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In order to cleanse bank balance sheets of distressed loans and other assets and reduce the associated market overhang, the FDIC and Treasury are launching the Legacy Loans Program.

The FDIC will provide oversight for the formation, funding, and operation of new public-private investment funds ("PPIFs") that will purchase loans and other assets from depository institutions. The Legacy Loans Program will attract private capital through an FDIC debt guarantee and Treasury equity co-investment. Private market equity investors ("Private Investors') are expected to include but are not limited to financial institutions, individuals, insurance companies, mutual funds, publicly managed investment funds, pension funds, foreign investors with a headquarters in the United States, private equity funds, and hedge funds. The participation of mutual funds, pension plans, insurance companies, and other long term investors is particularly encouraged.

The FDIC will staff operations relating to the formation, funding, and operation of PPIFs and will work with participant banks, the Treasury, Private Investors and contractors to administer the asset pool auctions. The Treasury will be responsible for overseeing and managing its equity contribution in the PPIFs, while the FDIC will be responsible for overseeing and managing its debt guarantees to the PPIFs.