Banking, Finance & Insurance
Summary | Team | Current Environment | P3
Stimulus
The American Recovery and Reinvestment Act of 2009 (ARRA), a $789 billion combination of spending and tax cuts, is intended to put millions of unemployed back to work and advance the president’s agenda on energy, education and healthcare. The bill calls for approximately $507 billion in spending and $282 billion in tax relief. Major components include a temporary increase in aid to states for Medicaid costs, aid to local schools and colleges, infrastructure creation and repair, and renewable energy support.
Interests that are positioned to take advantage of the stimulus are gearing up for a share battle. The lengthy legislation identifies many specific tranches of funding for which there will be multiple competitors. While need will always be important, speed has become a critical component that will differentiate successful requests and proposals. All stimulus areas will be evaluated against an analogy to the “shovel ready” type of infrastructure projects that are expected to be supported because they can generate jobs immediately.
The Learning Curve
Experience suggests that the government will have a steep learning curve in its new businesses. In the S&L crisis, the government began its involvement through seizing assets. Soon it found itself simultaneously in the owner’s chair at the other side of the table, needing to protect interests like the value of underlying financing. Curves on the road to the final disposition of remaining assets through the new RTC included the abolishment of the SLIC and FHLBB, increased responsibility for FDIC and the establishment of a new Treasury supervisory office.
Today, the government is a key stakeholder in the banking, insurance, housing and automotive industries, with equity positions that will take years to unwind. Whether the administration can stimulate a new energy industry through tax incentives remains to be seen. The imperative to deliver efficient operation and recover value may sit uneasily next to the mission to establish a new transparency. Can the government be an equity holder, an asset trader and a regulator… profitably?
General Contractors Association of New York
A federally funded captive insurance fund indemnifies the City of New York and the private contractors who rushed to assist at Ground Zero and worked for over a year without coverage for related health claims.
Dillard University
Dillard stands and rebuilds after Hurricane Katrina with critical support from an innovative low-interest loan from the Department of Education.
NAPTP
The tax treatment of traditional Publicly Traded Partnerships (oil and gas partnerships) is protected in the carried interest debate.
Nat’l Employment Opportunity Network
A major Work Opportunity Tax Credit program enhancement increases eligibility, allowing a significantly larger population of disadvantaged Americans to qualify for the program.
