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Legislative Update

BY Adam Schlagman
October 27, 2008

In what has been a remarkably tumultuous month in the financial world, the reactions by various legislative and regulatory bodies have been formulated and enacted at a dizzying pace. Some have been in response to the financial crisis, and some simply timed out to coincide with it; but nevertheless, there is an incredible amount of material to digest and process. What will the effects be on the financial markets, will they ease the liquidity crisis, will they restore long-term consumer and investor confidence, and how and who will ultimately pay for them? The true answers will only be found over the course of time, but in the meantime, what follows is a short summary of some of the relevant highlights.

The Emergency Economic Stabilization Act of 2008

The Emergency Economic Stabilization Act of 2008 is designed to promote liquidity in the financial markets and to minimize further economic deterioration. The Act authorizes the Secretary of the Department of Treasury to establish a troubled asset relief program (“TARP”) to purchase “troubled assets” from any “financial institution,” defined as “any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States [or any state or U.S. jurisdiction] ' having significant operations in the United States.”

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