Financial Markets Update

The Financial Markets Update is prepared by a multi-disciplinary group of attorneys monitoring the events that are affecting the Financial Markets. They offer comprehensive analysis and practical solutions for financial institutions, investors and businesses affected by recent events. We invite you to learn more about our Bankruptcy and Creditors' Rights, Consumer Finance and Creditors' Rights, Distressed Assets, and Financial Services Regulation Practice Groups.

For more information about the services available from Day Pitney, please contact any of the partners listed on this page.

Treatment of Trust Preferred Securities Under Dodd-Frank
7/23/2010
The Act makes significant changes to the ability of bank and thrift holding companies to issue trust preferred securities ("TRUPS") and continue to count them as Tier 1 capital.

Financial Regulatory Reform - Establishment of Bureau of Consumer Financial Protection
7/21/2010
On July 15, 2010, the Senate approved the conference report for H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act"). The House had approved the conference report on June 30. The bill was signed into law by President Obama on July 21.

Preemption Under Dodd-Frank
7/19/2010
This Alert discusses those provisions of the Act that significantly reduce the ability of federally chartered financial institutions to rely on federal preemption of state consumer finance laws.

Financial Regulatory Reform: Banking Provisions
7/16/2010
This Alert addresses measures related to the thrift charter, risk retention for asset-backed securities sales, deposit insurance and business checking accounts.

Recent FDIC Loss Sharing Arrangements
9/1/2009
Loss sharing is a feature that the Federal Deposit Insurance Corporation (FDIC) first introduced into failed bank purchase and assumption (P&A) transactions in the early 1990s.

Treasury Guidelines - How to Apply for Renewable Energy Grants in lieu of Tax Credits
7/10/2009
The United States Treasury Department has issued procedures for applying for cash grants for expenditures constituting eligible basis for renewable energy projects in lieu of claiming tax credits that otherwise would be available with respect to such property.

President Obama Signs into Law the Credit Card Accountability, Responsibility and Disclosure Act of 2009
6/1/2009
According to the Federal Reserve, rising unemployment rates and credit card delinquency rates have led to a significant increase in national credit card debt - a number that is now approaching $1 trillion.

Hedge Fund Regulation: MFA Weighs in on Proposals
5/26/2009
New legislation that proposes to increase federal oversight of hedge funds has been introduced over the past several months in both the United States Senate and the House of Representatives.

Department of Energy Implements American Recovery and Reinvestment Act of 2009
03/31/2009
The Department of Energy ("DOE") has released a Funding Opportunity Announcement from the Office of Electricity Delivery and Energy Reliability ("OE"), outlining goals for developing, populating, managing, and maintaining a Web-based Smart Grid Information Clearinghouse.

Funding Opportunity Announcements for Plug-in Hybrid Electric Vehicles and Advanced Batteries
03/30/2009
On March 19, 2009, the Department of Energy ("DOE") received $2.4 billion in funding under the American Recovery and Reinvestment Act of 2009 (the "Stimulus Package Act") earmarked for demonstrating and manufacturing Plug-in Hybrid Electric Vehicles, including advanced battery components.

The Public-Private Investment Program for Legacy Assets
03/27/2009
The United States Treasury, in conjunction with the FDIC and the Federal Reserve, earlier this week announced the Public-Private Investment Program (the "Program") as part of the Obama Administration's Financial Stability Plan.

The purpose of the Program is to cleanse the balance sheets of financial institutions by removing troubled assets and restart the market for legacy securities (i.e., commercial mortgage-backed securities and residential mortgage-backed securities originally issued prior to 2009). As a result, Treasury is seeking to improve the health of these financial institutions and increase the flow of credit by them.

Delaware Court Affirms Directors' Business Judgment in Handling the Current Financial Crisis
03/04/2009
In the recent Citigroup decision, the first to assess director responsibilities in the current financial crisis, the Delaware Chancery Court affirmed Citigroup's board of directors' business judgment in managing the risks involving Citigroup's financial exposure to the subprime mortgage market. The court refused to "second guess" the soundness of the board's decisions, instead according deference to judgments made in good faith and based upon reasonable information.

President Obama Unveils Homeowner Affordability and Stability Plan
02/27/2009
On February 18, 2009, the Obama Administration unveiled the Homeowner Affordability and Stability Plan ("HASP"). The plan is comprised of three components: (1) access to low-cost refinancing for "responsible" homeowners without rewarding homeowners who purchased homes beyond their means; (2) support for low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac; and (3) creation of a Homeowner Stability Initiative ("HSI") in the amount of $75 billion to assist at-risk homeowners. The plan is scheduled to go into effect on March 4, 2009.

Best Practices for Hedge Fund Managers and Investors Issued by the President's Working Group on Financial Markets
02/20/2009
On January 15, 2009, the Asset Managers' Committee (the "AMC") and the Investors' Committee (the "IC") of the President's Working Group on Financial Markets issued reports setting forth "best practices" for the hedge fund industry.

Summary of COBRA Provisions of the 2009 Stimulus Package
02/20/2009
The economic stimulus legislation signed by President Obama on February 17, 2009, provides a subsidy for COBRA premiums for certain employees who are involuntarily terminated from employment on or after September 1, 2008 and before January 1, 2010. The subsidy will result in additional reporting and disclosure obligations for employers which will need to be undertaken within a short period of time. The subsidy provision will also present employers with immediate issues regarding the design of existing severance arrangements for employees who are involuntarily terminated.

Stimulus Package Act: Infrastructure Funds
02/16/2009
Substantial portions of the funds available under Division A of the American Recovery and Reinvestment Act of 2009 (the "Stimulus Package Act") are earmarked for investments in transportation infrastructure and efficiency improvements. The Stimulus Package Act provides over $49 billion in funding for improving national transportation infrastructure, including highways, railroads, and airports, with the majority of those funds allocated to highway infrastructure investments.

Stimulus Package Act - Energy Funds and Energy Tax Incentives
02/16/2009
Substantial portions of the funds available under Division A of the American Recovery and Reinvestment Act of 2009 (the "Stimulus Package Act") are earmarked for investments in energy infrastructure and efficiency improvements. Significant energy-related tax incentives are also included under Division B of the Stimulus Package Act. The Stimulus Package Act provides over $34 billion in funding for improving national systems of energy production, distribution, and transmission, including investments in electric transmission infrastructure.

Stimulus Act Expands Executive Compensation Limits for TARP Recipients
02/15/2009
Title VII (Division B) of the American Recovery and Reinvestment Act of 2009 (the "Stimulus Package Act") further limits executive compensation for financial institutions receiving assistance under the Troubled Asset Relief Program ("TARP") enacted in the Emergency Economic Stabilization Act of 2008 ("EESA").

IRS Launches Compliance Check on Governmental Bond Financings
02/05/2009
Last week, the Internal Revenue Service sent compliance questionnaires to 200 governmental bond issuers in order to evaluate the post-issuance and record retention policies, procedures and practices of governmental issuers of tax-exempt bonds. The

New Jersey Passes "Mortgage Stabilization and Relief Act" to Assist Borrowers
01/27/2009
On January 9, 2009, New Jersey Governor Jon Corzine signed into law the Mortgage Stabilization and Relief Act (S-1599/A-3506) (the "Act"). The Act is designed to reduce the number of foreclosures of residential properties in New Jersey by offering assistance to qualified homeowners through the Mortgage Stabilization Program and the Housing Assistance and Recovery Program ("HARP")[1] and by imposing new requirements and restrictions on creditors who seek to foreclose on residential property. The relevant provisions discussed below take effect on April 1, 2009.

National Banks Exercising Fiduciary Powers Are Not Subject to Various State Laws
01/22/2009
The Office of the Comptroller of the Currency (the "OCC") has issued two recent Interpretive Letters that further confirm the preemption of national bank fiduciary powers from various state laws that would seek to restrict those powers. These Interpretive Letters, which were issued in September and October of last year, were first publicly released by the OCC in its December 2008 monthly publication.

Six IRS Notices Ease the Use of Losses Following Certain Equity Transactions
10/30/2008
The Internal Revenue Service has eased the ability of a company with built-in losses and net operating losses to utilize them following an applicable change in ownership notwithstanding the limitation that would otherwise be applicable under Section 382 of the Internal Revenue Code of 1986, as amended.

Directors of Financial Institutions Need to Review and Consider Their Risks and Exposures
10/24/2008
As is painfully evident, these are very difficult times for financial institutions.

Understanding the Initial Guidance on the Executive Compensation Rules under the Emergency Economic Stabilization Act of 2008 (EESA)
10/23/2008
The Treasury Department has issued interim guidance on the executive compensation rules enacted in the Emergency Economic Stabilization Act of 2008 (EESA), including guidance from the Internal Revenue Service (I.R.S.).

TARP Capital Purchase Program Update
10/21/2008
On October 14th, the U.S. Treasury announced a Capital Purchase Program to purchase up to $250 billion of senior preferred shares from U.S. banks, savings associations, and their holding companies. An election to participate in the Program must be made by November 14, 2008.

New Jersey Passes "Save New Jersey Homes Act of 2008" to Extend Foreclosure Protection to New Jersey Families
10/17/2008
On September 15th, Governor Corzine signed into law the "Save New Jersey Homes Act of 2008" (the "Act"). Effective immediately, the Act will substantially affect how certain mortgage lenders deal with the ongoing economic crisis created, in part, by the subprime mortgage market.

Treasury Announces Executive Compensation Rules Under the Emergency Economic Stabilization Act
10/14/2008
Overview of the executive compensation rules under the Emergency Economic Stabilization Act addressing limitation on parachute agreements, details of the Capital Purchase Program provisions, and the term sheet for senior preferred equity.

FDIC Temporary Liquidity Guarantee Program
10/14/2008
Overview of the FDIC’s Temporary Liquidity Guarantee Program which is intended to unlock inter-bank credit markets and restore rationality to credit spreads. The Program, which is voluntary, is intended to free up funding for banks to make loans to creditworthy businesses and consumers.

Energy Improvement and Extension Act of 2008
10/6/2008
Overview and full text of the Energy Improvement and Extension Act of 2008, signed by the President on Friday, October 3, 2008, which extends tax credits for renewable energy and adds categories of renewable energy eligible for tax credits. 

Emergency Economic Stabilization Act of 2008
10/3/2008
Overview and full text of the Discussion Draft Bill providing for the Troubled Assets Relief Program.

Troubled Assets Relief Program Summaries of the House and Senate Discussion Draft Bills
9/26/2008
Overview and full text of the House and Senate Discussion Draft Bills relating to the Troubled Assets Relief Program.

Senate Issues Guidelines To Treasury on Credit Legislation
9/25/2008
Overview of the principles guiding the Senate's consideration of the proposal by the Department of the Treasury to address the credit crisis. 

Federal Reserve Eases Rules on Equity Investments in Banks
9/25/2008
Overview of the Federal Reserve Board's new policy statement, issued on September 22, 2008, concerning equity investments in banks and holding companies.