Jump to Navigation


President Signs Emergency Economic Stabilization Act of 2008

October 3, 2008

Emergency Economic Stabilization Act of 2008.  As you may be aware, the House of Representatives passed the EESA today by a vote of 263 to 171, with 172 Democrats and 91 Republicans voting for the bill.  This legislation was identical to the version of the bill passed by the Senate on Wednesday of this week.  The President signed the bill into law this afternoon.  In general terms, this legislation authorizes the Secretary of the Treasury to spend up to $700 billion to purchase troubled assets from financial institutions and empowers the Secretary to enforce a range of new corporate governance standards and executive compensation rules for institutions that participate in the program. The new law also contains a provision that permits the FDIC to increase the amount of deposited money it can insure from $100,000 to $250,000.  The bill also contains a variety of "tax extenders" that prevent existing tax deductions from expiring.  In addition to a section-by-section analysis of the EESA available from the Senate Banking Committee, we will be providing commentary on various provisions over the next few weeks.
Congressional Hearings.  As you might anticipate, passage of this legislation is only the beginning of the regulatory and legislative process related to the financial crisis.  In the short term, we can expect efforts to develop regulations and guidance to move quickly at Treasury, and it will be important for institutions seeking to participate in the program to be active through this developmental process.  Furthermore, Congressional investigations and oversight related to the current financial crisis is already underway.  On October 16th, the House Oversight and Government Reform Committee is holding a hearing on the role of hedge funds in the financial markets and their regulatory and tax status.  Additionally, we understand that the Senate Banking Committee will soon hold hearings on implementation of the legislation.
Going Forward.
  In addition to providing commentary on the provisions of the EESA, in upcoming Alerts we will keep you apprised of the full panoply of developments related to the recent crisis, including the changes to "mark to market" accounting principles and most importantly, the development of new regulatory structures for mortgage-related assets and financial institutions.