Firm Represents the U.S. Department of the Treasury in Connection With Citigroup and Bank of America TARP Investments
02.19.09
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The Firm represented the U.S. Department of the Treasury in connection with its recent purchase of $20 billion of preferred stock with warrants from Citigroup under the Troubled Asset Relief Program. As part of the transaction, Treasury and the Federal Deposit Insurance Corporation agreed to provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other assets. As a fee for this arrangement, Citigroup issued approximately $7 billion of preferred stock with warrants to the Treasury and the FDIC. In addition, the Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan.
The Firm is also representing Treasury in a similar transaction with Bank of America. Treasury has purchased $20 billion of preferred stock with warrants from Bank of America. Treasury, the FDIC and the Federal Reserve have also committed to provide protection against unusually large losses on an asset pool of approximately $118 billion of loans, securities backed by residential and commercial real estate loans, and other assets. Bank of America will issue preferred stock with warrants to the Treasury and the FDIC as a fee for this arrangement.
In addition, the Firm has represented the U.S. Department of the Treasury in connection with its purchase of preferred stock and warrants under the TARP Capital Purchase Program from 24 other banks and financial institutions (aggregating over $165 billion).
The Simpson Thacher attorneys representing Treasury include Lee Meyerson, Elizabeth Cooper, Shalini Aggarwal and Christopher Gaskill (M&A); Andy Keller and Edgar Lewandowski (Capital Markets); Tristan Brown (Executive Compensation & Employee Benefits); and Marcy Geller (Tax).