Emergency Economic Stabilization Act Programs 

Mission Statement 

The mission of the Office of Financial Stability is to carry out the authorities delegated to 

the Office by the Secretary of the Treasury to implement the Troubled Assets Relief 

Program (TARP). These authorities were vested to the Treasury Secretary by the 

Emergency Economic Stabilization Act of 2008, which authorized the Secretary of the 

Treasury to establish the TARP to “purchase, and to make and fund commitments to 

purchase troubled assets from any financial institution, on terms and conditions as are 

determined by the Secretary.” 

The purposes of the EESA are to— 

(1) immediately provide authority and facilities that the Secretary of the Treasury can use 

to restore liquidity and stability to the financial system of the United States; and 

(2) ensure that such authority and such facilities are used in a manner that — 

(A) protects home values, college funds, retirement accounts, and life savings; 

(B) preserves homeownership and promotes jobs and economic growth; 

(C) maximizes overall returns to the taxpayers of the United States; and 

(D) provides public accountability for the exercise of such authority. 

Program Summary by Budget Activity 

(Dollars in thousands) 

FY 2009 FY 2010 

Purchase 

Cap1 

Obligations2 Purchase Cap1 Obligations2

Capital Purchase Program $218,000,000 $58,830,700 $0 $0 

Public-Private Investment Program3, 4 $75,000,000 $24,997,500 $0 $0

Systemically Significant Failing Institutions Program $70,000,000 $57,946,000 $0 $0

Consumer and Business Lending Initiative3 

TALF 1.0 $20,000,000 $6,666,000 $0 $0 

TALF Asset Expansion $35,000,000 $11,665,500 $0 $0 

TALF for Legacy Securities $25,000,000 $8,332,500 $0 $0

Unlocking SBA Lending Markets $15,000,000 $4,999,500 $0 $0

Home Affordable Modification Program $50,000,000 $50,000,000 $0 $0

Targeted Investment Program $40,000,000 $19,540,000 $0 $0

Automotive Industry Financing Program and Auto 

Supplier Support Program 

$35,400,000 $18,235,070 $0 $0

Asset Guarantee Program5 $12,500,000 ($752,500) $0 $0

Estimate of Redemption ($25,000,000) NA $0 $0

Capital Assistance and Other TBD Programs3 $129,100,000 $43,029,030 $0 $0

Total $700,000,000 $303,489,300 $0 $0 1

Amount applied to the Section 115 Purchase Cap. 

2

Estimated program costs or savings do not include $1,998,749,041 in estimated modification costs due to revisions of 

the initial loan and equity purchase terms. 

3

Subsidy rate will be revised from the current 33.33% placeholder. 4

 The TALF for Legacy Securities program categorized under the Consumer and Business Lending Initiative in this 

table will be implemented under the Public-Private Investment program. 5

 Loan Guarantees are expected to be $419 billion, but Treasury will be limited to a $12.5 billion second loss. 

EESA - 1 
EESA - 2 

FY 2010 Priorities 

During FY 2010, the Office of Financial Stability will continue to implement the TARP 

and other programs established under the EESA. 
Table of Contents 

1A-Description of Office, Vision and Priorities 4 

1B – Current programs under the EESA 5 

1C – Credit Reform 13 

2.1 Summary of Appropriation Highlights 15 

2.2 Operating Levels Tables 16 

2.3 Financing Accounts- Non-Budgetary Summary 17 

2.4 TARP Summary 17 

2B – Enacting Legislation 18 

2C – Legislative Proposals 18 

3.1 – Budget by Strategic Outcome 19 

4A – Human Capital Strategy Description 21 

4B – Summary of IT Resources and Information Technology Strategy 21 

 

EESA - 3 
Section 1 – Purpose

1A-Description of Office Vision and Priorities 

The Emergency Economic Stabilization Act of 2008 (EESA) authorized the Secretary of 

the Treasury to establish the Troubled Assets Relief Program (TARP) to “purchase, and 

to make and fund commitments to purchase troubled assets from any financial institution, 

on terms and conditions as are determined by the Secretary.” The EESA further 

authorized that the Secretary implement the programs under section (1) through an Office 

of Financial Stability (OFS). 

Accordingly, since the passage of the legislation in October 2008, the Office of Financial 

Stability has implemented a number of programs aimed at stabilizing the financial system 

and restoring the flow of credit to consumers and businesses. The Treasury Department 

has also implemented a series of initiatives as part of its Financial Stability Plan that – 

alongside the American Recovery and Reinvestment Act – lay the foundations for 

economic recovery: 

• Efforts to Improve Affordability for Responsible Homeowners: Treasury has 

implemented programs that allow families to save on their mortgage payments by 

refinancing, assist responsible homeowners in avoiding foreclosure through a loan 

modification plan, and, alongside the Federal Reserve, help bring mortgage 

interest rates down to near historic lows. 

• Consumer and Business Lending Initiative: Treasury and the Federal Reserve 

are expanding the Term Asset-Backed Securities Loan Facility in conjunction 

with the Federal Reserve to jumpstart the secondary markets that support 

consumer and business lending. In addition, Treasury announced plans to make 

up to $15 billion in direct purchases to spur the secondary market governmentguaranteed Small Business Administration loans. 

• Capital Assistance Program: Treasury has also launched a new capital program, 

including a forward-looking capital assessment undertaken by bank supervisors to 

ensure that banks have the capital they need in the event of a worse-than-expected 

recession. If banks are confident that they will have sufficient capital to weather a 

severe economic storm, they are more likely to lend now – making it less likely 

that a more serious downturn will occur. 

• Public-Private Investment Program: To address the challenge of legacy assets, 

Treasury – in conjunction with the Federal Deposit Insurance Corporation and the 

Federal Reserve – has announced the Public-Private Investment Program as part 

of its efforts to repair balance sheets throughout our financial system and ensure 

that credit is available to the households and businesses, large and small, that will 

help drive us toward recovery. 

EESA – 4
The priorities of the OFS are to effectively carry out these new programs as well as to 

continue the implementation of any new programs developed under the EESA. 

1B – Current programs under the EESA 

Capital Purchase Program 

In October 2008, Treasury created the Capital Purchase Program (CPP) to stabilize the 

financial system by building the capital base of healthy, viable U.S. financial institutions, 

which in turn will increase the capacity of those institutions to lend to businesses and 

consumers and support the economy. Under this program, Treasury is purchasing senior 

preferred shares from qualifying U.S. controlled banks, savings associations, and certain 

bank and savings and loan holding companies. 

Through the CPP, Treasury has invested in over 540 institutions, including small, 

community, regional, and national banks, as well as Community Development Financial 

Institutions, in 48 states, the District of Columbia, and Puerto Rico. The application 

deadline for publicly-held institutions was November 14, 2008, the deadline for 

applications from eligible privately-held financial institutions was December 8, 2008, and 

the application deadline for S corporations was February 13, 2009. The deadline for a 

mutual holding company or holding company with a mutual top-tier parent to the CPP is

May 7, 2009. The federal banking regulators are evaluating all submitted CPP 

applications and continue to send qualifying applications to Treasury for final approval. 

On February 27, 2009, Treasury announced a plan to participate in an exchange of 

Citigroup CPP preferred stock for a new series stock which will automatically convert to 

common stock upon shareholder approval. Under the terms of the plan, Treasury will 

exchange up to $25 billion dollars of CPP shares for the new series. Closing of the plan 

is subject to regulatory approval and participation by certain private investors and public 

investors.

Systemically Significant Failing Institutions 

The Systemically Significant Failing Institution program (SSFI) is intended to provide 

stability and prevent disruptions to financial markets from the failure of a systemically 

significant institution. The Treasury will determine the eligibility of participants on a 

case-by-case basis. Treasury provided assistance to the American International Group, 

Inc. (AIG) under the SSFI program in November 2008 and April 2009. In determining 

whether an institution is systemically significant and at substantial risk of failure, 

Treasury may consider, among other things: 

1. The extent to which the failure of an institution could threaten the viability of 

its creditors and counterparties because of their direct exposures to the institution; 

2. Whether the institution is sufficiently important to the nation’s financial and 

economic system that a disorderly failure would, with a high probability, cause 

EESA – 5
major disruptions to credit markets or payments and settlement systems, seriously 

destabilize key asset prices, significantly increase uncertainty or losses of 

confidence thereby materially weakening overall economic performance; or 

3. The extent and probability of the institution’s ability to access alternative 

sources of capital and liquidity, whether from the private sector or other sources 

of government funds. 

Targeted Investment Program 

The Targeted Investment Program (TIP) is designed to prevent a loss of confidence in 

financial institutions that could result in significant market disruptions, threatening the 

financial strength of similarly situated financial institutions, impairing broader financial 

markets, and undermining the overall economy. Treasury will consider institutions as 

candidates for the TIP on a case-by-case basis, based on a number of factors described in 

the program guidelines. These factors include the threats posed by destabilization of the 

institution, the risks caused by a loss of confidence in the institution, and the institution’s 

importance to the nation’s economy. 

Treasury completed the first transaction under the TIP on December 31, 2008, when it 

invested $20 billion in Citigroup perpetual preferred stock and warrants. Under the 

agreement with Citigroup, Treasury will receive an 8 percent annual dividend, payable 

quarterly. As part of this agreement, Citigroup must implement rigorous compensation 

standards and other restrictions on corporate expenditures. Treasury has also invested in 

Citigroup through the CPP and the Asset Guarantee Program. 

On January 16, 2009, Treasury completed its second transaction under the TIP, investing 

$20 billion in Bank of America. Under the agreement with Bank of America, Treasury 

purchased $20 billion of preferred stock and warrants and will receive an 8 percent 

dividend, payable quarterly. As part of this agreement, Bank of America must implement 

rigorous executive compensation standards and other restrictions on corporate 

expenditures. Treasury has also invested in Bank of America through the CPP. 

Automotive Industry Financing Program 

The objective of the Automotive Industry Financing Program (AIFP) is to prevent a 

significant disruption of the American automotive industry, which would pose a systemic 

risk to financial market stability and have a negative effect on the economy of the United 

States. The program requires participating institutions to implement plans that will 

achieve long-term viability. Participating institutions must also adhere to rigorous 

executive compensation standards and other measures to protect the taxpayer’s interests, 

including limits on the institution’s expenditures and other corporate governance 

requirements. Treasury has funded or announced its intent to fund four institutions 

under the AIFP for $35.4 billion. 

EESA – 6
Auto Supplier Support Program 

On March 19, 2009, Treasury released details and eligibility information for the $5 

billion Auto Supplier Support Program (ASSP). The ASSP program will provide 

domestic auto suppliers access to government-backed protection for products they ship to 

auto manufacturers. Participating suppliers will also be able to sell their receivables into 

the program at a modest discount, helping to unlock credit more broadly in the supplier 

industry. 

All U.S.-based auto suppliers that ship to participating auto manufacturers on qualifying 

commercial terms may be eligible to participate in the program. Any domestic auto 

manufacturer is eligible to participate in the program. Participating auto manufacturers 

will decide which suppliers and receivables will receive protection. 

Participating suppliers will pay a small fee for the right to participate in the program. 

Auto manufacturers that choose to participate in the program will request an allocation 

from Treasury to provide government-backing, and then will work with a third-party 

servicer to establish a receivables purchase program. Participating auto manufacturers 

will be required to make a financial commitment in connection with the allocation they 

receive from Treasury. Any receivable created with respect to goods shipped after March 

19, 2009, that is made on qualifying commercial terms between a participating supplier 

and a participating auto manufacturer will be eligible for the program. General Motors 

(GM) and Chrysler have already agreed to participate in the program and will have fully 

operational purchase programs established shortly. 

Warrantee Commitment Program

On March 31, 2009, as part of its assessment of the viability plans submitted by GM and 

Chrysler, the Administration announced the Warrantee Commitment Program, which will 

provide government-funded protection for warranties issued by auto manufacturers that 

are in the process of restructuring. The program will be available for all new warranties 

on new vehicles purchased from participating auto manufacturers during the period in 

which those manufacturers are restructuring. Both GM and Chrysler have already 

indicated their intention to participate in the program. 

 Asset Guarantee Program 

The Asset Guarantee Program (AGP) provides guarantees for assets held by systemically 

significant financial institutions that face a risk of losing market confidence due in large 

part to a portfolio of distressed or illiquid assets. The AGP will be applied with extreme 

discretion in order to improve market confidence in the systemically significant 

institution and in financial markets broadly. Treasury does not anticipate that the 

program will be made widely available and notes that the EESA requires that premiums 

under section 102 of ESSA be set to ensure that taxpayers are fully protected. Details on 

the AGP are available on Treasury’s web site. 

Treasury completed its first transaction under the AGP on January 16, 2009, when it 

finalized the terms of a guarantee agreement with Citigroup that was previously 

announced on November 23, 2008. Under the agreement, Treasury, the Federal Reserve, 

EESA – 7
and the Federal Deposit Insurance Corporation (FDIC) will provide protection against the 

possibility of large losses on an asset pool of approximately $301 billion of loans and 

securities backed by residential and commercial real estate and other such assets, which 

will remain on Citigroup’s balance sheet. The following loss-sharing protocol will apply: 

Citigroup will absorb the first $39.5 billion in losses; losses over $39.5 billion are shared 

by the Government (90 percent) and Citigroup (10 percent) (the “second loss”). Treasury 

absorbs the second loss up to $5 billion, the FDIC absorbs the third loss up to $10 billion, 

and the Federal Reserve funds any residual loss through a non-recourse loan. The 

guarantee is in place for ten years for residential assets and five years for non-residential 

assets. As a fee for the guarantee, Citigroup will issue $7 billion of preferred stock with 

an 8 percent dividend rate; $4 billion will be issued to Treasury and $3 billion to the 

FDIC. As part of the agreement, Citigroup must submit an executive compensation plan 

to Treasury and the FDIC for approval and must comply with certain common stock 

dividend restrictions. Treasury has also invested in Citigroup through the CPP and the 

TIP. 

In addition, Treasury and the FDIC announced that they will provide protection to Bank 

of America against the possibility of unusually large losses on an asset pool of 

approximately $118 billion of loans and securities backed by residential and commercial 

real estate loans, and other trading book assets that have been marked to current market 

value. The large majority of these assets were assumed by Bank of America as a result of 

its recent acquisition of Merrill Lynch & Co. The assets will remain on Bank of 

America’s balance sheet. As a fee for this arrangement, Bank of America will issue 

preferred shares to Treasury and the FDIC. In addition and if necessary, the Federal 

Reserve is prepared to backstop residual risk in the asset pool through a non-recourse 

loan. As part of the agreement, Bank of America will be required to submit an executive 

compensation plan to Treasury and the FDIC for approval and to adhere to certain 

common stock dividend restrictions. The Bank of America guarantee was announced on 

January 16, 2009, but has not yet been finalized. 

The Consumer and Business Lending Initiative (CBLI) 

Term Asset-Backed Securities Loan Facility 

In carrying out the Financial Stability Plan, the Federal Reserve and Treasury released 

further details on the Term Asset-Backed Securities Loan Facility (TALF) in February 

2009, including program terms and conditions, as well as questions and answers. The 

creation of the TALF was announced in November 2008 as a Federal Reserve facility to 

which Treasury will provide $20 billion in funding through the TARP; subsequently, 

standardized terms have been developed. The Federal Reserve will lend on a nonrecourse basis to holders of certain AAA-rated asset-backed securities (ABS) secured by 

newly and recently originated consumer and small business loans. TALF loans will have 

a term of three years and will be secured solely by eligible collateral. Haircuts (a 

percentage reduction used for collateral valuation) will be determined based on the 

riskiness of each type of eligible collateral and the maturity of the eligible collateral 

EESA – 8
pledged to the Federal Reserve. The haircuts will provide additional protection to 

taxpayers by protecting the Federal Government from loss. 

To promote accountability and oversight for the current facility, the participating sponsor 

must provide a certification to the effect that the collateral supporting the ABS is eligible 

under TALF and that an independent accounting firm registered with the Public 

Company Accounting Oversight Board has attested to the sponsor’s assessment of the 

eligible collateral. As part of the Consumer and Business Lending Initiative announced 

by the Secretary on February 10, 2009, Treasury and the Federal Reserve have agreed to 

include four new asset categories under the TALF: (1) ABS backed by mortgage 

servicing advances; (2) ABS backed by loans or leases related to business equipment; (3) 

ABS backed by leases of vehicle fleets; and (4) ABS backed by floorplan loans. The 

CBLI also includes up to $25 billion for the purchase of legacy securities through the 

TALF structure as part of our Public Private Investment Program.

Initiative to Unlock Credit for Small Businesses 

Traditionally, Small Business Administration (SBA) lending has been supported by an 

active secondary market, as community banks and other lenders sell the governmentguaranteed portion of their loans, providing them with new capital to make additional 

loans. Since last fall, this secondary market – which has historically supported over 40 

percent of SBA's 7(a) lending program – has frozen up. As a result, both lenders, 

including community banks and credit unions, and the "pool assemblers" that securitize 

their loans have been left with government-guaranteed SBA loans and securities on their 

books. This has prevented them from making or buying new loans. 

On March 16, 2009, Treasury announced a program to unlock credit for small businesses 

as part of the Consumer and Business Lending Initiative. As part of the program, 

Treasury will make up to $15 billion in TARP funds available to make direct purchases 

to unlock the secondary market for the government-guaranteed portion of SBA 7(a) loans 

as well as first-lien mortgages made through the 504 program. These purchases, 

combined with higher loan guarantees and reduced fees implemented under the American 

Recovery and Reinvestment Act of 2009, will help provide lenders with the confidence 

that they need to extend credit, knowing that if they make an SBA loan, they will be able 

to sell it and access the liquidity necessary to do further lending. 

Making Home Affordable 

On March, 4, 2009, the Treasury released program guidelines for Making Home 

Affordable, a component of the Administration’s Homeowner Affordability and Stability 

Plan announced in February 2009. Making Home Affordable includes: the Home 

Affordable Refinance Program and the Home Affordable Modification Program. 

Together, these programs will assist as many as nine million homeowners making a 

good-faith effort to stay current on their mortgage payments and will also work to prevent 

the destructive impact of foreclosures on families and communities. This plan is being 

implemented pursuant to Sections 101 and 109 of the EESA. 

EESA – 9
Under the Home Affordable Refinance Program, eligible borrowers who are current on 

their mortgages but have been unable to refinance to lower interest rates because their 

homes have decreased in value, may have the opportunity to refinance. This lower-cost 

refinancing program is limited to mortgage loans held in portfolio, securitized or 

guaranteed by Fannie Mae or Freddie Mac. First liens up to 105% of the current market 

value of the mortgaged property are eligible for the new high LTV refinancing program. 

The Making Home Affordable Plan also includes the Home Affordable Modification 

Program. Treasury will share the cost with mortgage lenders to help borrowers avoid 

foreclosure by modifying at-risk loans to achieve a payment the borrower can afford. 

Borrowers must meet several eligibility requirements, including that the mortgaged 

property is the borrower’s primary residence, the current monthly mortgage loan payment 

is greater than 31% of the borrower’s monthly gross income, and the mortgage loan 

amount does not exceed $729,750 for one unite properties (more for 2-4 unit properties). 

To encourage foreclosure mitigation efforts, Treasury will provide mortgage loan 

servicers up-front and “pay for success” fees for eligible loan modifications made to 

borrowers on a timely basis. Treasury will also pay borrower incentives for those who 

continue to stay current on his or her mortgage loan. This incentive payment will be paid 

to investors to reduce the principal of the borrower’s loan. Treasury plans to create a 

reserve fund, designed to discourage lenders from opting to foreclose on mortgaged 

properties located in a declining housing market. 

To protect taxpayers, the Home Affordable Modification Program will focus on sound 

modifications – incentive payments will only be made for sustainable modifications done 

in compliance with program guidelines. The Treasury has worked closely with the FDIC 

and other regulatory agencies to develop uniform guidance for loan modifications across 

the mortgage industry to bring order and consistency to foreclosure mitigation. 

Capital Assistance Program 

On February 10, 2009, Treasury announced the Capital Assistance Program (CAP), 

which is designed to ensure the continued ability of U.S. financial institutions to lend to 

creditworthy borrowers in the face of a weaker than expected economic environment and 

larger than expected potential losses. The CAP consists of two elements aimed at 

restoring confidence in the conditions of the U.S. banking system: a supervisory exercise 

and a new capital access program for qualifying financial institutions. 

The first element is a forward-looking supervisory exercise on the part of the four federal 

banking regulators, who have long worked with the major banking organizations. The 

federal banking or thrift supervisor will undertake a coordinated supervisory capital 

planning exercise or “stress test” with each of 19 major U.S. banking organizations with 

assets in excess of $100 billion. The stress test will determine whether major financial 

institutions have the additional capital buffer necessary to continue lending and to absorb 

potential losses in a worse than expected economic downturn. If the respective federal 

EESA – 10
banking or thrift supervisor concludes that there is a need to establish an additional 

capital buffer, the bank will have a six-month window to raise that capital privately or to 

access the capital made available by Treasury under the CAP. Eligible U.S. financial 

institutions with consolidated assets below $100 billion may also apply and obtain capital 

from the CAP. 

The second component under the CAP is a new capital access program, under which 

Treasury will purchase convertible preferred shares from qualified financial institutions. 

In accordance with the considerations of the EESA, a broad spectrum of financial 

institutions is eligible for the program: U.S. controlled banks, savings associations, and 

certain bank and savings and loan holding companies. A recommendation on acceptance 

is received from the institution’s primary federal regulator or, in some cases, from a 

council of representatives from each federal regulator. Treasury is responsible for final 

approval. 

The investment limit under the CAP is between 1% and 2% of total risk-weighted assets, 

plus any amount of CAP convertible preferred shares to the extent the proceeds are used 

to redeem preferred shares sold under the CPP and, if applicable, TIP. The convertible 

preferred shares automatically convert to common stock after seven years at a specified 

conversion price. The preferred shares also have an optional conversion feature which 

allows the financial institution to convert in whole or in part at any time with approval 

from their primary regulator. Standardized terms have been developed for institutions 

that are organized as publicly traded institutions; terms applicable to privately held 

institutions, S corporations, and mutual organizations are still under consideration. The 

standardized terms also impose provisions (such as the issuance of warrants) that will 

enable the taxpayer to benefit from the future appreciation of the financial institution. 

Additionally, firms must agree to comply with enhanced restrictions with respect to 

executive compensation, transparency, accountability, and monitoring. 

Public-Private Investment Program 

To address the challenge of legacy assets, Treasury – in conjunction with the FDIC and 

the Federal Reserve – is announcing the Public-Private Investment Program (PPIP) as 

part of its efforts to repair balance sheets throughout our financial system and ensure that 

credit is available to the households and businesses, large and small, that will help drive 

us toward recovery. 

Three Basic Principles: Using $75 to $100 billion in TARP capital and capital from 

private investors, the PPIP will generate $500 billion in purchasing power to buy legacy 

assets – with the potential to expand to $1 trillion over time. The PPIP will be designed 

around three basic principles: 

• Maximizing the Impact of Each Taxpayer Dollar: First, by using government 

financing in partnership with the FDIC and the Federal Reserve and coinvestment with private sector investors, substantial purchasing power will be 

created, making the most of taxpayer resources. 

EESA – 11
• Shared Risk and Profits with Private Sector Participants: Second, the PPIP 

ensures that private sector participants invest alongside the taxpayer, with the 

private sector investors standing to lose their entire investment in a downside 

scenario, and the taxpayer sharing in profitable returns. 

• Private Sector Price Discovery: Third, to reduce the likelihood that the 

government will overpay for these assets, private sector investors competing with 

one another will establish the price of the loans and securities purchased under the 

program. 

Two Components for Two Types of Assets: The PPIP has two parts, addressing both the 

legacy loans and legacy securities clogging the balance sheets of financial firms: 

• Legacy Loans: The overhang of troubled legacy loans stuck on bank balance 

sheets has made it difficult for banks to access private markets for new capital and 

limited their ability to lend. 

• Legacy Securities: Secondary markets have become highly illiquid, and are 

trading at prices below where they would be in normally functioning markets. 

These securities are held by banks as well as insurance companies, pension funds, 

mutual funds, and funds held in individual retirement accounts. 

The Legacy Loans Program: To cleanse bank balance sheets of troubled legacy loans and 

reduce the overhang of uncertainty associated with these assets, the FDIC and Treasury 

are launching a program to attract private capital to purchase eligible legacy loans from 

participating banks through the provision of FDIC debt guarantees and Treasury equity 

co-investment. Treasury currently anticipates that approximately half of the TARP 

resources for legacy assets will be devoted to the Legacy Loans Program, but our 

approach will allow for flexibility to allocate resources where we see the greatest impact. 

The Legacy Securities Program: The goal of this program is to restart the market for 

legacy securities, allowing banks and other financial institutions to free up capital and 

stimulate the extension of new credit. The resulting process of price discovery will also 

reduce the uncertainty surrounding the financial institutions holding these securities, 

potentially enabling them to raise new private capital. The Legacy Securities Program 

consists of two related parts designed to draw private capital into these markets by 

providing debt financing from the Federal Reserve under the TALF and through 

matching private capital raised for dedicated funds targeting legacy securities.

1. Expanding TALF to Legacy Securities to Bring Private Investors Back into the 

Market: The Treasury and the Federal Reserve have announced their plans to 

create a lending program that will address the broken markets for securities tied to 

residential and commercial real estate and consumer credit. The intention is to 

incorporate this program into the previously announced TALF. 

2. Partnering Side-by-Side with Private Investors in Legacy Securities Investment 

Funds: Treasury will make co-investment/leverage available to partner with 

private capital providers to immediately support the market for legacy mortgageEESA – 12
and asset-backed securities originated prior to 2009 with a rating of AAA at 

origination. 

1C – Credit Reform 

EESA Section 123 requires that the cost of EESA programs be calculated using the 

methods required by the Federal Credit Reform Act of 1990 ("credit reform"). Under 

credit reform, the net present value expected cost of a loan or loan guaranty is budgeted 

for at the time of obligation. Under EESA Section 101(a)(1), Treasury is authorized to 

"purchase, and to make and fund commitments to purchase, troubled assets from any 

financial institution, on such terms and conditions as are determined by the Secretary..." 

Under this authority, Treasury can enter into equity investments and other financial 

transactions in addition to loans and loan guarantees. Based on Section 123 of EESA, 

Treasury is budgeting for its equity investments under credit reform. 

To comply with the credit reform requirements, Treasury has established five credit 

program accounts: TARP Equity Purchase Program Account, TARP Equity Purchase 

Financing Account, TARP Program Account, Troubled Assets Insurance Financing Fund 

Guaranteed Loan Financing Account, and TARP Direct Loan Financing Account. 

Credit Reform Accounts Descriptions 

TARP Equity Purchase Program Account 

The Equity Purchase Program Account records the subsidy costs (cost to the government) 

associated with Federal equity injections into qualifying financial institutions. Subsidy 

costs are calculated on a net present value basis. 

TARP Equity Purchase Financing Account 

The Equity Purchase Financing Account (EPFA) is a non-budgetary account that records 

all financial transactions to and from the government resulting from equity purchases. 

The EPFA primarily tracks each cohort year’s purchase activity (dividend payments, the 

exercise of warrants, Treasury borrowings, interest paid to or received from Treasury, 

etc.) and is not included in the budget totals when calculating total government spending. 

TARP Program Account 

The TARP Account records the subsidy costs (cost to the government) associated with 

direct loans obligated and guaranteed loans committed to qualifying institutions. Subsidy 

costs are calculated on a net present value basis. 

Troubled Assets Insurance Financing Fund Guaranteed Loan Financing Account 

The Troubled Assets Insurance Financing Fund Guaranteed Loan Financing Account 

(GLFA) is a non-budgetary account that records all financial transactions to and from the 

government resulting from guarantees committed. Like EPFA, its primary purpose is the 

financial tracking of each cohort year’s loan activity and is not included in the budget 

totals. 

EESA – 13
TARP Direct Loan Financing Account 

The TARP Direct Loan Financing Account (DLFA) is a non-budgetary account that 

records all financial transactions to and from the government resulting from direct loans. 

Like EPFA and GLFA, its primary purpose is the financial tracking of each cohort year’s 

loan activity and is not included in the budget totals. 

EESA – 14
Section 2 – Budget Adjustments and Appropriation Language 

2.1 Summary of Appropriation Highlights 

Total TARP 

Summary of Appropriation Highlights 

(dollars in thousands) 

2009 

TARP On-Budget Accounts 

2008 

Actual Budget 

Estimate 

Current 

Estimate 

2010 

Estimate 

Increase (+) 

Decrease (-) 

Obligations: 

 Housing Account 

 Equity Program Account 

 TARP Account 

 TARP Negative Receipt Account 

 TARP Administrative Account 

Total Obligations 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$50,000,000 

$141,554,949 

$114,685,600 

- $752,500 

$278,700 

$305,766,749 

$0 

$0 

$0 

$0 

$262,375 

$262,375 

-$50,000,000 

-$141,554,949 

-$114,685,600 

+ $752,500 

-$16,325 

-$305,504,374 

Budget Authority: 

 Housing Account 

 Equity Program Account 

 TARP Account 

 TARP Negative Receipt Account 

 TARP Administrative Account 

Total Budgetary Authority 

 $0 

 $0 

 $0 

 $0 

 $0 

 $0

 $0 

 $0 

 $0 

 $0 

 $0 

 $0

 $50,000,000 

$141,554,949 

$114,685,600 

 - $752,500 

 $278,700 

$305,766,749 

 $0 

 $0 

 $0 

 $0 

 $262,375 

 $262,375 

 -$50,000,000 

 -$141,554,949 

 -$114,685,600 

 + $752,500 

 -$16,325 

 -$305,504,374 

Outlays: 

 Housing Account 

 Equity Program Account 

 TARP Account 

 TARP Negative Receipt Account 

 TARP Administrative Account 

Total Outlays 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$0 

$4,091,201 

$141,554,949 

$114,685,600 

- $752,500 

$222,960 

$259,802,210 

$8,102,255 

$0 

$0 

$0 

$265,640 

$8,367,895 

+$4,011,054 

-$141,554,949 

-$114,685,600 

+ $752,500 

+$42,680 

-$251,434,315 

Note: Dollar amounts may not add due to rounding in this and subsequent charts. 

The FY 2009 appropriation forecast includes $279 million funding for general operating 

expenses associated with the TARP. The TARP does not require subsidy for FY 2010 

obligations beyond $262 million for general operating expenses. These administrative 

costs do not count against the $700B purchase cap limitation.

EESA – 15
2.2 Operating Levels Table 

(dollars in thousands) 

2009 

Office of Financial Stability Account 

2008 

Actual Budget 

Estimate 

Current 

Estimate 

2010 

Estimate 

Increase (+)

Decrease (-)

FTE 0 0 134 225 

Object Classification: 

 11/12 Salary & Benefits 

 21 Travel 

 21 Transportation 

 21 Rent, Communications, Utilities 

 21 Contracts and Other Misc. Services 

 21 Supplies 

 21 Equipment 

 21 Land/Bldgs/Leasehold Improvements 

Total 

 $0 

$0 

$0 

$0 

$0 

$0 

$0 

$0

$0 

 $0 

$0 

$0 

$0 

$0 

$0 

$0 

$0

$0

 $21,110 

$1,540 

$500 

$4,637 

$248,160 

$376 

$2,278 

$100

$278,700 

 $35,054 

$2,538 

$504 

$8,224 

$213,098 

$497 

$2,459 

$0

$262,375

+ $13,944 

+ $998 

+ $4 

+ $3,587 

- $35,062 

+ $121 

+ $181 

- $100

- $16,325

2.2.1 Operating Levels Table by Treasury Reimbursements 

(dollars in thousands) 

2009 

Office of Financial Stability Account 2008 

Actual Budget 

Estimate 

Current 

Estimate 

2010 

Estimate 

Increase (+)

Decrease (-)

Direct Program Activity 

Reimbursements: 

 Congressional Oversight Panel 

 GAO 

 Treasury and non-Treasury Agencies 

Total 

$0 

$0 

$0 

$0

$0

$0 

$0 

$0 

$0

$0

$252,700 

$4,000 

$9,000 

$14,000

$279,700

$228,375 

 

$4,000 

$9,000 

$21,000

$262,375

- $24,325 

+ $0 

+ $0 

+ $7,000

- $17,325

EESA – 16
2.3 Financing Accounts - Non-Budgetary Summary 

Financing Accounts – Non-Budgetary Financial Summary 

(dollars in thousands) 

2009 

2008 

Actual

Budget 

Estimate 

Current 

Estimate 

2010 

Estimate 

Increase (+) 

Decrease (-) 

 TARP Guaranteed Loans: 

 Obligations 

 Collections 

 Financing Authority (net) 

 Financing Disbursements (net) 

$0 

$0 

$0 

$0

$0 

$0 

$0 

$0

$752,575

$276,363

$752,500

$476,212

$1,096,067 

$1,222,167 

$593,084 

-$126,100 

+$343,492

+$945,804

-$159,416

-$602,312

 TARP Direct Loans: 

 Obligations 

 Collections 

 Financing Authority (net) 

 Financing Disbursements (net)

$0 

$0 

$0 

$0

$0 

$0 

$0 

$0

$350,998,065

$152,348,718

$198,649,347

$198,649,347

$19,885,917 

$31,397,879 

-$11,511,962 

-$11,511,962 

-$331,112,149

-$120,950,839

-$210,161,309

-$210,161,309

Equity Purchases: 

 Obligations 

 Collections 

 Financing Authority (net) 

 Financing Disbursements (net)

$0 

$0 

$0 

$0

$0 

$0 

$0 

$0

$348,524,618

$182,165,548

$166,359,070

$166,359,070

$13,393,164 

$22,939,476 

-$9,546,312 

-$9,546,312 

-$335,131,454

-$159,226,072

-$175,905,382

-$175,905,382

TARP Financing Accounts Totals: 

 Obligations 

 Collections 

 Financing Authority (net) 

 Financing Disbursements (net) 

$0 

$0 

$0 

$0

$0 

$0 

$0 

$0

$700,275,258

$334,790,629

$365,760,917

$365,484,629

$34,375,148 

$55,559,521 

-$20,465,190 

-$21,184,374 

-$665,900,111

-$279,231,108

-$386,226,107

-$386,669,003

2.4 TARP Summary 

Summary of TARP Activity 

(dollars in thousands) 

Amount 

towards $700B 

limit 

Subsidy 

Rates 

Subsidy Cost 

Total Equity Transactions $333,000,000 41.91% 

 

$139,556,200 

Total Direct Loans $329,500,000 34.81%

 

$114,685,600 

Guaranteed Loans: $12,500,000 -0.18% -$752,500 

Home Affordable Modification Program $50,000,000 NA $50,000,000 

Estimated Redemptions ($25,000,000) 

Total Amount of TARP Activity $700,000,000 43.36% $303,489,300 

EESA – 17
2B – Enacting Legislation 

 

Public Law 110-343, Emergency Economic Act of 2008, provides such sums as 

necessary, including administrative expenses, for the cost to purchase and insure certain 

types of troubled assets for the purposes of providing stability to and preventing 

disruption in the economy and financial system. 

2C –Legislative Proposals 

The TARP has no legislative proposals in FY 2010. 

EESA – 18
Section 3 – Budget and Performance Plan 

This table lists all FY 2010 resources by strategic goal, objective and outcome. 

3.1 – Budget by Strategic Outcome 

Treasury Strategic Outcome 

(dollars in thousands) 

FY 2009 

Estimated 

AMOUNT 

FY 2010 

Estimated 

AMOUNT 

Percent 

Change 

AMOUNT 

Ensure the Overall Stability and Liquidity of the Financial 

System $517,100,000 $0 - 100%

Protect the Economy from Systemic Risks $157,900,000 $0 - 100%

Provide incentives to ensure Homeownership Preservation $50,000,000 $0 - 100%

3A – Ensure the Overall Stability and Liquidity of the Financial System

The primary objective of the EESA is to ensure the overall stability and liquidity of the 

financial system. To achieve that objective, Treasury has developed a number of 

programs that are broadly available to all financial institutions. Two of the programs, 

CPP and CAP, are designed to inject capital directly into the banking system. This 

capital enhances the banks’ ability to increase lending to households and businesses, and 

allows for the write-down or sale of troubled assets that sit on banks’ balance sheets. A 

second complementary program, the PPIP, facilitates the removal of troubled assets from 

the banks’ balance sheets. In addition to these initiatives Treasury has implemented the 

CBLI program to enhance liquidity and restore the flow of credit to consumers and 

business. As with the CPP, CAP and PPIP, the CBLI program is available to all financial 

institutions. It is comprised of a specific small business component and a general 

securitization component. Taken together these programs will help ensure the overall 

stability and liquidity of the financial system. 

Performance metrics are in development and will be available by FY 2010. 

3B – Protect the Economy from Systemic Risks

While the above widely available programs will put the country on a path to a stronger 

financial system, there are specific instances where exceptional assistance is required. 

Treasury has identified a select few financial institutions where direct aid is required to 

prevent a broader crisis from spreading throughout the economy, and has taken action in 

these cases to mitigate potential systemic risks. The objectives of the TIP, SSFI and AGP 

programs are to mitigate distress at key troubled financial institutions through targeted 

programs and investments. Similarly, the AFIP provides funding for the automotive 

EESA – 19
industry in order to prevent a significant disruption of the automotive industry that would 

pose a systemic risk to financial markets and negatively affect the real economy. 

Performance metrics are in development and will be available by FY 2010. 

3C – Homeownership Preservation

 

The Home Affordable Modification program will help mortgage holders who are making 

a good-faith effort to make their mortgage payments, while attempting to prevent the 

destructive impact of the housing crisis on families, communities, and the economy. This 

program is intended to reach millions of responsible homeowners who are struggling to 

afford their mortgage payments because of the current recession, yet cannot sell their 

homes because prices have fallen so significantly. The Home Affordable Modification 

program operates through a shared partnership between the Treasury Department and 

mortgage loan servicers to help those who commit to make reasonable monthly mortgage 

payments to stay in their homes. This plan will also help to stabilize home prices for 

homeowners in neighborhoods hardest hit by foreclosures. 

Performance metrics are in development and will be available by FY 2010. 

EESA – 20
EESA – 21

Section 4 – Supporting Materials 

4A – Human Capital Strategy Description 

OFS's Human Capital Strategy is designed to position the Office of Financial Stability to 

meet the human capital management challenges necessary to support OFS’s mission. 

The key aspects of OFS's FY 2009/2010 human capital strategy include using: 

• OPM HR flexibilities and authorities to hire new employees for short and long 

term assignments; 

• experts or consultants and detailees for temporary or intermittent employment; 

• pay incentives flexibilities to retain unique expertise that enables OFS to meet its 

goals; and 

• regularly scheduled strategic workforce assessments to refine the organization and 

identify and eliminate competency gaps of its workforce needed to achieve OFS's 

mission. 

4B – Summary of IT Resources and Information Technology Strategy 

As an organization embedded in Domestic Finance, the Office of Financial Stability 

(OFS) leverages technologies and services provided by the Treasury Office of the Chief 

Information Officer (OCIO). Most services rely on IT Line-of-Business service 

providers, the Treasury GSS, and existing key Treasury management control applications 

in use across the agency. 

Financial outlays from OFS for technology are also occasionally required for the 

acquisition of products and services which have not been historically available through 

the agency and for those OFS requirements that exceed the capacity of the agency 

technology provider. The acquisition of computers, copiers, technology analyst and 

developers are examples of such outlays. OFS support technologies are in concert with 

the Treasury Optimized Enterprise IT Infrastructure.