Financial Bailout Legislation

The latest version of the $700 billion financial bailout legislation being negotiated by Congress and the Administration (H.R. 3997, the Emergency Economic Stabilization Act of 2008 or EESA) would authorize the Secretary of Treasury to establish a new troubled asset relief program (TARP) to buy "troubled assets" from any "financial institution," subject to various conditions, limits and requirements.  EESA would impose executive compensation limits and corporate governance requirements on any financial institution from which assets are purchased.  In addition, it would generally require the Secretary to obtain from financial institutions, as part of the purchase transaction, warrants or a long-term note to help provide potential "upside" for taxpayers.

Attached is an informational memorandum about the possible impact of the proposed bill on pension plans and executive compensation.