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Chief Compliance Officer for Tarp

Chief Compliance Officer for Tarp

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Published by: subsidyscope_bailout on Jan 26, 2009
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07/01/2009

 
First Quarterly Report to Congresspursuant to section 104(g) of theEmergency Economic StabilizationAct of 2008
For the quarter endingDecember 31, 2008F
INANCIAL
S
TABILITY
O
VERSIGHT
B
OARD
 
Ben S. Bernanke, ChairpersonChairmanBoard of Governors of the Federal Reserve SystemHenry M. Paulson, Jr.SecretarySteve PrestonSecretaryDepartment of the Treasury Department of Housingand Urban DevelopmentChristopher CoxChairmanSecurities and Exchange CommissionJames B. Lockhart IIIDirectorFederal Housing Finance Agency
 
F
INANCIAL
S
TABILITY
O
VERSIGHT
B
OARD
Q
UARTERLY
R
EPORT
 
1
I.
 
INTRODUCTION
This report constitutes the first quarterly report of the Financial StabilityOversight Board (“Oversight Board”) pursuant to section 104(g) of the EmergencyEconomic Stabilization Act of 2008 (“EESA”). This report covers the period fromOctober 3, 2008 (the date of enactment of the EESA), through the quarter endingDecember 31, 2008 (the “quarterly period”).The Oversight Board was established by section 104 of the EESA to help overseethe Troubled Assets Relief Program (“TARP”) and other emergency authorities andfacilities granted to the Secretary of the Treasury (“Secretary”) under the EESA to helprestore liquidity and stability to the U.S. financial system. The Oversight Board iscomposed of the Secretary, the Chairman of the Board of Governors of the FederalReserve System (“Federal Reserve Board”), the Director of the Federal Housing FinanceAgency (“FHFA”), the Chairman of the Securities and Exchange Commission (“SEC”),and the Secretary of the Department of Housing and Urban Development (“HUD”).Section 104(g) of the EESA provides that the Oversight Board shall report at leastquarterly to the Congress regarding the Oversight Board’s review of the Secretary’sexercise of authority under the TARP, including —i.
 
the policies implemented by the Secretary and the Office of FinancialStability established within the Department of the Treasury(“Treasury”) under the TARP, including the appointment of financialagents, the designation of asset classes to be purchased under theEESA, and plans for the structure of vehicles used to purchasetroubled assets; andii.
 
the effect of the actions taken by the Treasury in assisting Americanfamilies in preserving home ownership, stabilizing financial marketsand protecting taxpayers.As provided in section 104(g) of the EESA, a copy of this report will be submitted to theCongressional Oversight Panel established by section 125 of the EESA.As discussed further below, the Oversight Board during the past quarter hasreviewed and monitored the policies developed by the Treasury to implement the TARPand promote financial stability in the United States, which is critical to the health of theU.S. economy, including the housing and housing finance markets, and the economicwell-being of consumers and businesses. In addition, the Oversight Board has consideredand discussed ways that the TARP might be used currently or in the future to achieve theobjectives of the EESA.During the firs
 
t quarter of its operations, the Treasury, both independently and inconjunction with other agencies, has taken important actions under the authoritiesprovided by the EESA to promote financial market stability and reduce systemic risk to
 
F
INANCIAL
S
TABILITY
O
VERSIGHT
B
OARD
Q
UARTERLY
R
EPORT
 
2
 
the financial system and the economy. These actions have, among other things, improvedthe ability of financial institutions to avoid severe funding market pressures that couldhave led to an escalation of stresses and disorderly failures. In addition, Treasury,through the TARP, has made capital available to a wide range of financial institutions tostrengthen their financial positions, which reduced pressures to pull back from extendingcredit to households, businesses, and state and local governments. More generally, theactions taken under the TARP and the authorities granted by the EESA have helpedpromote confidence in the financial markets and U.S. financial institutions, which is acritical first step to the restoration of more normal financial market and economicactivity. The Oversight Board believes that, without the actions taken by TARP duringthe quarterly period, the severity of the financial crisis and its impact on the U.S.economy, consumers, businesses, and state and local governments would be materiallygreater.Significant challenges, however, lie ahead for the TARP, particularly in light of the continuing stresses in the financial sector and the weakened outlook for the U.S.economy. Initially, it is important that the remaining $350 billion in funds included inthe EESA be made available so that the TARP has additional resources to continue topursue the important objectives that Congress has established for the TARP. At therequest of the President-elect, the Administration on January 12, 2009, submitted to theCongress the notification and report necessary to make these resources available. Carefulconsideration will need to be given as to how best to utilize any additional TARPresources to further improve liquidity and stability to the U.S. financial system andpromote a restoration of economic growth in a manner that, consistent with the EESA:protects home values, college funds, retirement accounts and life savings; preserveshomeownership; promotes jobs and economic growth; maximizes overall returns to thetaxpayers of the United States; and provides public accountability.The Oversight Board believes it will be important for the Treasury to be able tocontinue to take actions under the TARP to stabilize financial markets, help strengthenfinancial institutions, improve the functioning of the credit markets, and address systemicrisks, given the disproportionate consequences that instability of the nation’s financialinstitutions and markets may have for the broader economy. As additional resourcesbecome available, the Oversight Board also believes that it will be important for theTARP to continue to pursue effective strategies for providing resources in support of reducing preventable foreclosures due to the harm that such foreclosures may have on theaffected borrowers, communities, the housing market, and the financial system andbroader economy. Moreover, as the program evolves, it will be important for TARP tocontinue to pursue strategies designed to allow the TARP to exit from its financialinterests in a timely manner consistent with the objectives of the EESA.During the first quarter of operations under the TARP, the Treasury has takenimportant steps to develop the infrastructure, internal controls, and compliance,monitoring and reporting programs necessary for the TARP to operate effectively,transparently, and in the public interest. For example, Treasury quickly hired or retainedqualified staff and outside experts to facilitate the prompt development and

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