Components of the “Troubled Asset Relief Program” (TARP) – adopted in 2008 to battle the effects on the banking system of a collapsing subprime housing market – will be wound down under a Treasury proposal filed Friday, as the agency works to eliminate “unnecessary regulations” under the auspices of an executive order.
In its filing with the Federal Register (likely to be published as early as Monday), Treasury cites Executive Order 13777, Enforcing the Regulatory Reform Agenda, signed by President Donald Trump early last year. The order directed federal agencies to establish regulatory reform task forces to identify rules that were (among other things) “outdated, unnecessary or ineffective.”
Treasury said it is proposing to eliminate one part of the TARP rules because it no longer has “any current or future applicability” and to amend one regulation to remove portions “that no longer have any current or future applicability.”
Treasury said the regulations, or portions of regulations, proposed to be removed relate to components of programs that are no longer in existence: TARP Standards for Compensation and Corporate Governance (31 CFR Part 30). These programs set standards for compensating executives of companies that received capital from Treasury as part of TARP.
“Portions of this rule relate to ‘exceptional financial assistance’ that was provided to some of the largest financial institutions in the United States under programs specifically created for those institutions,” Treasury stated.
Other portions of the rule established and provided authority to the Office of the Special Master for TARP Executive Compensation. The Special Master was given authority to approve certain payments to employees of TARP recipients receiving exceptional financial assistance, review payments to employees made prior to Feb. 17, 2009, and issue advisory opinions on compensation to TARP recipients.
“The TARP program has largely wound down and there are no recipients of exceptional financial assistance left in the TARP program,” Treasury said. “Additionally, the Special Master had the opportunity to review compensation made prior to Feb. 17, 2009. Given the absence of exceptional financial assistance entities and the current status of the TARP program, the Office of the Special Master for TARP Executive Compensation no longer has any employees.” Thus, Treasury proposes removing the rule.
In amending the TARP rules, Treasury proposes to make changes to the “Payments in Lieu of Low Income Housing Tax Credits (31 CFR Part 32).”
Treasury noted that the regulation sets the department’s policy for the time limitation within which state housing credit agencies must disburse funds received under section 1602 of the American Recovery and Reinvestment Tax Act of 2009. The rule, Treasury said, allowed states to disburse section 1602 funds to subawardees through Dec. 31, 2011, under certain conditions.
“Treasury no longer awards section 1602 funds to State housing credit agencies,” Treasury pointed out. “Thus, Treasury proposes to remove 31 CFR Part 32 because no State housing credit agencies hold section 1602 funds and because the time period for disbursement of section 1602 funds to subawardees has expired.”
TARP was enacted in 2008 as part of the Economic Stabilization Act of 2008, meant to respond to the troubled housing market (spurred by the collapse of subprime loans). The law gave Treasury authority to purchase or insure up to $700 billion in “troubled assets” and equity from financial institutions.