12 USC 5223 - Minimization of long-term costs and maximization of benefits for taxpayers

U.S Code last checked for updates: May 04, 2024

§ 5223.

Minimization of long-term costs and maximization of benefits for taxpayers

(a)

Long-term costs and benefits

(1)

Minimizing negative impact

(2)

Authority

In carrying out paragraph (1), the Secretary shall—

(A)

hold the assets to maturity or for resale for and until such time as the Secretary determines that the market is optimal for selling such assets, in order to maximize the value for taxpayers; and

(B)

sell such assets at a price that the Secretary determines, based on available financial analysis, will maximize return on investment for the Federal Government.

(3)

Private sector participation

(b)

Use of market mechanisms

In making purchases under this chapter, the Secretary shall—

(1)

make such purchases at the lowest price that the Secretary determines to be consistent with the purposes of this chapter; and

(2)

maximize the efficiency of the use of taxpayer resources by using market mechanisms, including auctions or reverse auctions, where appropriate.

(c)

Direct purchases

(d)

Conditions on purchase authority for warrants and debt instruments

(1)

In general

The Secretary may not purchase, or make any commitment to purchase, any troubled asset under the authority of this chapter, unless the Secretary receives from the financial institution from which such assets are to be purchased—

(A)

in the case of a financial institution, the securities of which are traded on a national securities exchange, a warrant giving the right to the Secretary to receive nonvoting common stock or preferred stock in such financial institution, or voting stock with respect to which,1

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the Secretary agrees not to exercise voting power, as the Secretary determines appropriate; or

(B)

in the case of any financial institution other than one described in subparagraph (A), a warrant for common or preferred stock, or a senior debt instrument from such financial institution, as described in paragraph (2)(C).

(2)

Terms and conditions

The terms and conditions of any warrant or senior debt instrument required under paragraph (1) shall meet the following requirements:

(A)

Purposes

Such terms and conditions shall, at a minimum, be designed—

(i)

to provide for reasonable participation by the Secretary, for the benefit of taxpayers, in equity appreciation in the case of a warrant or other equity security, or a reasonable interest rate premium, in the case of a debt instrument; and

(ii)

to provide additional protection for the taxpayer against losses from sale of assets by the Secretary under this chapter and the administrative expenses of the TARP.

(B)

Authority to sell, exercise, or surrender

(C)

Conversion

(D)

Protections

(E)

Exercise price

(F)

Sufficiency

(3)

Exceptions

(A)

De minimis

(B)

Other exceptions

(Pub. L. 110–343, div. A, title I, § 113, Oct. 3, 2008, 122 Stat. 3777.)

cite as: 12 USC 5223