Notice is a historical project of the Committee for a Responsible Federal Budget, which tracked the money spent by the 2009 stimulus bill. This site is not regularly updated.

Public-Private Investment Fund

February 10, 2009
Policy Area: 
Economic Target: 
Action Type: 
Maximum Amount: 
$75.00 billion
Amount Spent: 
$14.03 billion
Deficit Impact: 
$1.40 billion

See the companion FDIC entry for the Public-Private Investment Fund (PPIP) and the Fed entry for PPIP.

Program first announced by Treasury Secretary Geithner on 2/10/2009.

Program is run by the Treasury in conjunction with the Federal Reserve and Federal Deposit Insurance Corporation. It will enlist "$75 to $100 billion" of TARP capital to create up to $500 billion in total public-private asset purchasing power. The program may eventually expand to $1 trillion in total leveraged purchasing capacity. On April 21, 2009, Geither announced that $75 billion of the program's funds would come from TARP, with another $25 billion coming from the Treasury's existing support (also through TARP) of the TALF program.

The Treasury released details of the program on March 23, 2009. Its aim is to use public money to entice private purchase of distressed bank loans and illiquid securities. The program has two main components:

1) The "legacy loans" program uses public financing (via TARP) to help private entities purchase pools of bank loan assets. The FDIC is charged with guaranteeing the purchase of loans once they are sold, and the Treasury provides half of the initital financing required to purchase the loan. Under the terms of the program, banks determine the loans they consider distressed and put these loans up for auction to other private market participants. The FDIC determines the eligibility of the proposed loans, and specifies how much leverage it will allow for the initial purchase. The maximum potential leverage is a 6:1 ratio, meaning that any party that purchases a loan can make the purchase at a debt to equity ratio of no greater than 6:1. For example, if a pool of loan assets costs $42, an initial payout ("equity") of $6 would be required, creating $6 in equity and $36 in debt. The bidder that wins the auction for the loan is allowed to draw on the public-private investment fund for half of its equity cost. In the case of the previous example, the bidder could take $3 from the public-private partnership, and would be required to provide the other $3 itself. The buyer issues debt that is guaranteed by the FDIC to fund the remaining cost of purchasing the loan. The FDIC is then charged with managing and overseeing the servicing of this remaining debt.

2) The "legacy securities" program has two components:
a) The government will choose five "asset managers" (selected from an open application process) that agree to raise some amount of private capital to buy legacy securities. The government matches whatever funds these asset managers manage to raise (via TARP). The private funds are matched at least one to one, although the Treasury has indicated that it may provide as much as two or even three dollars for every dollar of private capital raised. The fund manager has substantial discretion in how he/she invests the funds.
b) The Fed's recently-started Term Asset Backed Securities Lending Facility (TALF) will be expanded to include asset classes of non-agency residential mortgage-backed securities, commercial mortgage-backed securities, and other classes of asset-backed securities. Asset managers who take part in the public-private investment fund (see above) will be allowed to participate jointly in TALF. 


On July 8, 2009 the Treasury, FDIC, and Fed released details concerning the Legacy Securities program of PPIP. According to the release , the "Treasury will invest up to $30 billion [from the $100 PPIP maximum] of equity and debt in PPIFs [Public-Private Investment Funds] established with private sector fund managers and private investors for the purpose of purchasing legacy securities. Thus, Legacy Securities PPIP allows the Treasury to partner with leading investment management firms in a way that increases the flow of private capital into these markets while maintaining equity “upside” for US taxpayers."

On September 16, 2009 the FDIC announced a pilot sale of receivership assets to test the Legacy Loans Program. A total of 12 consortiums bid in a competitive process for a portfolio of $1.3 billion in residential mortgage loans owned by the FDIC as Receiver of Franklin Bank, LLC in Houston, Texas. Residential Credit Solutions (RCS), the winning bidder, will pay $64.2 million for a 50 percent equity stake in the LLC, and the LLC will issue a $727.8 million note to the FDIC.

On September 30, 2009 the Treasury announced the first public and private commitments for the legacy securities program.



Maximum amount is Treasury's contribution from TARP funds.  Current amount spent reflects total approved funds for Legacy Securities PPIP as of 8/22/2012 ( Deficit impact calculated from the program's subsidy rate (10%), reported in the CBO's January 2010 baseline (minus any distributions or dispositions).

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