MARYLAND ASSOCIATION OF CPAs 2010 GOVERNMENT & NOT FOR PROFIT CONFERENCE. April 30, 2010

Transcription

1 MARYLAND ASSOCIATION OF CPAs 2010 GOVERNMENT & NOT FOR PROFIT CONFERENCE April 30, 2010 U.S. DEPARTMENT OF THE TREASURY Fred Selby Deputy Chief Financial Officer Slide 1 Agenda History of EESA and Establishment of TARP/OFS OFS Structure TARP Programs Internal Control Framework Program Results Accounting and Reporting Issues Q&A

2 History of the EESA Emergency Economic Stabilization Act of 2008 (EESA) Signed into Law October 3, 2008 Established to restore liquidity and stability to the financial system of the United States Amendments - Helping Families Save Their Homes Act of 2009 Secretary Extended Authority until October 3, 2010 Slide 3 Establishment of TARP/OFS Emergency Economic Stabilization Act of 2008 (EESA) Authority Facility Funding Authorizes the Authorizes Authorizes Secretary of the establishment of funding up to Treasury to the Office of $700 Billion establish the Financial Troubled Asset Stability (OFS) Relief Program (TARP) Communication Slide 4

3 Establishment of TARP Troubled Asset Relief Program (TARP) The Secretary is authorized to purchase, and to make and fund commitments to purchase troubled assets Section 101 Purchases of Troubled Assets Section 102 Insurance of Troubled Assets Slide 5 Oversight (FinSOB, SIGTARP, GAO, COP, Others) Treasury Department Policy & Services Reporting Transparency Office of Financial Stability Chief Counsel Program Offices Legal Agents Financial Agents: Bank of New York Mellon, Fannie Mae, Freddie Mac TARP Fund Recipients Slide 6

4 Organization Chart for OFS Est. 283 FTE Assistant Secretary for Financial Stability Chief Counsel Chief of Operations Office of Financial Agents Chief Internal Review Chief Investment Officer Chief Financial Officer Chief Homeownership Preservation Oversight Financial Stability Oversight Board (FinSOB) the Chairman of the Board of Governors of the Federal Reserve System; the Secretary; the Director of the Federal Housing Finance Agency; the Chairman of the Securities Exchange Commission; the Secretary of Housing and Urban Development Special Inspector General (SIGTARP) Government Accountability Office (GAO) Congressional Oversight Panel (COP) Slide 8

5 Capital Purchase Program (CPP) Preferred Stock with Warrants - 5% for 5 years, 9% Beyond 707 Institutions; $205 Billion; 48 States, D.C. and Puerto Rico Dividend / Interest - Payments Received -- $9 Billion Warrant Proceeds $5.6 Billion Repayments / Redemptions 70+ Institutions -- $136 Billion Final Investment Dec 29, 2009 Asset Guarantee Program (AGP) Citigroup up to $5 Billion Program Terminated TARP Programs AIG Program -- Preferred Stock with Warrants Initial Purchase -- $40 Billion Capital Facility -- Up to $30 Billion Targeted Investment Program (TIP) Citigroup -- $20 Billion Bank of America -- $20 Billion Fully Repaid, Program Terminated Consumer and Business Lending Initiative (CBLI) Term Asset Backed Securities Loan Facility (TALF) -- $30 Billion Community Development Capital Initiative --$780 million SBA 7a--$5 Billion Small Business Lending Fund Slide 9 -- $30 Billion TARP Programs (continued) Automotive Industry Financing Program (AIFP) GMAC -- $16.4 Billion Preferred Stock with Exercised Warrants General Motors -- $884 Million Debt Obligation - Loan to Participate in GMAC Rights Exchanged for GMAC Common Stock General Motors -- $49.5 Billion Debt Obligation with Warrants and Additional Notes and Common Stock Chrysler -- $14.9 Billion Debt Obligation with Additional Note Warranty Commitment Program Repaid --$640 Million Special Purpose Vehicle Chrysler Financial -- $1.5 Billion Debt Obligation with Additional Note Repaid in Full Auto Supplier Support Program (ASSP) -- $3.5 Billion Special Purpose Vehicle All Repaid

6 AIFP Post Restructuring Status Today GMAC TARP Investment TARP Status After Restructuring Own $11.4 B Mandatorily Convertible Preferred Stock Own $2.7 B Trust Preferred Stock Own 56.3% of GMAC Common Stock General Motors Chrysler Own $2.1B in GM Preferred Stock Own 60.8% of GM Common Equity Debt Obligation $6.7B Debt Obligation $3.5B Debt Obligation $5.1B Own 9.9% of Chrysler Equity Slide 11 Financial Stability Plan TARP Programs Capital Assistance Program (CAP) Terminated with no applications Public - Private Investment Program (PPIP) -- $30 Billion--$7.2 B Invested Making Home Affordable -- $50 Billion--$38.2 B Obligated Home Affordable Modification Program (HAMP) Slide 12

7 OFS Control Environment Executive Committee Establish control environment Execute Senior Management control activities Senior Assessment Team Conduct risk assessments Asset Purchases Asset Management Asset Sales Potential new functions Procurement Budget/Accounting Reporting/Compliance Human Resources Information Tech. Perform control activities by function Business Functions Support functions Governance Internal and external monitoring Information and communication Support entire control framework and organization Slide 13 SO HOW ARE WE DOING? LIBOR Down 440 Basis Points Since October 2008 TED Spread Down 430 Basis Points Since October 2008 Corporate Borrowing Rates Down 250 Basis Points Since October 2008 AAA Consumer ABS Down 600 Basis Points Since October 2008 Implied Volatility of S&B (VIX) Down 55% Since October 2008 Aaa Bond Spread Down 85 Basis Points Since October 2008 Baa Bond Spread Down 205 Basis Points Since October 2008 Mortgage Spread Down 83 Basis Points Since October 2008 Mortgage Rates Down 142 Basis Points Since October 2008 Foreclosure Rate Up 100 Basis Points Between Dec 2008 and October 2009 Slide 14 Slide 14

8 SO HOW ARE WE DOING PART II EVENT 2010 President s Budget CBO June 2009 Estimate 2010 Midsession Review FY 2009 OFS Financial Statements 2011 President s Budget CBO January 2010 Estimate CBO March 2010 Estimate ESTIMATED LOSS $ 303 Billion $ 159 Billion $ 341 Billion $ 69 Billion $ 117 Billion $ 99 Billion $ 109 Billion SO HOW ARE WE DOING PART III 2011 PRESIDENT S BUDGET COST BY PROGRAM PROGRAM NAME Capital Purchase Program Asset Guarantee Program AIG Program Targeted Investment Program Consumer and Business Lending Initiative: Term Asset-Backed Securities Loan Facility Other CBLI Automotive Industry Financing Program Public-Private Investment Program Home Affordable Modification Program TOTAL COST $ (4) Billion $ (3) Billion $ 48 Billion $ (4) Billion $ (1) Billion $ 3 Billion $ 28 Billion $ 0 Billion $ 49 Billion $ 117 Billion

9 TARP RECEIPTS AND REPAYMENTS Dividends and Fees Interest Purchases of Warrants &Warrant Preferred Stock Subtotal Purchases/Repayments on Preferred stock Loan Principal Repaid Subtotal Grand Total $ Billion $.61 Billion $ 5.61 Billion $ Billion $ Billion $ 4.95 Billion $ Billion $ Billion TARP Accounting and Reporting Issues Treasury Follows FASAB Standards EESA Requires the Cost of Purchased Troubled Assets or Guarantees of Troubled Assets to Follow the Credit Reform Act for Budgetary Accounting Therefore Equity Programs Accounted for under Credit Reform for Budgetary Accounting EESA Requires Market Risk Adjusted Discount Rate Used for Calculating Costs FASAB Statements Don t Address Equities Accounted for Under Credit Reform Rely on GAAP Hierarchy in Absence of FASAB Guidance Slide 18

10 TARP Accounting and Reporting Issues Consolidation Questions Around: Citigroup, GM, GMAC, AIG, and Various Special Purpose Vehicles (Auto Suppliers, Auto Warranties, TALF) LOTS of coordination with Treasury Department, GAO and OMB BUT, Unqualified Opinion on FY 2009 Financial Statements and Internal Control Over Financial Reporting Slide 19 Slide 19 TARP Exit Strategy Extend TARP Authority until October 3, 2010 Terminated Programs That Have Supported Large Financial Institutions Limiting New Investments to Housing and Markets that Facilitate Consumer and Small Business Loans Maintaining the Capacity to Respond to Potential Financial Threats Continuing to Manage Equity Investments in a Commercial Manner, While Protecting Taxpayers and Unwinding Those Investments as Soon as Practicable Slide 20

11 CHALLENGES AND QUESTIONS Do It All Again Do it Faster Credit Reform Modeling Highest Risk HAMP Program w/ Fannie/Freddie, 100+ Servicers, 3-4 million homeowners Continuing Maturing of OFS as an Organization Slide 21 21