Client Alert
EESA Update: Interagency Backstop Unfolds
October 15, 2008
Kevin L. Petrasic
In what is becoming an almost daily round of announcements on implementation of the Emergency Economic Stabilization Act (EESA), the Treasury Department, Federal Reserve Board (FRB) and Federal Deposit Insurance Corporation (FDIC) yesterday issued a series of closely coordinated news releases on backstopping the banking industry. The substance of the releases, which were discussed by the President in a Rose Garden Press Conference yesterday morning, are likely to have far-reaching effects on the business of banking for many years to come. The coordinated announcements reveal a three-legged stool approach by the federal government to backstop the banking system Treasury investments to promote credit availability, FDIC guarantees for deposits and new debt to support liquidity, and FRB funding to support the commercial paper market.