

manage portfolios of Eligible Assets. The Applicant must describe any changes in ownership or 

major changes in corporate structure in the last 3 years, and any anticipated future changes to its 

ownership or corporate structure. 

2. Personnel. The Applicant must provide information regarding the relevant expertise of its 

personnel. In particular, the Applicant must provide specific detail on personnel that currently 

manage funds, accounts or other investment vehicles managing portfolios of Eligible Assets, the 

names and experience of the personnel who will be assigned to manage the Fund and the 

percentage of business time that each such person will devote to the Fund. 
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3. Assets Under Management. The Applicant must provide information showing in detail the 

number of funds, accounts or other investment vehicles it manages and the total assets under 

management, with relevant totals and subtotals. The Applicant must include particular details on 

Eligible Assets under management. 

4. Fundraising. The Applicant must describe its expectations for fundraising from private 

investors for equity capital commitments to the Fund (including the amount of equity capital 

proposed to be raised and anticipated timing). The Applicant must note whether, and if so how, it 

plans to structure the Fund to facilitate the participation of retail investors in the Fund. In addition, 

the Applicant must provide examples of its experience fundraising for funds, accounts or other 

investment vehicles that primarily invest in Eligible Assets within the past 5 years. The Applicant 

must include its expectations as to the composition of the private investor base (e.g. financial 

institutions, foundations, public pension plans, university and other endowments, high net worth 

investors and/or retail investors). 

5. Past Performance. The Applicant must provide a table showing the gross and net returns 

for its funds, accounts or other investment vehicles that invest primarily in Eligible Assets for each 

of the past 5 years ending December 31, 2008. The Applicant must describe in detail how its 

returns are calculated. 

6. References. The Applicant must provide reference contacts for the 3 largest limited 

partners in aggregate invested in its funds, accounts or other investment vehicles that invest 

primarily in Eligible Assets over the last 3 years, including name, title, organization and phone 

number. 

7. Custodians. The Applicant must list the top 3 custodians with which it currently processes 

assets. 

8. Small, Veteran-, Minority- and Women-Owned Businesses. If the Applicant is a small, 

veteran-, minority- or women-owned business, it must provide evidence of such status and 

describe the structure of the partnership it expects to form with other private asset managers, if 

necessary, in order to meet the criteria outlined in Attachment I, if applicable. 

B. Proposed Fund

1. Structure. The Applicant must describe the proposed structure of the Fund and include a 

proposed structure chart. 

2. Summary of Terms. The Applicant must provide a summary of proposed material terms of 

the Fund, including a proposed drawdown schedule and whether it plans to (i) recycle realized 

capital; (ii) have voluntary withdrawal rights (which withdrawal rights will be subject to 

limitations agreed with Treasury); (iii) make use of Treasury Debt Financing as defined in 

Attachment I and (iv) finance the purchase of Eligible Assets through Legacy TALF, any other 

Treasury program or debt financing raised from private sources, subject to the restrictions 

described in Attachment I. In addition, the Applicant must describe proposed covenants relating to 

allocation of investment opportunities, competing funds and investments away from the Fund. 
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3. Debt Financing. The program currently contemplates the Treasury will provide Treasury 

Debt Financing in an amount up to 50% of a Fund’s total equity capital; provided that Treasury 

Debt Financing will not be available to any Fund Manager in respect of a Fund in which the private 

investors have voluntary withdrawal rights. Treasury will consider requests for Treasury Debt 

Financing of up to 100% of a Fund’s total equity capital subject to restrictions on asset level 

leverage, withdrawal rights, disposition priorities and other factors Treasury deems relevant. To 

the extent the Applicant is interested in receiving Treasury Debt Financing above 50% of total 

equity capital, it must provide a description of the amount of the leverage requested along with the 

terms as noted above. 

4. Proposed Fees. The Applicant must describe any fees it proposes to charge to private 

investors in the Fund, including but not limited to management fees and incentive fees. 

Additionally, the Applicant must provide information on a proposed fee structure for Treasury 

consistent with the terms in Attachment I. 

5. Tax Considerations. The applicant must describe significant intended tax consequences 

for private investors participating in the PPIF. 

C. Investment Strategy 

1. Asset Management Strategies. The Applicant must describe the asset management 

strategies it utilizes to manage its existing portfolios of Eligible Assets. In addition, the Applicant 

must describe the following: (i) the application of its asset management strategies to the 

management of the Fund in furtherance of the Investment Objective of the Fund pursuant to the 

Investment Strategy (each as described in Attachment I); (ii) Applicant’s methodology for 

evaluating, pricing and purchasing Eligible Assets, (iii) Applicant’s expectations as to the use of 

leverage and (iv) potential considerations that may argue for a deviation from a long-term buy and 

hold strategy. 

2. Risk Management. The Applicant must describe the risk metrics and limits it employs to 

manage portfolios of Eligible Assets. The Applicant must include particular details on the risk 

metrics and limits to be employed in managing a Fund investing in Eligible Assets on behalf of 

taxpayers and private investors. 

D. Governance and Management

1. Principal Transactions. The Applicant must describe the safeguards it intends to employ to 

ensure that the Fund does not, directly or indirectly, acquire Eligible Assets from or sell Eligible 

Assets to its affiliates, any other Fund or any private investor that has committed 10% or more of 

the aggregate private capital raised by the Fund. 

2. Other Conflicts of Interest. The Applicant must identify any other real or potential 

conflicts of interest it may have in managing a Fund as described in Attachment I, and explain how 

it will avoid or ameliorate any such conflicts. The Applicant must include the interests of its 

affiliates in the answer. In addition, the Applicant must describe its philosophy for fulfilling its 

duty to the Treasury and the taxpayers as investors in the Fund in light of its proprietary interests, 
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those of the private investors in the Fund and those of its other clients. The Applicant must 

describe any covenants it has to allocate purchases of Eligible Assets to existing funds, accounts or 

other investment vehicles it manages. 

3. Prevention of Waste, Fraud and Abuse. The Applicant must describe its proposals to 

minimize waste, fraud and abuse. 

4. Alignment of Incentives. The Applicant must describe any additional proposals to ensure 

that incentives for investing private capital and Treasury capital are aligned. 

5. Oversight. The Applicant must indicate if its organization employs a risk oversight officer 

that operates independently from private asset managers and other investment-policy decision 

makers. The Applicant must identify the most important attributes of its particular risk oversight 

framework. 

6. Taxes. The Applicant must indicate the following: (i) whether it and each of its affiliates 

have paid all material federal, state and local taxes in the United States (“Taxes”) and filed all 

material Tax returns required to be filed through the date hereof; and (ii) that there is no material 

Tax deficiency that has been, or could reasonably be expected to be, asserted against it or any of its 

affiliates, except any Taxes the amount or validity of which are currently being contested in good 

faith. 

7. Regulatory and Legal Actions. The Applicant must identify any Federal or State citations 

or enforcement actions its organization or any affiliate has received or been warned of, and any 

litigation or legal proceeding involving its asset management or investment consulting services 

involving fraud, negligence, criminal activity, or breach of fiduciary duty. 

8. Investor Due Diligence. The Applicant must describe its due diligence process for 

assessing potential investors. In particular, the Applicant must describe its anti-money laundering 

and “know your client” policies and procedures. 

E. Valuation, Monitoring and Reporting

1. Valuation. The Applicant must describe the methodology it intends to employ for 

determining the fair market value of the Fund’s Eligible Assets. 

2. Monitoring. The Applicant must describe the methodology it intends to employ for 

monitoring acquisitions and dispositions of Eligible Assets on behalf of the Fund, including 

tracking and maintaining records of (i) trades executed (all pertinent financial and settlement 

information) and (ii) notifications of principal and interest payments. 

3. Reporting. The Applicant must describe the format whereby it intends to provide the 

reporting information required by the Treasury, as described in Attachment I (including 

transaction reports, monthly reports and audited and unaudited financial statements). In particular, 

describe how it will ensure sufficient transparency while protecting the commercial interest of its 

investors. 
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II DEADLINE AND COMMUNICATIONS 

All Applications for investment by Treasury must be submitted in PDF format via email by 

5:00 p.m. ET on April 24, 2009. 

All Applicants are responsible for seeking clarification on any issues in this Application that the 

Applicant does not fully understand. All questions should be directed to the following: 

Treasury Contact:

 U.S. DEPARTMENT OF THE TREASURY 

Office of Financial Stabililty: Legacy Securities Public-Private Investment Fund 

1500 PENNSYLVANIA AVENUE NW 

WASHINGTON, DC 20220 

Phone Number: 202-622-9911 

E-mail Address: SecuritiesPPIF@do.treas.gov

Treasury, in its sole discretion, may respond orally to any questions about the Application. 

Substantive questions should be submitted as soon as possible. No other channel of 

communication between the Applicant and an officer, employee, or agent of Treasury regarding 

this Application is permitted, and no information gained from any such communication may be 

considered in any way binding or limiting on the Treasury. 

The Treasury, in its sole discretion, may change the deadline for submission of Applications. 

III SUBMISSION OF APPLICATIONS 

All Applications must be delivered in PDF format via email to Treasury by the deadline. 

Treasury has no obligation to consider an Application received after the deadline provided above. 

The only acceptable evidence of the time of receipt is the Treasury’s time/date stamp on the 

Application or other evidence of receipt maintained by the Treasury. 

The Applicant, by submitting an Application to be a Fund Manager, warrants and represents that it 

understands and agrees to all terms of this Application and the selection process, including the 

following: 

1. Treasury, in its sole discretion, will select a Fund Manager based on its determination of what 

is in the best interests of the United States. 

2. No communication, question, response or clarification, whether oral or written, about the 

requirements of this Application shall in any way serve to limit the Treasury’s complete and 

sole discretion in selecting a Fund Manager and in making decisions in connection with this 

Application. 
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3. Treasury may select, reject, or request additional clarifying information about an Applicant’s 

Application without further discussion with the Applicant. 

IV APPLICATION FORMAT 

All Applications must include a 1 page cover letter, executed by a person legally authorized to 

represent the Applicant, that includes the following information: name, title, address, e-mail, and 

office and mobile phone numbers of the individual designated to receive communications from 

Treasury and a certification statement that the Applicant (i) understands and agrees to the terms 

and selection process set forth in this Application; (ii) understands and agrees to the confidentiality 

provisions in Section V; and (iii) understands and agrees that it will have a fiduciary duty to act in 

the best interests of the Fund. The cover letter must also indicate whether the Applicant is a small, 

veteran-, minority- or women-owned business. 

All Applications must include a document not to exceed 40 one-sided pages, in 12-point font with 

1 inch margins, addressing the items in Section I above. 

Applications must not include any other documents or attachments. Applications must not include 

any generic marketing or sales information, or rely on cross-references to other documents. 

V CONFIDENTIALITY 

Treasury considers any information provided to an Applicant in evaluating its Application to be 

strictly confidential and must not be disclosed to any third party outside the Applicant’s corporate 

organization, nor duplicated, used or disclosed in whole or in part for any purpose other than to 

prepare an Application. Under no circumstances shall any information received in connection with 

an Application be disclosed to any third party outside the Applicant’s corporate organization 

without the express prior written consent of the Treasury. 

VI RESERVATION OF RIGHTS 

The release of an Application and Treasury’s receipt of any information or responses shall not, in 

any manner, obligate the Treasury to perform any act or otherwise incur any liabilities. 

Treasury assumes no obligation to reimburse or otherwise compensate the Applicant for expenses 

or losses incurred in connection with this Application. 

Treasury shall have the unlimited right to use, for any governmental purpose, any information 

submitted in connection with this Application. 

Treasury reserves the right to: (1) modify the requirements in this Application or withdraw this 

Application at any time; (2) decide not to select any Applicants; (3) reject an Application without 

inviting the Applicant to submit a new Application; (4) negotiate with and select any Applicant 

considered qualified; (5) request, orally or in writing, clarification of or additional information on 

a response; (6) waive minor informalities or irregularities, or a requirement of this Application; (7) 

accept any Application in part or in total; and (8) reject an Application that does not conform to the 

specified format or other requirements of this Application. 
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Any selection and designation of a private manager pursuant to this Application shall be 

contingent upon and subject to availability of funding. 

OMB Control No. 1505-0215 

An agency is not authorized to conduct, and persons are not required to respond to, an information 

collection request unless it displays a valid control number.
Attachment I:

Legacy Securities Public-Private Investment Funds 

Summary of Proposed Terms 

Summary of Program The United States Department of the Treasury (“Treasury”) will 

participate in Legacy Securities Public-Private Investment Funds 

(“Funds”) that will invest in legacy securities that will initially include 

securities backed by mortgages on residential and commercial properties 

(“Eligible Assets”) on behalf of taxpayers and private investors. 

The Funds are one component of a broader array of measures targeting 

legacy assets in order to encourage new credit formation. This program 

contributes to that effort by improving the health of financial institutions 

through removal of legacy assets from their balance sheets and by 

helping to increase the liquidity and functioning of markets for these 

securities. 

Private asset managers (“Fund Managers”) will apply to be pre-qualified 

to raise private capital to invest in joint investment programs with 

Treasury. 

Fund Managers will raise equity capital from private investors and 

receive matching Treasury equity funding (as described below). 

Taxpayers (through the Treasury) and private investors will generally 

share any profits or losses on a pro rata basis in accordance with equity 

capital investments, except as described under “Treasury Warrants” 

below. 

Investment Objective To generate attractive returns for taxpayers and private investors through 

long-term opportunistic investments in accordance with the Investment 

Strategy. 

Investment Strategy The Funds will seek to achieve the Investment Objective by following 

predominantly a long-term buy and hold strategy, but Treasury will 

consider other strategies involving limited trading. 

Fund Structure Treasury and a vehicle controlled by the applicable Fund Manager 

through which private investors will invest in a Fund (each, a “Private 

Vehicle”) will be the sole investors in a Fund. Additional detail with 

respect to Fund Structure can be found under “Fund Structure Detail” 

below. 

Pre-Qualification of 

Fund Managers 

Private asset managers wishing to participate in this program should 

submit the application found at http://www.financialstability.gov/ to 

Treasury as part of the selection process. Fund Managers will be 

pre-qualified based upon criteria that are anticipated to include: 
• Demonstrated capacity to raise at least $500 million of private 

capital. 

• Demonstrated experience investing in Eligible Assets, including 

through performance track records. 

• A minimum of $10 billion (market value) of Eligible Assets 

under management. 

• Demonstrated operational capacity to manage the Funds in a 

manner consistent with Treasury’s stated Investment Objective 

while also protecting taxpayers. 

• Headquarters in the United States. 

Other criteria are identified in the application. Treasury will consider 

suggestions from Fund Managers to raise equity capital from retail 

investors. 

Application Deadlines An applicant must submit its application to Treasury no later than April 

24, 2009. 

Treasury expects to inform an applicant of its preliminary approval on or 

prior to May 15, 2009. 

Applicants will have a limited period of time from preliminary approval 

to raise at least $500 million of private capital and demonstrate 

committed capital before receiving final approval from Treasury. 

Applicants will be asked to describe the amount of time they anticipate 

needing to raise private capital in their applications. In the event 

applicants are not able to so demonstrate, Treasury will consider other 

applications. 

Treasury Funding Treasury expects to approve approximately 5 Fund Managers to raise 

private capital to invest in joint investment programs with Treasury. The 

number of Fund Managers may be increased depending on Treasury’s 

evaluation of the applications received and determination of what is in 

the best interests of taxpayers. Treasury will consider expanding the 

program through additional fundings in the future. 

Eligible Assets The Eligible Assets will initially be commercial mortgage backed 

securities and residential mortgage backed securities issued prior to 2009 

that were originally rated AAA or an equivalent rating by two or more 

nationally recognized statistical rating organizations without ratings 

enhancement and that are secured directly by the actual mortgage loans, 

leases or other assets and not other securities (other than certain swap 

positions, as determined by the Treasury). The loans and other assets 

underlying any Eligible Asset must be situated predominantly in the 

United States, which limitation is subject to further clarification by 

Treasury. The Eligible Assets must be purchased solely from financial 

institutions from which the Secretary of the Treasury may purchase 

assets pursuant to Section 101(a)(1) of the Emergency Economic 
Stabilization Act of 2008 (“EESA”). 

Drawdowns Treasury equity capital will be drawn down in tranches to provide for 

anticipated investments (subject to limitations to be agreed with 

Treasury); provided that, except as otherwise agreed by Treasury, 

Treasury equity capital may only be drawn down at the same time and in 

the same proportion as private capital is drawn down. Debt financing (as 

described below) will be funded concurrently with drawdowns of equity 

commitments. 

Asset Purchases / 

Dispositions 

Fund Managers will control the process of asset selection and pricing. 

Fund Managers will also control the process of asset liquidation, trading, 

and disposition. 

Governance and 

Management 

Treasury expects to define final terms and conditions for the Funds prior 

to fundraising. 

Funds will be managed by Fund Managers, not the Treasury. 

Treasury will retain the right to cease funding of committed but undrawn 

Treasury equity capital and debt financing in its sole discretion. 

Fund Managers will be required to present monthly reports to Treasury 

on Eligible Assets purchased, Eligible Assets disposed, current 

valuations of Eligible Assets and profits/losses on Eligible Assets 

included in each Fund. 

Prices of Eligible Assets for reporting purposes must be tracked using 

third party sources and annual audited valuations by a nationally 

recognized accounting firm. 

A Fund Manager may not, directly or indirectly, acquire Eligible Assets 

from or sell Eligible Assets to its affiliates, any other Fund or any private 

investor that has committed 10% or more of the aggregate private capital 

raised by the Fund. Private investors may not be informed of potential 

acquisitions of specific Eligible Assets prior to acquisition. 

Fund Managers must agree to waste, fraud and abuse protections for the 

Fund to be defined by Treasury in order to protect taxpayers. 

Fund Managers must agree to provide access to relevant books and 

records of the Fund for Treasury, the Special Inspector General of the 

TARP, the Government Accountability Office and their respective 

advisors and representatives to enable appropriate oversight and taxpayer 

protection. 

Treasury Capital Term Fund Managers will make proposals for the term of a Fund with the 

intention to maximize returns for taxpayers and private investors, but no 

greater than 10 years, subject to extension with Treasury’s consent. 
Debt Financing Each Fund Manager will have the option to obtain for each Fund secured 

non-recourse loans from Treasury (“Treasury Debt Financing”) in an 

aggregate amount of up to 50% of a Fund’s total equity capital; provided

that Treasury Debt Financing will not be available to any Fund Manager 

in respect of a Fund in which the private investors have voluntary 

withdrawal rights. Treasury will consider requests for Treasury Debt 

Financing of up to 100% of a Fund’s total equity capital subject to 

restrictions on asset level leverage, withdrawal rights, disposition 

priorities and other factors Treasury deems relevant. Fund Managers will 

have the opportunity to request this additional Treasury Leverage and 

propose additional terms in their applications. 

Funds may also finance the purchase of Eligible Assets through Legacy 

TALF, any other Treasury program or debt financing raised from private 

sources; provided that Treasury equity capital and Private Vehicle capital 

must be leveraged proportionately from such private debt financing 

sources. 

The Treasury Debt Financing will be secured by the Eligible Assets held 

by the applicable Fund. 

Loans made by Treasury to any Fund will accrue interest at an annual rate 

to be determined by the Treasury and will be payable in full on the date of 

termination of the Treasury Capital Term. 

Treasury Warrants Proceeds received by a Fund will be divided between the Treasury and 

the applicable Private Vehicle based on equity contributions, except that 

Treasury will take warrants as required by EESA to protect the interests 

of taxpayers. The terms and amounts of such warrants will be 

determined in part based on the amount of Treasury Debt Financing 

taken. 

Fees Fund Managers may charge private investors fees in their discretion. The 

Treasury will consider the fees proposed to be charged to private 

investors when evaluating applications by private asset managers. 

For Treasury equity capital, the Treasury will accept proposals for fixed 

management fees (“Treasury Fees”) to apply as a percentage of equity 

capital contributions for invested equity capital. Treasury Fees and 

Treasury’s share of Fund expenses will be paid solely out of distributions 

with respect to Treasury equity capital.

Any fees paid to a Fund Manager or its affiliates in connection with a 

Fund other than Treasury Fees and management or incentive fees 

charged to private investors should accrue to the benefit of the Treasury 

and private investors on a pari passu basis based on equity capital 

commitments. 

Small, Veteran-, To ensure a diversity of participation, the Treasury will encourage small, 
Minority- and 

Women-Owned 

Businesses 

veteran-, minority- and women-owned private asset managers to partner 

with other private asset managers, if necessary, in order to meet the 

criteria identified above for assets under management and ability to raise 

private capital. 

Fund Structure Detail Private investors may be given voluntary withdrawal rights at the level of 

a Private Vehicle, subject to limitations to be agreed with Treasury 

including that no private investor may have the right to voluntarily 

withdraw from a Private Vehicle prior to the third anniversary of the first 

investment by such Private Vehicle. 

The Treasury will request suggestions on structure from Fund Managers, 

including with respect to possible recycling of realized capital. 

It is anticipated that Private Vehicles will be structured so that benefit 

plan investors, within the meaning of Section 3(42) of the United States 

Employee Retirement Income Security Act of 1974, as amended, will be 

eligible to participate as indirect investors in the Funds.