Emergency Economic Stabilization Act Programs 

Mission Statement 

The mission of the Office of Financial Stability is to carry out the authorities delegated to 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) Purchase Cap1

 BA Outlays2

FY 2009 FY 2010 Total Cohort 2009

and 2010 

Capital Purchase Program $204,617,573 $3,382,427 $208,000,000 - $3,680,719 

Public-Private Investment Program $6,666,667 $23,340,000 $30,006,667 + $314,542

AIG Investment Program $69,835,000 $0 $69,835,000 + $48,147,456

Consumer and Business Lending Initiative $20,000,000 $40,000,000 $60,000,000 + $2,194,226

Home Affordable Modification Program3 $27,065,760 $21,690,240 $48,756,000 + $48,756,000

Targeted Investment Program $40,000,000 $0 $40,000,000 - $4,083,330 

Automotive Industry Financing Program $81,054,933 $3,790,000 $84,844,933 + $28,208,444

Asset Guarantee Program4 $5,000,000 $0 $5,000,000 - $3,014,971

Total $454,239,933 $92,202,667 $546,442,599 + $116,841,648

1

Amount applied to the Section 115 Purchase Cap (i.e., the portion of the original $700 billion cap expected to be used). 2 Estimated program costs (+) or savings (-) over the life of the program, including interest on reestimates and excluding 

administrative costs. 

3

 Includes $1.2 B reduction in TARP purchase authority from the Helping Families Save Their Homes Act of 2009. 4 Treasury guaranteed up to $5 billion of potential losses incurred on a $301 billion portfolio of loans. 

FY 2011 Priorities 

During FY 2011, the Office of Financial Stability will be primarily in the maintenance phase of 

the TARP, which includes managing assets, repayments, repurchases, warrant liquidation, 

dividends, corporate actions, collateral management exchanges, etc. Under the terms of TARP, 

Treasury can enter into new commitments to purchase troubled assets through October 3, 2010. 

While Treasury does not plan to implement any new TARP programs in FY 2011, funding for 

existing programs such as the Home Affordable Modification Program will continue to occur. 

EESA - 1 
Table of Contents 

1A-Description of Office Vision and Priorities 3 

1B – Program History and Future Outlook 3 

1C – Credit Reform 15 

2.1 Summary of Appropriation Highlights 17 

2.2 Operating Levels Table 18 

2.3 Financing Accounts- Non-Budgetary Summary 19 

2.4 TARP Summary 19 

2A – Enacting Legislation 20 

2B – Legislative Proposals 20 

3.1 – Budget by Strategic Outcome 21 

4A – Human Capital Strategy Description 26 

4B – Summary of IT Resources and Information Technology Strategy 29 

 

EESA - 2 
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 101 through 

an Office of Financial Stability (OFS). 

In light of this statutory direction, OFS established the following as its operational 

goals: 

1. Ensure the overall stability and liquidity of the financial system. 

a. Make capital available to viable institutions. 

b. Provide targeted assistance as needed. 

c. Increase liquidity and volume in securitization markets. 

2. Prevent avoidable foreclosures and help preserve homeownership. 

3. Protect taxpayer interests. 

4. Promote transparency. 

1B – Program History and Future Outlook 

To administer the programs under TARP, the Secretary of the Treasury has established 

the OFS, which is designed to be temporary in nature, but also highly skilled and well 

equipped to handle the complexity of TARP initiatives. During FY 2009, the OFS 

disbursed $364 billion of the authorized $700 billion, most of it in the form of 

investments. As a result of improved financial conditions and careful stewardship of the 

program, the ultimate cost to the taxpayer of TARP investments is likely to be 

significantly lower than expected. In the FY 2010 budget total impact of the program on 

the deficit was expected to be $306 billion, but it is now expected to total only $117 

billion (see Program Summary by Budget Activity table above). The authority for 

administrative budget TARP funds is provided in Section 118 of EESA. In FY 2011 OFS 

plans to obligate almost $298 million and use 271 FTE, a decrease of $58 million and an 

increase of 11 FTE from the FY 2010 estimates. 

Capital Purchase Program 

EESA was originally proposed as a means to buy mortgage loans, 

mortgage-backed securities and certain other assets from banks. However, the authorities 

granted under EESA were broadened in the legislative process to cover any financial 

instrument whose purchase the Secretary of the Treasury, after consultation with the 

Chairman of the Federal Reserve, determines necessary to promote financial market 

stability. Shortly following passage of EESA, it became clear to the leaders of many G-7 

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nations that rapid action was needed to provide capital to the financial system as a whole. 

Lending even between banks had practically stopped, credit markets had shut down, and 

many financial institutions were facing severe stress. There was not sufficient time to 

implement a program to buy mortgage related assets, which posed difficulties related to 

valuing such assets and getting the holders of such assets to sell them at current prices. In 

this context, immediate capital injections into financial institutions were a necessary step 

to avert a potential collapse of the financial system. 

Given the high level of uncertainty in financial markets and the economy, even strong 

financial institutions began to hoard capital. Based on various market indicators, it 

became clear that financial institutions needed additional capital to sustain a normal flow 

of credit to businesses and consumers during the financial turmoil and economic 

downturn. As a result, OFS launched the Capital Purchase Program (CPP), its largest and 

most significant program under EESA, on October 14, 2008. OFS initially committed 

over a third of the total TARP funding, $250 billion, to the CPP, which it lowered to $218 

billion in March 2009. 

The CPP was designed to bolster the capital position of viable institutions and, in doing 

so, to build confidence in these institutions and the financial system as a whole. With the 

additional capital, CPP participants were better equipped to undertake new lending, even 

while absorbing write downs and charge-offs on loans that were not performing. 

Of the $250 billion commitment, OFS invested $125 billion in eight of the country’s 

largest financial institutions. The remaining $125 billion was made available to 

qualifying financial institutions (QFIs) of all sizes and types across the country, including 

banks, savings associations, bank holding companies and savings and loan holding 

companies. QFIs interested in participating in the program had to submit an application 

to their primary federal banking regulator. The minimum subscription amount available 

to a participating institution was 1 percent of risk-weighted assets. The maximum 

subscription amount was the lesser of $25 billion or 3 percent of risk-weighted assets. 

OFS provided a total of $205 billion in capital to 707 institutions in 48 states, including 

more than 300 small and community banks, helping to enable them to absorb losses from 

bad assets while continuing to lend to consumers and businesses. The largest investment 

was $25 billion while the smallest was $301,000. To encourage continued participation 

by small and community banks, the application window for CPP was reopened on May 

13, 2009, for banks with less than $500 million in assets, with an application deadline of 

November 21, 2009. As of December 31, 2009, the funding deadline for CPP ended. 

The Budget reflects that financial institutions redeemed $70.7 billion in principal 

repayments and $9.7 billion in dividends, interest, warrants and fees as of September 30, 

2009. Furthermore, the Budget reflects that financial institutions will redeem an 

additional $59.7 billion in principal repayments and receive over $20.1 billion in 

dividends, interest, warrants and fees in 2010. 

Most banks participating in the CPP are to pay OFS a dividend rate of 5 percent per year, 

increasing to 9 percent a year after the first five years. In the case of S-corporations, OFS 

EESA – 4
acquires subordinated debentures. Under the CPP, OFS has a right to elect two directors 

to the board of directors of an institution that misses six or more dividend payments. 

American International Group, Inc. (AIG) Investment Program 

Since September 2008, the Federal Reserve and OFS have taken a series of actions 

related to AIG in order to prevent AIG’s disorderly failure and mitigate systemic risks. 

These actions addressed the liquidity and capital needs of AIG, helping to stabilize the 

company. OFS provided this assistance by purchasing preferred shares in AIG and also 

received warrants to purchase common shares in the institution. The assistance provided 

to AIG was deemed “exceptional assistance” which means that the recipient is subject to 

greater restrictions under the rules relating to executive compensation. 

The Federal Reserve Board, through the Federal Reserve Bank of New York (FRBNY), 

provided an $85 billion credit facility in the form of secured loans to AIG on September 

16, 2008 to contain the financial panic at least cost to the American taxpayer. The 

FRBNY has also provided additional assistance to AIG by funding special purpose 

entities which purchased certain derivative contracts from AIG. In connection with its 

assistance to AIG, the FRBNY received convertible preferred stock representing 

approximately 77.9 percent of the fully diluted voting power of the AIG common stock. 

This preferred stock was deposited in a trust, which exists for the benefit of the U.S. 

taxpayers. The FRBNY has appointed three independent trustees who have the power to 

vote the stock and dispose of the stock with prior approval of FRBNY and after 

consultation with Treasury. The Department of the Treasury does not control the trust 

and cannot direct the trustees. 

In November 2008, this assistance was restructured so that AIG had more equity and less 

debt. OFS purchased $40 billion in cumulative preferred stock from AIG under the 

TARP, the proceeds of which were used to repay the Federal Reserve loan in part. In 

April 2009, OFS exchanged the $40 billion in cumulative preferred stock for $41.6 

billion in non-cumulative preferred stock and created an equity capital facility, under 

which AIG may draw up to $29.8 billion as needed in exchange for issuing additional 

preferred stock to OFS. As of September 30, 2009, AIG had drawn approximately $3.2 

billion from the facility. The preferred stock pays a noncumulative dividend, if declared, 

of 10 percent per annum. 

Targeted Investment Program 

OFS established the Targeted Investment Program (TIP) under the TARP in December 

2008. The TIP gave the OFS the necessary flexibility to provide additional or new 

funding to financial institutions that were critical to the functioning of the financial 

system. Through TIP, OFS sought to prevent a loss of confidence in critical financial 

institutions, which could result in significant financial market disruptions, threaten the 

financial strength of similarly situated financial institutions, impair broader financial 

markets, and undermine the overall economy. 

EESA – 5
Eligibility to participate in the TIP was determined on a case-by-case basis, depending on 

a number of factors. OFS considered, among other things: 

• 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; 

• The number and size of financial institutions that are perceived or known 

by investors or counterparties as similarly situated to the failing institution, or that 

would otherwise be likely to experience indirect contagion effects from the failure 

of the institution; 

• Whether the institution is sufficiently important to the nation’s financial 

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

cause major disruptions to credit markets or payments and settlement systems, 

seriously destabilize key asset prices, or significantly increase uncertainty or loss 

of confidence, thereby materially weakening overall economic performance; and 

• 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. 

OFS invested $20 billion in each of Bank of America (BofA) and Citigroup under the 

TIP. These investments provide for annual dividends of 8 percent; and impose greater 

reporting requirements and harsher restrictions on the companies than under the CPP 

terms, including restricting dividends to $0.01 per share per quarter, restrictions on 

corporate expenses, and other measures. The Budget reflects that both Citigroup and 

Bank of America fully redeemed the Government's TIP investments in 2010. 

Furthermore, the Budget reflects that Citigroup and Bank of America paid $1.8 billion in 

dividends in 2009 and an estimated $791 million in additional dividend payments in 

2010. Assistance under the TIP is also considered “exceptional assistance”, which means 

that the recipient is also subject to greater restrictions under the executive compensation 

rules. 

Automotive Industry Financing Program 

OFS established the Automotive Industry Financing Program (AIFP) on December 19, 

2008, to help prevent a significant disruption to the American automotive industry, which 

would have posed a systemic risk to financial market stability and had a negative effect 

on the economy. OFS announced a plan to make emergency loans available from the 

TARP under the AIFP to General Motors Corporation (GM) and Chrysler LLC 

(Chrysler) to provide a path for these companies to go potentially through orderly 

restructurings and achieve viability. 

OFS’ investments in the auto companies were determined to be consistent with both the 

purpose and specific requirements of EESA. OFS determined that the auto companies 

EESA – 6
were and are interrelated with entities extending credit to consumers and dealers because 

of their financing subsidiaries and other operations, and that a disruption in the industry 

or an uncontrolled liquidation would have had serious effects on financial market 

stability, employment and the economy as a whole. In addition, Congress provided the 

Secretary of the Treasury broad authority by defining “financial institutions” in EESA 

flexibly so as not to be limited to banks, savings institutions, insurance companies and 

similar entities. The auto companies, as well as their respective financing entities, 

qualified as "financial institutions" under EESA. In each case, they were organized under 

Delaware law, had significant U.S. operations, were subject to extensive federal and 

state regulation, and were not a central bank or institution owned by a foreign 

government. 

OFS initially provided loans of $13.4 billion to GM and $4 billion to Chrysler under the 

AIFP to give the companies time to negotiate with creditors and other stakeholders in 

order to prevent disorderly bankruptcies. Under the terms of the loans, each company 

was required to prepare a restructuring plan that included specific actions aimed at 

assuring: (i) the repayment of the loan extended by TARP; (ii) the ability of the company 

to comply with applicable federal fuel efficiency and emissions requirements and 

commence the domestic manufacturing of advanced technology vehicles in accordance 

with federal law; (iii) achievement of a positive net present value; (iv) rationalization of 

costs, capitalization, and capacity with respect to the manufacturing workforce, suppliers 

and dealerships of the company; and (v) a product mix and cost structure that is 

competitive in the U.S. marketplace. 

To oversee the federal financial assistance—including evaluating the restructuring 

plans—and to make decisions about future assistance to the automakers, the loan 

agreements provided for a presidential designee. Under the terms of the loan agreements, 

because no presidential designee has been appointed to date, the Secretary of the 

Treasury makes decisions on all matters involving financial assistance to the automakers, 

with input from the National Economic Council. 

To date, the OFS has provided approximately $85 billion in loans and equity investments 

to GM, Chrysler, and their respective financing entities. 

Auto Supplier Support Program 

Because of the credit crisis and the rapid decline in auto sales, many of the nation's auto 

parts suppliers were struggling to access credit and faced uncertainty about the prospects 

for their businesses. Suppliers that ship parts to auto companies generally receive 

payment approximately 45-60 days after shipment. In a normal credit environment, 

suppliers can either sell or borrow against those commitments, or receivables, in the 

interim period to pay their workers and fund their ongoing operations. However, due to 

the uncertainty about the ability of the auto companies to honor their obligations, banks 

were unwilling to extend credit against these receivables. On March 19, 2009, OFS 

announced the Auto Supplier Support Program (ASSP) to help address this problem by 

providing up to $5 billion to domestic auto manufacturers to purchase supplier 

EESA – 7
receivables. With the emergence of New GM and New Chrysler from bankruptcy 

proceedings and with the threat of liquidation greatly reduced, credit market access for 

suppliers has improved. As of July 1, 2009, the base commitment under the ASSP was 

decreased to $3.5 billion. As of September 30, 2009, OFS has funded $413 million under 

the ASSP. The loans used to finance the program must be repaid within a year, unless 

extended. OFS expects these loans to be fully repaid by or before April 2010. The 

companies may still draw on the loans but they are not expected to. 

Warranty Commitment Program 

On March 30, 2009, OFS announced an Auto Warranty Program designed to give 

consumers considering new car purchases from domestic manufacturers the confidence 

that warranties on those cars would be honored regardless of the outcome of the 

restructuring process. As of July 10, 2009, the program was terminated after New GM 

and New Chrysler completed the purchase of substantially all of the assets of GM and 

Chrysler from their respective bankruptcies. The $640 million advanced to GM and 

Chrysler under the program has been repaid to OFS; Chrysler repaid the full amount with 

interest while GM repaid only principal. 

 

Asset Guarantee Program 

Pursuant to section 102 of EESA, OFS established the Asset Guarantee Program (AGP) 

with the same objective as the TIP of preserving financial market stability. The AGP, 

like the TIP, is a targeted program aimed at maintaining the stability of systemically 

important financial institutions and, thereby, reducing the potential for problems at such 

an institution to “spillover” to the broader financial system and economy. More 

specifically, the AGP may be used to provide protection against the risk of significant 

loss in a pool of assets held by a systemically significant financial institution that faces a 

risk of losing market confidence due in large part to its holdings of distressed or illiquid 

assets. By helping limit the institution’s exposure to losses on illiquid or distressed assets, 

the AGP can help the institution maintain the confidence of its depositors and other 

funding sources and continue to meet the credit needs of households and businesses. 

The AGP has been applied with extreme discretion and OFS does not anticipate wider 

use of this program. To date, OFS has used this program to assist Citigroup and began 

negotiations with Bank of America (BofA) under the AGP which BofA subsequently 

terminated. 

Citigroup 

 

In January 2009, OFS and Citigroup entered into an agreement for Citigroup’s 

participation in the AGP. OFS guaranteed up to $5 billion of potential losses incurred on 

a $301 billion pool of loans, mortgage-backed securities, and other financial assets held 

by Citigroup. The Federal Reserve and the FDIC are also parties to this arrangement. 

OFS will not become obligated to pay on its guarantee unless and until Citigroup has 

absorbed $39.5 billion of losses on the covered pool. OFS would then cover 90 percent of 

all losses on the covered pool, up to a maximum of $5 billion. In consideration for the 

EESA – 8
guarantee, OFS received $4.03 billion in preferred stock that pays an annual dividend of 

8 percent. OFS also received a warrant to purchase approximately 66 million shares of 

common stock at a strike price of $10.61 per share. 

 

As part of an exchange offer, OFS exchanged preferred stock received under the AGP for 

an equivalent amount of trust preferred securities paying interest at the same rate. 

On December 22, 2009, Treasury, the Federal Reserve, the Federal Deposit Insurance 

Corporation and Citigroup terminated the agreement under which the U.S. government 

agreed to share losses on a pool of Citigroup assets. The U.S. government parties did not 

pay any losses under the agreement, and will keep $5.2 billion of $7.0 billion in trust 

preferred securities as well as warrants for common shares that were issued by Citigroup 

as consideration for such guarantee. With this termination, the AGP is being terminated 

at a profit to the taxpayer. 

Bank of America 

In January 2009, OFS, the Federal Reserve and the FDIC entered into a term sheet for a 

potential loss sharing arrangement under the AGP on a $118 billion pool of financial 

instruments owned by Bank of America. In May 2009, Bank of America announced its 

intention to terminate negotiations with respect to the loss-sharing arrangement and in 

September 2009, Treasury, the Federal Reserve, the FDIC and Bank of America entered 

into a termination agreement pursuant to which (i) the parties terminated the related term 

sheet and (ii) Bank of America agreed to pay a termination fee of $425 million to the 

government parties, with $276 million going to Treasury. The fee compensated the 

government parties for the value that Bank of America had received from the 

announcement of the negotiations with government parties to guarantee and share losses 

on the pool of assets from and after the date of the term sheet. The termination fee was 

determined by taking the fee that would have been payable had the guarantee been 

finalized. 

The Consumer and Business Lending Initiative (CBLI) 

OFS designed two initiatives to restore consumer and business lending, the Term AssetBacked Securities Loan Facility (TALF) and the Unlocking Credit for Small Business 

Initiative. Both programs are discussed in more detail below. 

Term Asset-Backed Securities Loan Facility 

The asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS) 

markets over time have funded a substantial share of credit to consumers, businesses and 

real estate owners. In the third quarter of 2008, the ABS market and commercial 

mortgage-backed securities markets came to nearly a complete halt. 

In November 2008, the Federal Reserve and Treasury announced the creation of the Term 

Asset-Backed Securities Loan Facility (TALF) and launched TALF under the Financial 

EESA – 9
Stability Plan on February 10, 2009. The TALF's objective was to stimulate investor 

demand for certain types of eligible ABS, specifically those backed by loans to 

consumers and small businesses, and ultimately, bring down the cost and increase the 

availability of new credit to consumers and businesses. Under the TALF, the Federal 

Reserve extends up to $200 billion in three- and five-year non-recourse loans to investors 

that agree to purchase eligible consumer or small business ABS. OFS provides up to $20 

billion of TARP monies in credit protection to the Federal Reserve for losses arising 

under TALF loans. 

The TALF was initially designed for newly or recently originated AAA-rated ABS 

backed by student loans, auto loans, credit card loans, and loans guaranteed by the SBA. 

On March 19, 2009, OFS and the Federal Reserve announced that the TALF would be 

expanded to include newly or recently issued AAA-rated Asset Backed Securities (ABS) 

backed by four additional types of consumer and business loans – mortgage servicing 

advances, loans or leases relating to business equipment, leases of vehicle fleets, and 

floor plan loans. These new categories of collateral were eligible for inclusion in the 

April 2009 TALF subscription and funding process. 

The OFS and the Federal Reserve structured the TALF to minimize credit risk to the U.S. 

government to the greatest extent possible, consistent with achieving the program’s 

purpose of encouraging lending to consumers and businesses. Investors take risk by 

providing some of the capital to purchase the securities. The amount of private capital is 

measured in the form of haircuts, which represents the investor's equity contribution. The 

haircut level varies across asset class and maturity to take into account any differences in 

risk. Finally, the borrower must also make monthly or quarterly interest payments to the 

federal government. The cost of the loan is 100 basis points over a fixed or floating rate 

benchmark, such as the London Interbank Offered Rate ("LIBOR"). 

The Federal Reserve had originally authorized using the TALF to make loans through 

December 31, 2009. To promote the flow of credit to businesses and households and to 

facilitate the financing of commercial properties, the Federal Reserve announced on 

August 17, 2009 that the TALF will continue to make loans against newly issued ABS 

and previously issued CMBS through March 31, 2010. In addition, TALF will make 

loans against newly issued CMBS through June 30, 2010. The inclusion of CMBS as 

eligible collateral helps prevent defaults on economically viable commercial properties, 

increases the capacity of current holders of maturing mortgages to make additional loans, 

and facilitates the sale of distressed properties. 

Unlocking Credit for Small Businesses Program 

To help restore the confidence needed for financial institutions to increase lending to 

small businesses, Treasury announced a program to unlock credit for small businesses on 

March 16, 2009. Under the program, Treasury announced that it would make up to $15 

billion in TARP funds available to purchase securities backed by the Small Business 

Administration (SBA)-guaranteed portions of loans made under the SBA’s 7(a) loan 

EESA – 10
program. The SBA’s 7(a) program is the SBA’s most basic and widely used loan 

program. 

Since Treasury's announcement of this program, the credit markets for small businesses 

have improved somewhat. The secondary market for guaranteed SBA loans, for example, 

had essentially ceased working last fall and had only $86 million in January re-sales. That 

market improved notably this spring in the wake of Treasury’s announcement, with $399 

million settled from lenders to broker-dealers in September 2009. As a result of this 

improvement, as well as reluctance on the part of market participants to accept TARP 

funds, OFS found that demand for its proposed program declined. As of September 30, 

2009, no funds had been disbursed under the program, although it remains available. 

However, as part of its commitment to take additional steps to improve the availability of 

credit to small businesses, Treasury is working with the Small Business Administration to 

develop and implement additional TARP efforts that will support small banks in 

increasing lending to small businesses in their communities. 

Home Affordable Modification Program 

To mitigate foreclosures and help ensure homeownership preservation, Treasury 

announced a comprehensive $75 billion program, the Home Affordable Modification 

Program (HAMP), in February 2009. OFS will provide up to $50 billion in funding 

through the TARP, while Fannie Mae and Freddie Mac agreed to provide up to $25 

billion of additional funding. HAMP focuses on creating sustainably affordable 

mortgage payments for responsible home owners who are making a good faith effort to 

make their mortgage payments, while mitigating the spillover effects of preventable 

foreclosures on neighborhoods, communities, the financial system and the economy. 

HAMP is built around three core concepts. First, the program focuses on affordability. 

Every modification under the program must lower the borrower's monthly mortgage 

payment to no more than 31 percent of the borrower's monthly gross income, the “target 

monthly mortgage payment ratio”. Second, the HAMP's pay-for-success structure aligns 

the interests of servicers, investors and borrowers in ways that encourage loan 

modifications that will be both affordable for borrowers over the long term and costeffective for investors and taxpayers. Third, the HAMP establishes detailed guidelines for 

the industry to use in making loan modifications with the goal of encouraging the 

mortgage industry to adopt a sustainably affordable standard, both within and outside of 

the HAMP. 

HAMP operates through the combined efforts of the Treasury Department, Fannie Mae, 

Freddie Mac, mortgage loan servicers, investors and borrowers to help qualifying 

homeowners who commit to making modified monthly mortgage payments to stay in 

their homes. In addition, the federal bank, thrift, and credit union regulatory agencies 

have encouraged all federally regulated financial institutions that service or hold 

residential mortgage loans to participate in the HAMP. 

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The following highlights some of the key terms and conditions of HAMP: 

• Eligible Homeowners: The modification plan was designed to be inclusive, with 

a loan limit of $729,750 for single-unit properties, and higher limits for multi-unit 

properties. Over 97 percent of the mortgages in the country have a principal 

balance within these limits. 

• Servicers’ Obligation to Extend Modification Offer: Servicers participating in 

HAMP are required to apply a standardized net present value (NPV) test to each 

loan that is at risk of foreclosure -- defined as either at risk of imminent default or 

in default. The NPV test compares the net present value of cash flows from the 

mortgage if modified under HAMP and the net present value of the cash flows 

from the mortgage without modification. If the NPV test is positive – meaning 

that the net present value of expected cash flows is greater if modified under the 

HAMP than if the loan is not modified – the servicer must extend an offer to 

modify the loan in accordance with HAMP guidelines, absent fraud or a 

contractual prohibition limiting modification of the mortgage. 

• Reductions in Monthly Payments: Servicers are required to follow the waterfall 

outlined in the program contracts in reducing the borrower's monthly payment to 

no more than 31 percent of their monthly gross income. The interest rate floor 

under HAMP is 2 percent. Further flexibility is provided if reducing the loan rate 

to 2 percent, by itself, does not achieve the 31 percent threshold. In that case, the 

servicers can extend the term of the loan, up to 480 months, in order to achieve 

the 31 percent payment threshold. The HAMP also provides the servicer the 

option to reduce principal on a stand-alone basis to help reduce the borrower’s 

monthly payment 

The HAMP includes a standardized set of procedures that servicers must follow in 

modifying eligible loans under the program and in estimating the expected cash flows of 

modified mortgages. The borrower must remain current on their modified mortgage 

payments for at least 90 days in order for a HAMP loan modification to become 

permanent. 

To increase participation in HAMP and encourage borrowers to remain current on loan 

modifications under the program, OFS provides targeted incentives to borrowers, 

investors, and servicers that participate in the program. These incentives include an upfront payment of $1,000 to the servicer for each successful modification after completion 

of the trial period, and "pay for success" fees of up to $1,000 per year for three years, 

provided the borrower remains current. Additional one-time incentives of $500 to the 

servicers and $1,500 to the investors are paid if loans are modified for borrowers who are 

current but are in danger of imminent default are successfully modified. Homeowners 

will also earn up to $1,000 towards principal balance reduction each year for five years if 

they remain current and pay on time. Investors are entitled to payment reduction costshare compensation for up to five years for half the cost of reducing the borrower's 

EESA – 12
payment from a 38 percent to 31 percent threshold, provided the borrower remains 

current. Investors must pay for reducing the borrower's payment down to the 38 percent 

threshold before they are able to benefit from the cost-share incentive. This requires 

investors to take the first loss for unaffordable and unsustainable loans that were 

extended to borrowers. 

Public-Private Investment Program 

Treasury, in conjunction with the Federal Reserve and the FDIC, announced the PublicPrivate Investment Program (PPIP) on March 23, 2009, as a part of the Financial Stability 

Plan. The PPIP is designed to improve the condition of financial institutions by 

facilitating the removal of legacy assets from their balance sheets. Legacy assets include 

both real estate loans held on banks’ balance sheets (legacy loans) as well as securities 

backed by residential and commercial real estate loans (legacy securities). The legacy 

loans portion of PPIP was initially to be operated by the FDIC and has not been 

implemented to date. 

The PPIP is designed to help restart the market and provide liquidity for legacy assets, 

enabling financial institutions to make new loans available to households and businesses. 

Legacy assets became a stumbling block to the normal functioning of credit markets with 

the bursting of the housing bubble. With the housing market in decline, financial 

institutions and investors suffered significant losses on these legacy assets. These losses 

drove financial institutions to conserve capital, reduce leverage and minimize exposure to 

riskier investments. Many institutions did so by selling assets, triggering a wide-scale 

deleveraging in these markets. As the supply of assets being sold increased, prices 

declined and many traditional investors exited these markets, causing further declines in 

the demand and the liquidity for these assets. This lack of liquidity created significant 

uncertainty regarding the value of these legacy assets, which in turn raised questions 

about the balance sheets of these financial institutions, compromising their ability to raise 

capital and continue lending. 

The PPIP helps address this valuation concern. Through PPIP, OFS partners with 

experienced investment managers and private sector investors to purchase legacy assets. 

Rather than resolving the uncertainty by having the government set the price for these 

assets, the private sector investors compete with one another to establish the price of the 

legacy assets purchased under the PPIP. By drawing new private sector capital into the 

market for legacy assets and facilitating price discovery, the PPIP should increase the 

liquidity for these legacy assets. 

OFS initially announced that it would provide up to $100 billion for the PPIP. Because 

of improvements in the market, this amount was reduced to $30 billion. Under the PPIP, 

OFS provides equity and debt financing to newly-formed public-private investment funds 

(PPIFs) established by private fund managers with private investors for the purpose of 

purchasing legacy securities. These securities are commercial mortgage-backed 

securities and non-agency residential mortgage-backed securities. To qualify for 

purchase by a Legacy Securities PPIP (S-PPIP), these securities must have been issued 

EESA – 13
prior to 2009 and have originally been rated AAA – or an equivalent rating by two or 

more nationally recognized statistical rating organizations – without ratings enhancement 

and must be secured directly by the actual mortgage loans, leases, or other assets. 

The S-PPIP allows the OFS to partner with private investors in a way that increases the 

flow of private capital into these markets while maintaining equity “upside” for the 

taxpayers. Under the principal terms of the S-PPIP, OFS partners with pre-qualified fund 

managers that raise a minimum amount of capital from private sources. Each manager 

forms a Public Private Investment Fund or PPIF. OFS invests equity capital from the 

TARP in each PPIF on a dollar-for-dollar basis, matching the funds raised by these 

managers. In addition, OFS also provides debt financing up to 100 percent of the PPIF’s 

total equity capital, subject to certain restrictions on leverage, withdrawal rights, 

disposition priorities and other customary financing protections. OFS not only 

participates pro rata in any profits or losses of the PPIF but also receives additional 

potential equity upside in the form of warrants, as required by EESA. Each fund manager 

will seek to generate attractive returns for the PPIF through a predominately long-term 

buy and hold strategy. 

On July 8, 2009, following a comprehensive two-month application, evaluation and 

selection process, OFS pre-qualified nine fund managers to participate in the S-PPIP 

based, in part, on a demonstrated ability to invest in legacy assets and to raise private 

capital for such investments. On September 30, 2009, two PPIFs signed limited 

partnership agreements and loan agreements with OFS, resulting in a $6.7 billion 

commitment for OFS. As of September 30, 2009, these two PPIFs had approximately 

$1.13 billion in private sector capital commitments, which were matched 100 percent by 

OFS, representing total equity capital commitments of $2.26 billion. OFS is providing 

debt financing up to 100 percent of the total capital commitments of each PPIF, 

representing in the aggregate approximately $4.52 billion of total equity and debt capital 

commitments. As of November 30, 2009, nine PPIFs have signed agreements with OFS. 

Following signature of these agreements, each fund manager has up to six months to raise 

additional private capital to receive the full allocation of the $3.3 billion in matching 

equity and debt capital from OFS. Assuming that each of the nine fund managers raises 

enough private capital to receive the full allocation from OFS, the total purchasing power 

of the PPIFs will be $40 billion, including $10 billion in private capital and the $30 

billion OFS commitment. As of September 30, 2009, no fund managers had made any 

investments and OFS had not disbursed any funds. 

Program Evaluation 

During FY 2011, OFS is proposing to fund a project to enhance the HAMP’s existing 

standardized set of procedures that servicers must follow to modify loans in order to 

increase the conversion of offered to modified loans. This would be completed by 

facilitating and evaluating pilot programs, which some servicers have already 

implemented on their own book, that are structured differently from the standard loan 

modifications under HAMP. By assisting these servicers to develop and design 

EESA – 14
statistically sound pilot programs, these successful programs can then be launched on a 

national scale. 

1C – Credit Reform 

EESA Section 123 authorizes the cost of EESA programs to 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. 

EESA – 15
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. 

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 – 16
Section 2 – Budget Adjustments and Appropriation Language 

2.1 Summary of Appropriation Highlights 

Total TARP 

Summary of Appropriation Highlights 

(dollars in thousands) 

2010 

2009 2011 Increase (+) 

TARP On-Budget Accounts Actual Estimate Decrease (-) Budget Current 

Estimate Estimate 

Obligations: 

 Housing Account $27,065,760 

 Equity Program Account $142,420,358 

 TARP Account $40,377,449 

 TARP Negative Receipt Account - $2,720,374 

 TARP Administrative Account $248,325

Total Obligations 

$0 

$0 

$0 

$0 

$262,375

$207,391,518 

$21,690,240 

$4,626,845 

$3,000,000 

-$117,624,526 

$355,488

$262,375 

$0 

$0 

$0 

-$22,261 

$297,747

-$87,951,953 

- $21,690,240 

- $4,626,845 

- $3,000,000 

+ $117,602,264 

- $57,741

$275,485 + $88,227,438 

Budget Authority: 

 Housing Account $45,461,463 

 Equity Program Account $151,955,429 

 TARP Account $40,572,759 

 TARP Negative Receipt Account -$2,720,374 

 TARP Administrative Account $278,700

Total Budgetary Authority 

 $0 

 $0 

 $0 

 $0 

 $262,375

$235,547,978

 $3,294,537 

 $4,626,845 

 $3,000,000 

 -$117,624,526 

 $355,488

 $262,375 

 $0 

 $0 

 $0 

 -$22,261 

 $297,747

 -$106,347,656 

 - $3,294,537 

 - $4,626,845 

 - $3,000,000 

 +$117,602,264 

 - $57,741

 $275,485 + $106,623,141 

Outlays: 

 Housing Account $946 

 Equity Program Account $115,293,157 

 TARP Account $38,577,186 

 TARP Negative Receipt Account -$2,720,374 

 TARP Administrative Account $89,543

Total Outlays 

$8,102,255 

$0 

$0 

$0 

$265,640

$151,240,459 

$11,121,995 

$31,149,603 

$2,247,080 

 $2,720,374 

$285,000

$8,367,895 

$10,259,416 

$58,501 

$438,492 

$2,720,374 

$309,295

$47,524,052 

- $862,579 

- $31,091,102 

- $1,808,588 

+ $0 

+ $24,295

$13,786,077 - $33,737,975 

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

The current estimate for FY 2010 TARP administrative expenses is $355 million, 

including reimbursable expenses. In 2011, TARP administrative expenses are estimated 

at $298 million. These administrative costs are covered under the permanent, indefinite 

authority provided under EESA and do not count against the TARP purchase authority.

EESA – 17
2.2 Operating Levels Table 

(dollars in thousands) 

2010 

2009 2011 Increase (+)

Office of Financial Stability Account Actual Estimate Decrease (-) Budget Current 

Estimate Estimate 

FTE 86 225 260 271 11

Object Classification: 

 11/12 Salary & Benefits $14,173 

 21 Travel $268 

 22 Transportation $12 

 23 Rent, Communications, Utilities $113 

 24 Printing $0 

 25 Contracts and Other Misc. Services $233,269 

 26 Supplies $257 

 31 Equipment $232

Total 

 $35,054 

$2,538 

$504 

$8,224 

$0 

$213,098 

$497 

$2,459

$248,325 

 $39,565 

$629 

$357 

$250 

$100 

$313,956 

$130 

$500

$262,375 

 $43,145 

$631 

$364 

$255 

$50 

$252,916 

$135 

$250

$355,488 

+ $3,580 

+ $2 

+ $7 

+ $5 

- $50 

- $61,040 

+ $5 

- $250

$297,747 - $57,741

2.2.1 Operating Levels Table by Treasury Reimbursements 

(dollars in thousands) 

2010 

Office of Financial Stability Account 2009 2011 Increase (+)

Actual Estimate Decrease (-) Budget Current 

Estimate Estimate 

Direct Program Activity $205,079 

Reimbursements: 

 Congressional Oversight Panel $4,000 

 GAO $9,000 

 Treasury and non-Treasury Agencies $30,246

Total 

$228,375 

 

$4,000 

$9,000 

$21,000

$248,325

$313,808 

 

$4,800 

$11,360 

$25,520

$262,375

$260,117 

 

$2,400 

$11,928 

$23,301

$355,488

- $53,690 

- $2,400 

+ $568 

- $2,219

$297,747 - $57,741

EESA – 18
2.3 Financing Accounts - Non-Budgetary Summary 

Financing Accounts – Non-Budgetary Financial Summary 

(dollars in thousands) 

2010 

2009 2011 Increase (+) 

Actual Estimate Decrease (-) 

Budget Current 

Estimate Estimate 

 TARP Guaranteed Loans: 

 Obligations $1,049,055 $1,096,067 $2,223,599 $214,820 - $2,008,779

 Collections $457,234 $1,222,167 $524,948 $360,741 - $164,206

 Financing Authority (net) $774,415 $593,084 $1,986,462 $0 - $1,986,462

 Financing Disbursements (net) $591,821 -$126,100 $1,698,651 -$145,922 - $1,844,573

 TARP Direct Loans: 

 Obligations $116,284,337 $19,885,917 $81,280,759 $8,586,863 - $72,693,896

 Collections $42,036,128 $31,397,879 $12,103,180 $7,442,082 - $4,661,098

 Financing Authority (net) $72,447,947 -$11,511,962 $77,003,852 $2,937,947 - $74,065,905

 Financing Disbursements (net) $23,897,532 -$11,511,962 $57,532,161 $6,152,053 - $51,380,108

Equity Purchases: 

 Obligations $334,851,167 $13,393,164 $128,439,706 $11,762,275 - $116,677,431

 Collections $200,579,032 $22,939,476 $154,702,349 $27,147,116 - $127,555,233

 Financing Authority (net) $115,907,175 -$9,546,312 $16,567,212 -$8,873,160 - $25,440,372

 Financing Disbursements (net) $105,420,425 -$9,546,312 $568,454 -$15,202,082 - $15,770,536

TARP Financing Accounts Totals: 

 Obligations $452,184,559 $34,375,148 $211,944,064 $20,563,958 - $191,380,106

 Collections $243,072,393 $55,559,521 $167,330,477 $34,949,940 - $132,380,538

 Financing Authority (net) $189,129,536 -$20,465,190 $95,557,525 -$5,935,213 - $101,492,738

 Financing Disbursements (net) $129,909,778 -$21,184,374 $59,799,267 -$9,195,950 - $68,995,217

2.4 TARP Summary 

Summary of TARP Activity 

(dollars in thousands) 

 Amount towards Net impact on 

$700B purchase limit the deficit 

 

Total Equity Transactions $344,127,222 $48,289,344 

 

Total Direct Loans $148,559,377 $22,811,275 

Guaranteed Loans: $5,000,000 -$3,014,971 

Home Affordable Modification Program1 $48,756,000 $48,756,000 

Total Amount of TARP Activity $546,442,599 $116,841,648 

1

 Excludes $1.244B in Helping Families Save Their Home Act of 2009. 

EESA – 19
2A – Enacting Legislation 

 

Public Law 110-343, Emergency Economic Stabilization 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. 

2B –Legislative Proposals 

OFS has no legislative proposals. 

EESA – 20
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 FY 2009 FY 2010 Percent 

Estimated Estimated Change (dollars in thousands) AMOUNT AMOUNT AMOUNT 

Ensure the Overall Stability and Liquidity of the Financial $427,174,173 $70,512,427 - 83% System 

Prevent Avoidable Foreclosures by Providing an 

Affordable, Sustainable, Mortgage Modification Option $27,065,760 $21,690,240 - 20%

for up to 4 million At-Risk Homeowners 

Protect Taxpayer Interests -- -- --

Promote Transparency -- -- -- 

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, OFS developed several programs under the 

TARP that were broadly available to financial institutions. Under the Capital Purchase 

Program (CPP), OFS provided capital infusions directly to banks and insurance 

companies deemed viable by their regulators but in need of a stronger asset base to 

weather the crisis. The Capital Assistance Program (CAP) was developed to supplement 

the Supervisory Capital Assessment Program (SCAP), or "stress test" of the largest U.S. 

financial institutions. If these institutions were unable to raise adequate private funds to 

meet the SCAP requirements, OFS stood ready to provide additional capital. 

In addition, OFS provided direct aid to certain financial industry participants through the 

Targeted Investment Program (TIP) and the Asset Guarantee Program (AGP), as well as 

the program originally known as the Systemically Significant Failing Institutions (SSFI) 

program. These programs were designed to mitigate the potential risks to the system as a 

whole from the difficulties facing these firms. (Because SSFI was used only for 

investments in American International Group, Inc. (AIG), such investments are now 

referred to as the AIG Investment Program.) 

Similarly, the Automotive Industry Financing Program (AIFP) provided funding for 

General Motors Corporation (GM) and Chrysler LLC (Chrysler), as well as their 

financing affiliates in order to prevent a significant disruption of the automotive industry 

that would have posed a systemic risk to financial markets and negatively affected the 

EESA – 21
real economy. OFS’ actions helped GM and Chrysler undertake massive and orderly 

restructurings through the bankruptcy courts that have resulted in leaner and stronger 

companies. 

The Public-Private Investment Program (PPIP) was established to facilitate price 

discovery and liquidity in the markets for troubled real estate-related assets as well as the 

removal of such assets from the balance sheets of financial institutions. In addition to 

these initiatives, OFS implemented the Consumer and Business Lending Initiative 

(CBLI) to enhance liquidity and restore the flow of credit to consumers and small 

businesses. The primary program through which the CBLI operated in 2009 was the 

Term Asset-Backed Securities Loan Facility (TALF). 

Through this combination of tools, the TARP helped strengthen a broad set of financial 

institutions and markets. While directly measuring the effects of any of these programs is 

not possible, OFS is tracking a number of indicators of success of the programs taken 

together. 

Performance metrics1 FY 2008 

Result 

FY 2009 

Result 

LIBOR/OIS spread 218bp (1 m) 10bp (1 m) 

232bp (3m) 12bp (3m) 

Change in lending of CPP banks vs. control 

banks -- TBD

Change in capital ratio of CPP banks vs. 

control banks -- TBD

Credit default spreads at targeted institutions 151bp BofA 120bp BofA 

305bp Citi 190bp Citi 

1,451bp AIG 767bp AIG 

277bp CDR Index 98bp CDR Index 

Change in stock price of auto companies TBD TBD

Spreads between secondary ABS and 230bp prime auto 65bp prime auto 

benchmarks 200bp credit card 65bp credit card 

250bp equipment 120bp equipment 

450bp prv stdnt ln 500bp prv stdnt ln 

TALF eligible ABS issuance -- $79.7B

Decline in use of government programs 

(Qualitative) -- TBD

1

Items are indicators. 

EESA – 22
Prevent Avoidable Foreclosures by Providing an Affordable, Sustainable, Mortgage 

Modification Option for up to 4 million At-Risk Homeowners 

To prevent avoidable foreclosures and preserve homeownership, Treasury used authority 

granted under EESA to establish the Home Affordable Modification Program (HAMP) in 

February 2009. Other government policies have helped keep home mortgage rates at 

historic lows and allowed millions of Americans to refinance and stay in their homes. 

But because of falling housing prices, many responsible homeowners are unable to 

refinance. Meanwhile, job losses and reductions in working hours and benefits are 

making it harder for these Americans to pay their mortgages. HAMP provides incentives 

to mortgage servicers, investors, and homeowners to work together to reduce an eligible 

homeowner’s monthly payments to levels that are affordable in light of the homeowner’s 

current income. This plan also helps to stabilize home prices for homeowners in 

neighborhoods hardest hit by foreclosures. To track the success of these programs OFS 

is tracking the following indicators of success. 

Performance metrics1 FY 2009 

Result 

Number of modifications (trial/permanent) entered into 487,081/ 

1,733 

Change in average borrower payments NA 

Re-default rate

 NA 

1

Items are indicators. 

Protect Taxpayer Interests 

Government financial programs, including TARP, helped prevent the U.S. financial 

system from collapse, which could have resulted in a much more severe contraction in 

employment and production. The manner in which TARP was implemented is also 

designed to protect taxpayers and to compensate them for risk. For example, in exchange 

for capital injections, recipients of TARP funds have to adhere to corporate governance 

standards, limit executive pay, and provide additional reporting on lending activity. In 

addition, OFS generally received preferred equity, which provides dividends. The 

dividend rates generally increase over time to encourage repayment. 

Further, EESA stipulated that the taxpayer benefit as the institutions which received 

TARP funds recovered. Therefore, in connection with most investments, OFS receives 

warrants for additional securities in the institutions. Under the broad programs described 

above, the OFS has priority over existing shareholders of TARP recipients for which 

TARP holds equity investments. This gives taxpayers the ability to share in the potential 

upside along with existing shareholders. 

EESA – 23
Finally, the OFS seeks to achieve the goal of protecting the taxpayer through the effective 

management and disposition of all TARP investments. To evaluate the success of these 

efforts OFS tracks the following indicators and metrics. 

Performance metrics1 FY 2009 

Result 

FY 2010 

Target 

Return for each program over its benchmark (subsidy rate) TBD -- 

Clean audit opinion on TARP financials Yes Yes 

Percentage of SIGTARP and GAO oversight recommendations 

responded to on time 100% 100% 

1

Items in italics are indicators; those underlined are measures. Targets are provided only for measures. 

Promote Transparency 

EESA requires transparency and accountability. Specifically, EESA requires OFS to 

provide Congress with a variety of reports. These include a monthly report to Congress 

on TARP activity, a “tranche” report each time OFS reaches a $50 billion spending 

threshold, and transaction reports posted within two days detailing every TARP 

transaction. In carrying out its operations, the OFS has sought to not only meet the 

statutory requirements but also to be creative and flexible with respect to additional 

transparency initiatives. The OFS proactively provides to the public monthly Dividends 

and Interest Reports reflecting dividends and interest paid to OFS from TARP 

investments, loans, and asset guarantees, as well as monthly reports detailing the lending 

activity of participants in the Capital Purchase Program. All of these reports are publicly 

available on www.FinancialStability.gov.

EESA also provided for extensive oversight of the TARP, including by the Congressional 

Oversight Panel, the Special Inspector General for the TARP, and the Government 

Accountability Office. In addition, OFS officials frequently testify before Congress on 

the progress of TARP programs, and OFS staff provided briefings to Congressional staff 

on programmatic developments. OFS is tracking its performance along a number of 

metrics related to this Transparency objective. 

EESA – 24
Performance metrics1 FY 2009 

Result 

FY 2010 

Target 

On time reporting percentage 100% 100% 

Website satisfaction 65% 70% 

Timeliness of responses 

• Average business days to close a FOIA case 

• Percentage of Congressional correspondence responses 

drafted within 48 hours 

 

67 days 

87% 

64 days 

90% 

1

Items are measures. Targets are provided only for measures. 

EESA – 25
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 its mission. The 

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

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

term assignments 

• Experts or consultants and detailees for temporary or intermittent employment 

• Training and development interventions to ensure existing staff is engaged and 

possesses the requisite skill set 

• Regularly scheduled strategic workforce assessments to refine the organization 

and identify and eliminate competency gaps of its workforce needed to achieve 

OFS's mission 

The OFS organization required a rapid ramp up in staffing during its first year of 

operation in FY 2009 and utilized term employees and detailees where possible. 

Additionally, as diverse legal and financial asset management expertise not currently 

available within the government became essential to support some programs, it became 

necessary to contract with outside organizations to supplement Treasury’s in-house 

counsel. This was required because it is not practicable or economical for OFS to employ 

the staff of full-time legal practitioners and support personnel with the necessary required 

technical expertise to advise on and address the complex legal issues that arise under 

programs authorized by the EESA. 

The Treasury also issued an open notice soliciting financial institutions to provide asset 

management services needed for its portfolio of securities issued by Financial Institutions 

participating in programs under EESA. Those services included but were not limited to 

valuing of the assets issued by those Financial Institutions; analyzing the on-going 

financial condition, capital structure, and risks of those Financial Institutions; advising on 

the optimal disposition of Treasury's assets; and providing Treasury with analysis and 

recommendations on other business events connected with those Financial Institutions 

that could impact Treasury's ownership stake. These services required outside entities 

who were capable of gathering and analyzing market inputs, trends, and transactions that 

are relevant when determining the market value and market impact of Treasury's 

investments and decisions. Due to the potential impact of Treasury's investments on the 

Financial Institutions and the broader market, this is an additional area where the 

Government does not possess the depth and breadth, or the in-house personnel resources, 

to provide the type of analysis required to fully monitor the value and risks of such 

investments. 

EESA – 26
OFS is headed by an Assistant Secretary of the Treasury, appointed by the 

President with the advice and consent of the Senate. Reporting to the Assistant 

Secretary for Financial Stability are seven major divisions: the Offices of the 

Chief Investment Officer, the Chief Financial Officer, the Chief for Investment 

Operations/Technology, the Chief Homeownership Preservation Officer, the 

Chief Administrative Officer, the Chief Reporting Officer, and the Chief for OFS 

Internal Review. A Chief Counsel’s Office reports to the Office of the General 

Counsel in the Department of Treasury. 

The OFS organization chart is shown below: 

Assistant Secretary 

for 

Financial Stability

Financial Agents 

Chief Counsel 

Chief 

Operations 

Officer 

Chief 

Reporting 

Officer 

Chief 

OFS Internal

Review 

Chief 

Investment 

Officer 

Chief 

Financial 

Officer 

Chief 

Homeownership 

Preservation Officer 

Description of OFS Structure

As of January 8, 2010, OFS had 219 full-time employees (108 career civil servants, 101 

term appointments, and 10 detailees) who support the TARP. These employees include 

20 employees who report through the Department of the Treasury’s Office of General 

Counsel and approximately 40 others outside of OFS who continue to provide support to 

the office on an as-needed basis. OFS continues to use direct-hire and other 

appointments to expedite hiring of highly-qualified candidates, which has enabled OFS to 

reduce the number of temporary and contract staff and strengthen the continuity and 

institutional knowledge of the workforce. 

OFS is made up of six divisions: 

The Chief Investment Office (CIO) is responsible for program development and 

the execution and management of all investments made pursuant to EESA. The 

CIO relies on contracted asset managers and a custodian to assist in the 

management of acquired or insured assets. The CIO also manages a contract with 

an investment advisor who provides guidance on the selection of asset managers. 

The Office of the Chief Financial Officer (CFO) manages the OFS budget, cash flow 

requirements and accounting support activities for all of OFS concentrating on 

accounting and reporting activities required by the Federal Credit Reform Act to include 

EESA – 27
modeling of cash flow and all required re-estimates. The Office serves as liaison with 

Government Accountability Office (GAO) staff for financial statement reporting and 

internal controls. 

The Office of the Chief of Homeownership Preservation is responsible for 

identifying opportunities to help homeowners while also protecting taxpayers. 

The priorities of the Office are to: implement the Administration’s loss mitigation 

program; develop and implement a robust outreach program targeted to at-risk 

homeowners; outline and implement strategies to regularly update the 

Administration, Congress, the public, and other key stakeholders, on results; and 

monitor, analyze and report on the results of the loan modification program. 

The Office of the Chief Operations Officer (OCOO) is responsible for developing 

an office infrastructure and managing internal operations in OFS. The OCOO 

works with each OFS organizational entity to effectively manage the budget, 

facilities, information technology (IT), acquisition management oversight, 

document flows, physical security and privacy, and workforce planning. 

The Office of Reporting is responsible for coordinating OFS’ work with the 

external oversight entities including the GAO, Special Inspector General for 

TARP, Financial Stability Oversight Board and the Congressional Oversight 

Panel. The Office also prepares periodic, statutory reports to the Congress under 

EESA. 

The Office of Internal Review (OIR), for which most functions were previously 

conducted under the name Office of Compliance and Risk, is responsible for 

management controls such as policies and procedures, designed to help program and 

financial managers achieve results, mitigate risk, and safeguard the integrity of TARP 

programs. 

The Office of the Chief Counsel provides legal advice to the Assistant Secretary for 

Financial Stability. 

EESA – 28
EESA – 29

4B – Summary of IT Resources and Information Technology Strategy 

As an organization embedded in Domestic Finance, OFS has leveraged technologies and 

services provided by the Treasury Department Office of the Chief Information Officer 

(OCIO) as much as possible. In its first year of operation, OFS utilized OCIO-provided 

infrastructure/applications (e.g., LAN, WAN, telephones) and contractor personnel to 

develop and support the current infrastructure and applications. During FY 2010, OFS 

will focus on five core activities: 

• Develop a governance structure (program and project management) 

• Develop fundamental transaction records and ledgers to better support the Middle 

Office and Chief Financial Officer’s Office 

• Build a robust data warehouse to support end user questions, reporting and 

analysis 

• Enhance unstructured document management 

• Manage a variety of IT operational issues supported by either OFS or OCIO. 

To successfully achieve these objectives, OFS will expand its on board IT staff to include 

a Chief Technology Officer. External contractors/consultants will be sourced to provide 

short-term/specialized skills with additional personnel being absorbed through the 

transfer of personnel from within OFS as well as with term employees. 

The bulk of needed hardware and software has already been purchased, though 

refinement of OFS needs will occur as the requirements for the projects noted above are 

further developed. All OFS support technologies are in concert with the Treasury 

Optimized Enterprise IT Infrastructure.