“Treasury Changes Direction on TARP”

In response to the positive effects to date of capital injections helping to stabilize financial markets, Treasury Secretary Henry M. Paulson, Jr. said yesterday that the capital purchase program of the Troubled Asset Relief Program (the “TARP”) will be expanded to include a wider array of banks and non-bank financial institutions. The Treasury Department has now officially abandoned its original plans to create a program to purchase troubled mortgage assets.  Secretary Paulson announced the new strategy in remarks on November 12, 2008, in which he also unveiled a new strategy to deploy the remaining TARP funds to acquire securities backed by consumer debt. 

This Stroock Special Bulletin discusses Secretary Paulson’s remarks and the implications for the TARP.