November 17, 2008

Cover Story

TARP Dead on Arrival: What's Next for the ABS Industry?

With economic conditions worsening, the U.S. government has stepped up its bailout efforts - doling out $250 billion allotted under the Emergency Economic Stabilization Act (EESA) for equity investments in financial institutions. U.S. Treasury Secretary Henry Paulson last week formally shelved the government's plan to use the Troubled Assets Relief Program (TARP), which is part of the $700 billion EESA, to buy troubled assets from banks. Instead, the Treasury has chosen the equity stake route for financial institutions and will focus more on the consumer, attempting to increase the availability of student loans, credit cards and auto loans. It will also encourage private sector involvement by potentially matching private capital with government investments.