Covington & Burling LLP | Practices, Industries & Regions | Responding to the Global Financial Crisis

How We Can Help

Covington & Burling LLP has a multi-disciplinary group of experienced attorneys who are closely following, and advising a range of clients on, the rapidly changing financial regulatory landscape brought about by the recent economic downturn. Although the Troubled Asset Relief Program (TARP) has been the cornerstone of the Federal government’s response to the crisis thus far, the government is pursuing a multi-faceted strategy involving, among others, the U.S. Treasury Department, the FDIC, the Federal Reserve System, the OCC, the OTS, and the SEC. With the upcoming change in Administration, it seems inevitable that further changes in the financial regulatory landscape will be debated and, in some cases, implemented.

Covington’s attorneys in several disciplines − financial institutions, corporate and securities, tax, government affairs, bankruptcy and corporate restructuring, and employee benefits − are helping clients navigate this evolving landscape.

We will continue to keep you apprised of new regulatory and related developments in connection with the current economic situation as they emerge. For E-Alerts click here.

Representative Matters

Representing Freddie Mac and its Board of Directors in the establishment of the U.S. Government conservatorship over Freddie Mac in September 2008, and a range of subsequent issues relating to the implementation of the conservatorship.
Representing Wilmington Trust Company as indenture trustee for $48 billion of bonds issued by Lehman Brothers Holdings Inc. ("LBHI") and as co-chair of the official creditors committee in the LBHI chapter 11 bankruptcy case. The chapter 11 case is the largest ever filed and involves the dismantling of what was the fourth largest investment bank in the world.
Advising Trustmark Corporation on its sale of $215 million of preferred stock and warrants to the U.S. Treasury as part of the Treasury Department's Capital Purchase Program.
Representing the former CEO of IndyMac Bank (which was one of the largest bank failures in U.S. history) in SEC and U.S. Attorneys Office investigations, plus civil securities and ERISA class actions and likely FDIC lawsuit. The IndyMac Bank matter is expected to be one of the largest enforcement and litigation matters to arise out of the financial meltdown of 2008.
Assisting a major US bank in restructuring its securities lending business in light of current adverse market developments.
Advising a large public pension plan regarding gaps in the U.S. financial regulatory structure and potential proposals to change the regulatory structure.
Representing Freddie Mac in hearing before House Committee on Oversight and Government Reform.
Representing several financial institutions on four separate enforcement actions in front of the OCC, the Federal Reserve, the FDIC, and OTS, respectively. The matters involve safety and soundness issues, internal controls, and regulatory compliance issues.
Representing a range of clients in Congress with respect to selling troubled pension assets, permitting non-bank financial institutions to qualify for eligibility to sell troubled assets, and extending credits for re-usable sources of energy.

TARP-Related Activities

Assisting publicly-traded and privately-held financial institutions evaluate and apply to participate in the U.S. Treasury’s $250 billion Capital Purchase Program, including providing advice in the areas of corporate structuring, governance, executive compensation, securities regulation, and tax.
Advising several clients in connection with applications to act as service providers under the TARP.
Advising clients regarding the Treasury’s potential expansion of TARP programs to non-bank financial institutions.
Participating with clients in SIFMA comment letters to Treasury regarding the insurance/guarantee provisions of TARP.
Advising clients regarding the Treasury’s anticipated establishment and implementation of auction and direct purchase programs for troubled assets under the TARP.

Other Initiatives to Restore the Flow of Credit

Representing both financial institutions and other corporate clients considering whether to participate in the Federal Reserve’s Commercial Paper Funding Facility.
Advising an offshore structured investment vehicle in its efforts to access the Federal Reserve's Commercial Paper Funding Facility.
Representing clients regarding the implementation and interpretation of the FDIC’s Temporary Liquidity Guarantee Program to guarantee certain deposits and senior unsecured debt of financial institutions.
Advising various clients with respect to the Federal Reserve System's Money Market Investor Funding Facility.

Residential Mortgage Relief Initiatives

Advising various clients with respect to various residential mortgage modification and support programs proposed or adopted by the FDIC, Federal Housing Finance Agency (FHFA), Department of Housing and Urban Development, and other government agencies.

Tax Advice

Helping various clients with tax efficient restructurings to facilitate alternative borrowing sources as the foreign commercial paper market collapsed, including potential use of IRS's notice liberalizing inbound commercial foreign corporation to US parent lending.
Reviewing tax consequences from restructuring foreign and domestic hedging transactions in reaction both to perception of increased counterparty risk and possible losses.