Financial Reform Watch

TARP Management RFP's

As implementation of the financial rescue package accelerates, Treasury Secretary Hank Paulson today outlined at a press conference steps underway to implement the Troubled Asset Relief Program (TARP). Among those steps is the appointment of Neel Kashkari, a 35-year-old aerospace engineer whose resume includes a Wharton MBA and investment banking for Goldman Sachs, to be the interim head of the new Office of Financial Stability. The process for selecting firms to manage assets and assist in administering the TARP is underway. While it is moving quickly, we anticipate there will be additional opportunities in the near future for asset management firms and other service providers to be involved.

Earlier this week, Kashkari’s office issued three separate requests for proposals aimed at financial firms interested in performing the following services for the TARP:

  1. Custodian, accounting, auction management, and other infrastructure services -- respondents must have a minimum of $500 billion in domestic assets under custody. 
  2. Securities asset management services for a portfolio of troubled mortgage-related assets -- respondents must have at least $100 billion in dollar-denominated fixed income assets under management; and
  3. Whole loan asset management services for a portfolio of troubled mortgage-related assets -- respondents must manage a portfolio of at least $25 billion in mortgage loans” or provide evidence that it has the capacity to manage that amount or larger.

Responses to all 3 RFP’s were due at 5pm today. Treasury will select the custodian/infrastructure financial agent on Friday, October 10, and the firm must sign the contract and begin providing services and personnel the following day. Aside from the submission deadline, Treasury does not include a timeframe for the other two categories.

Because the minimum requirements allow only the largest firms to respond, all three notices include language about partnering and working with sub-managers and subcontractors. There is also additional language about later notices for small minority-owned and women-owned businesses. Therefore we expect forthcoming opportunities for other firms to participate in the TARP.

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