Road to Stability
Legacy Loans Public-Private Investment Program
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In order to cleanse bank balance sheets of distressed loans and other assets, the FDIC and Treasury have announced the Legacy Loans Program. The Legacy Loans Program will be designed to attract private capital to purchase eligible assets from participating banks. Combining public and private sector equity capital and an FDIC debt guarantee, public-private investment fund asset purchases should boost private demand for distressed assets that are currently held by banks and facilitate market-priced sales of troubled assets.
On June 3, 2009, the FDIC announced that the development of the program would continue, but that a previously planned pilot sale of assets by open banks would be postponed. The FDIC intended to test the funding mechanism contemplated by the Legacy Loans Program in a sale of receivership assets this summer. This funding mechanism drew upon concepts successfully employed in the 1990s by the Resolution Trust Corporation, which routinely assisted in the financing of asset sales through responsible use of leverage. On September 16, 2009, the FDIC announced the winning bidder on the pilot sale of receivership assets.
Additional Resources
- Legacy Loans Program - Winning Bidder Announced in Pilot Sale (September 16, 2009)
- Legacy Loans Program - Test of Funding Mechanism (July 31, 2009)
- FDIC Statement on the Status of the Legacy Loans Program
- FDIC Seeks Comment on the Recently Announced Legacy Loans Program (March 26, 2009)
- FDIC Chairman Sheila C. Bair Statement on Legacy Loans Program
- Transcript of the Press and Technical Briefing Conference Call on Legacy Loans Program
- Public-Private Investment Program White Paper - PDF (PDF Help)
- Public-Private Investment Program White Paper
- Legacy Loans Program Frequently Asked Questions
- Legacy Loans Program Summary of Terms
- Legacy Assets Fact Sheet
