The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Wed, 15 Apr 2026 11:32:14 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Public-Private Investment Funds – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Public-Private Investment Funds https://corpgov.law.harvard.edu/2009/03/25/public-private-investment-funds/?utm_source=rss&utm_medium=rss&utm_campaign=public-private-investment-funds https://corpgov.law.harvard.edu/2009/03/25/public-private-investment-funds/#comments Thu, 26 Mar 2009 03:27:52 +0000 http://blogs.law.harvard.edu/corpgov/?p=930?d=20150122105516EST Posted by Andrew Tuch, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday, March 26, 2009
Editor's Note:

This post is by Kelley D. Parker, Terry E. Schimek, Stephen W. Stites, Robert M. Hirsh, Marco V. Masotti, and Jennifer A. Spiegel of Paul, Weiss, Rifkind, Wharton & Garrison LLP.

UPDATE: We have received another memo, by Davis Polk & Wardwell, on the public-private investment program. Available here, the memo describes the framework of the public-private funds and analyzes key concerns and unresolved questions about the program from the perspectives of troubled asset sellers, fund and asset managers and private investors.

On 23 March the Treasury released highly anticipated details regarding the Public-Private Investment Fund (“PPIF”) portion of the Financial Stability Plan. The PPIF plan is intended to address the “legacy” assets at the center of the global financial crisis. These assets include both residential and commercial real estate loans held directly on the balance sheets of banks (“legacy loans”) and securities backed by real estate loan portfolios held by financial institutions (“legacy securities”). The announcement covered the creation of both a Legacy Loans Program and a Legacy Securities Program, the latter of which includes an expansion of the Term Asset-Backed Securities Loan Facility (“TALF”) program to include both residential and commercial backed mortgage securities.

We summarize below the various programs announced today and then discuss several open issues to consider in connection with the programs. We note that the details of these programs are still preliminary and the specific requirements and structure of the programs will be subject to further clarifications from the government, including a specific notice and comment rulemaking process for the Legacy Loans Program.

Legacy Loans Program:

FDIC to Oversee Formation of Multiple Funds. Under this program the Federal Deposit Insurance Corporation (“FDIC”) will oversee the formation and operation of multiple PPIFs to purchase legacy loans from insured banks and thrifts.

Auction Process to be Utilized. Private investors will bid for the opportunity to invest through an auction program run by the FDIC. Once asset pools are identified by eligible banks and their regulators, the FDIC will conduct diligence, prepare marketing materials and engage a third party firm to advise on appropriate leverage for the PPIF (not to exceed 6:1 debt to equity ratio) and to represent the government in structuring the auction.

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