U.S. Government Actions to Strengthen Market Stability

Washington, DC--Today we are taking decisive actions to protect the U.S. economy, to strengthen public confidence in our financial institutions, and to foster the robust functioning of our credit markets. These steps will ensure that the U.S. financial system performs its vital role of providing credit to households and businesses and protecting savings and investments in a manner that promotes strong economic growth in the U.S. and around the world. These actions are consistent with the strategy announced by the President's Working Group on October 6 and the action plan announced by the G7 Finance Ministers on October 10.

Under the authority of the Emergency Economic Stabilization Act of 2008, the U.S. Treasury will make available $250 billion of capital to U.S. financial institutions. This facility will allow banking organizations to apply for a preferred stock investment by the U.S. Treasury. Nine large financial organizations have already indicated their intention to subscribe to the facility in an aggregate amount of $125 billion.

The Senior Preferred will pay cumulative dividends at a rate of 5 percent per year for the first five years, and thereafter at a rate of 9 percent per year. The shares are non-voting, other than with respect to market standard terms that protect the taxpayer's rights as an investor. Institutions selling preferred shares to the Treasury agree that the following executive compensation limitations will apply while the Treasury owns shares in the company: 1) the Board will certify that that contracts of the top five executives do not encourage or reward excessive risk taking; 2) compensation payments made based on earnings, gains, or other criteria that are later proven to be materially inaccurate must be repaid, and 3) no golden parachute payments will be made. In addition, the taxpayers will also receive warrants to purchase common stock with an aggregate market price equal to 15 percent of the senior preferred investment.

After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and after consulting with the President, Secretary Paulson triggered the systemic risk exception to the FDIC Act, enabling the FDIC to temporarily guarantee the senior debt of all FDIC-insured institutions and their holding companies, as well as deposits in non-interest bearing deposit transaction accounts. Regulators will implement an enhanced supervisory framework to assure appropriate use of this new guarantee. The ability to issue guaranteed debt under the program would expire on June 30, 2009 and the full protection for deposits in noninterest bearing transaction deposit accounts would revert back to the statutory limits on December 31, 2009.

Purchasing Commercial Paper

To further increase access to funding for businesses in all sectors of our economy, the Federal Reserve has announced further details of its Commercial Paper Funding Facility (CPFF) program, which provides a broad backstop for the commercial paper market. Beginning October 27, the CPFF will be able to purchase commercial paper of 3 month maturity from high-quality issuers.

President Bush has made clear that we are committed to using all necessary tools to support our financial markets and institutions, so they can finance the U.S. economy. Given the interconnected nature of the global capital markets, we continue to work closely with our colleagues in the international regulatory community.

Together these three steps significantly strengthen the capital position and funding ability of U.S. financial institutions, enabling them to perform their role of underpinning overall economic growth. These actions demonstrate to market participants here and around the world the strength of the U.S. government's commitment to take all necessary steps to unlock our credit markets and minimize the impact of the current instability on the overall U.S. economy. The actions taken today are a powerful step toward restoring the health of the global financial system.

Treasury Announces Executive Compensation Rules Under the Emergency Economic Stabilization Act

Washington- The U.S. Treasury Department today announced the development of three programs under the Emergency Economic Stabilization Act and corresponding executive compensation and corporate governance standards. These standards generally apply to the chief executive officer, chief financial officer, plus the next three most highly compensated executive officers. Any firm participating in the following three programs will be required to adopt these standards.

Troubled Asset Auction Program- Treasury continues to develop a program to purchase troubled mortgage-related assets through an auction format, and will be issuing program guidance for this program in the coming weeks. Treasury is issuing guidance for the executive compensation requirements that will apply to firms participating in this program. As prescribed by the Act, any financial institution that sells more than $300 million of troubled assets to the Treasury via an auction would be prohibited from entering into new executive employment contracts that include golden parachutes for the term of the program. Treasury is releasing Treasury Notice 2008-TAAP regarding this restriction. Furthermore, under the Act, (1) the financial institution may not deduct for tax purposes executive compensation in excess of $500,000 for each senior executive, (2) the financial institution may not deduct certain golden parachute payments to its senior executives and (3) a 20-percent excise tax will be imposed on the senior executive for these golden parachute payments. Treasury is releasing I.R.S. Notice 2008-94 regarding these new tax rules.

Capital Purchase Program- The Treasury is issuing guidance for this program designed to provide equity capital under standardized terms directly to certain financial institutions, further strengthening their capital structures to facilitate their continued lending in the capital markets. Any financial institution participating in the Capital Purchase Program will be subject to more stringent executive compensation rules for the period during which Treasury holds equity issued under this program. The financial institution must meet certain standards, including: (1) ensuring that incentive compensation for senior executives does not encourage unnecessary and excessive risks that threaten the value of the financial institution; (2) required clawback of any bonus or incentive compensation paid to a senior executive based on statements of earnings, gains, or other criteria that are later proven to be materially inaccurate; (3) prohibition on the financial institution from making any golden parachute payment to a senior executive based on the Internal Revenue Code provision; and (4) agreement not to deduct for tax purposes executive compensation in excess of $500,000 for each senior executive. Treasury is issuing interim final rules for these executive compensation standards.

Programs for Systemically Significant Failing Institutions- The Treasury Department is currently developing a third program to potentially provide direct assistance to certain failing firms on terms negotiated on a case-by-case basis. Treasury is issuing guidance for the executive compensation standards that will apply to the firms participating in such programs and their senior executives (Treasury Notice 2008-PSSFI). These standards are similar in all respects to the Capital Purchase Programs executive compensation standards described above, with one significant difference. In situations where Treasury provides assistance under the systemically significant failing institutions programs, golden parachutes will be defined more strictly to prohibit any payments to departing senior executives.

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October 14, 2008
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Treasury Announces TARP Capital Purchase Program Description

Washington- Treasury today announced a voluntary Capital Purchase Program to encourage U.S. financial institutions to build capital to increase the flow of financing to U.S. businesses and consumers and to support the U.S. economy.

Under the program, Treasury will purchase up to $250 billion of senior preferred shares on standardized terms as described in the program's term sheet. The program will be available to qualifying U.S. controlled banks, savings associations, and certain bank and savings and loan holding companies engaged only in financial activities that elect to participate before 5:00 pm (EDT) on November 14, 2008. Treasury will determine eligibility and allocations for interested parties after consultation with the appropriate federal banking agency.

The minimum subscription amount available to a participating institution is 1 percent of risk-weighted assets. The maximum subscription amount is the lesser of $25 billion or 3 percent of risk-weighted assets. Treasury will fund the senior preferred shares purchased under the program by year-end 2008. Institutions interested in participating in the program should contact their primary federal regulator for specific enrollment details.

The senior preferred shares will qualify as Tier 1 capital and will rank senior to common stock and pari passu, which is at an equal level in the capital structure, with existing preferred shares, other than preferred shares which by their terms rank junior to any other existing preferred shares. The senior preferred shares will pay a cumulative dividend rate of 5 percent per annum for the first five years and will reset to a rate of 9 percent per annum after year five. The senior preferred shares will be non-voting, other than class voting rights on matters that could adversely affect the shares. The senior preferred shares will be callable at par after three years. Prior to the end of three years, the senior preferred may be redeemed with the proceeds from a qualifying equity offering of any Tier 1 perpetual preferred or common stock. Treasury may also transfer the senior preferred shares to a third party at any time. In conjunction with the purchase of senior preferred shares, Treasury will receive warrants to purchase common stock with an aggregate market price equal to 15 percent of the senior preferred investment. The exercise price on the warrants will be the market price of the participating institution's common stock at the time of issuance, calculated on a 20-trading day trailing average.

Companies participating in the program must adopt the Treasury Department's standards for executive compensation and corporate governance, for the period during which Treasury holds equity issued under this program. These standards generally apply to the chief executive officer, chief financial officer, plus the next three most highly compensated executive officers.

The financial institution must meet certain standards, including: (1) ensuring that incentive compensation for senior executives does not encourage unnecessary and excessive risks that threaten the value of the financial institution; (2) required clawback of any bonus or incentive compensation paid to a senior executive based on statements of earnings, gains or other criteria that are later proven to be materially inaccurate; (3) prohibition on the financial institution from making any golden parachute payment to a senior executive based on the Internal Revenue Code provision; and (4) agreement not to deduct for tax purposes executive compensation in excess of $500,000 for each senior executive. Treasury has issued interim final rules for these executive compensation standards.

Nine large financial institutions already have agreed to participate in this program, moving quickly and collectively to signal the importance of the program for the system. These healthy institutions have voluntarily agreed to participate on the same terms that will be available to small and medium-sized banks and thrifts across the nation.

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REPORTS

• Public Term Sheet

Joint Statement by Treasury, Federal Reserve and FDIC

Washington, DC-- The following statement was made by Treasury Secretary Henry M. Paulson, Jr, Federal Reserve Chairman Ben Bernanke and FDIC Chairman Sheila C. Bair:

Today we are taking decisive actions to protect the U.S. economy, to strengthen public confidence in our financial institutions, and to foster the robust functioning of our credit markets. These steps will ensure that the U.S. financial system performs its vital role of providing credit to households and businesses and protecting savings and investments in a manner that promotes strong economic growth in the U.S. and around the world. The overwhelming majority of banks in the United States are strong and well-capitalized. These actions will bolster public confidence in our system to restore and stabilize liquidity necessary to support economic growth.

Last week, the President's Working Group on Financial Markets announced that the U.S. government would deploy all of our tools in a strategic and collaborative manner to address the current instability in our financial markets and mitigate the risks that instability poses for broader economic growth. This past weekend, we and our G7 colleagues committed to a comprehensive global strategy to provide liquidity to markets, to strengthen financial institutions, to prevent failures that pose systemic risk, to protect savers, and to enforce investor protections.

We welcomed the steps announced by our European colleagues this weekend to implement the action plan, and ensure financial institutions in Europe can finance economic growth. Today we are implementing our strategy with three important actions.

First, Treasury is announcing a voluntary capital purchase program. A broad array of financial institutions is eligible to participate in this program by selling preferred shares to the U.S. government on attractive terms that protect the taxpayer. Second, after receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Paulson signed the systemic risk exception to the FDIC Act, enabling the FDIC to temporarily guarantee the senior debt of all FDIC-insured institutions and their holding companies, as well as deposits in non-interest bearing deposit transaction accounts. Regulators will implement an enhanced supervisory framework to assure appropriate use of this new guarantee.

We are pleased to announce that nine major financial institutions have already agreed to participate in both the capital purchase program and the FDIC guarantee program. We appreciate that these healthy institutions are taking these steps to strengthen their own positions and to enhance the overall performance of the U.S. economy. By participating in these programs, these institutions, along with thousands of others to come, will have enhanced capacity to perform their vital function of lending to U.S. consumers and businesses and promoting economic growth. They have also committed to continued aggressive actions to prevent unnecessary foreclosures and preserve homeownership.

Third, to further increase access to funding for businesses in all sectors of our economy, the Federal Reserve has announced further details of its Commercial Paper Funding Facility (CPFF) program, which provides a broad backstop for the commercial paper market. Beginning October 27, the CPFF will fund purchases of commercial paper of 3 month maturity from high-quality issuers.

Together these three steps significantly strengthen the capital position and funding ability of U.S. financial institutions, enabling them to perform their role of underpinning overall economic growth. These actions demonstrate to market participants here and around the world the strength of the U.S. government's commitment to take all necessary steps to unlock our credit markets and minimize the impact of the current instability on the overall U.S. economy. The actions taken today are a powerful step toward restoring the health of the global financial system.

Statement by Secretary Henry M. Paulson, Jr. on Actions to Protect the U.S. Economy

Washington, DC-- Treasury today issued the following statement by Secretary Henry M. Paulson, Jr. on actions to protect the economy and restore confidence and stability to our financial markets:

America is a strong nation. We are a confident and optimistic people. Our confidence is born out of our long history of meeting every challenge we face. Time and time again our nation has faced adversity and time and time again we have overcome it and risen to new heights. This time will be no different.

Today, there is a lack of confidence in our financial system – a lack of confidence that must be conquered because it poses an enormous threat to our economy. Investors are unwilling to lend to banks, and healthy banks are unwilling to lend to each other and to consumers and businesses.

In recent weeks, the American people have felt the effects of a frozen financial system. They have seen reduced values in their retirement and investment accounts. They have worried about meeting payrolls and they have worried about losing their jobs. Families all across our Nation have gone through long days and long nights of concern about their financial situations today, and their financial situations tomorrow. Without confidence that their most basic financial needs will be met, Americans lose confidence in our economy, and this is unacceptable.

President Bush has directed me to consider all necessary steps to restore confidence and stability to our financial markets and get credit flowing again. Ten days ago Congress gave important new tools to the Treasury, the Federal Reserve and the FDIC to meet the challenges posed to our economy. My colleagues and I are working creatively and collaboratively to deploy these tools and direct our powers at this disruption to our economy.

Today we are taking decisive actions to protect the US economy. We regret having to take these actions. Today's actions are not what we ever wanted to do – but today's actions are what we must do to restore confidence to our financial system.

Today I am announcing that the Treasury will purchase equity stakes in a wide array of banks and thrifts. Government owning a stake in any private U.S. company is objectionable to most Americans – me included. Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable. When financing isn't available, consumers and businesses shrink their spending, which leads to businesses cutting jobs and even closing up shop.

To avoid that outcome, we must restore confidence in our financial system. The first step in that effort is a plan to make capital available on attractive terms to a broad array of banks and thrifts, so they can provide credit to our economy. From the $700 billion financial rescue package, Treasury will make $250 billion in capital available to U.S. financial institutions in the form of preferred stock. Institutions that sell shares to the government will accept restrictions on executive compensation, including a clawback provision and a ban on golden parachutes during the period that Treasury holds equity issued through this program. In addition, taxpayers will not only own shares that should be paid back with a reasonable return, but also will receive warrants for common shares in participating institutions. We expect all participating banks to continue and to strengthen their efforts to help struggling homeowners who can afford their homes avoid foreclosure. Foreclosures not only hurt the families who lose their homes, they hurt neighborhoods, communities and our economy as a whole.

While many banks have suffered significant losses during this period of market turmoil, many others have plenty of capital to get through this period, but are not positioned to lend as widely as is necessary to support our economy. Our goal is to see a wide array of healthy institutions sell preferred shares to the Treasury, and raise additional private capital, so that they can make more loans to businesses and consumers across the nation. At a time when events naturally make even the most daring investors more risk-averse, the needs of our economy require that our financial institutions not take this new capital to hoard it, but to deploy it.

Nine large financial institutions have already agreed to participate in this program. They have agreed to sell preferred shares to the US government, on the same terms that will be available to a broad array of small and medium-sized banks and thrifts across the nation. These are healthy institutions, and they have taken this step for the good of the U.S. economy. As these healthy institutions increase their capital base, they will be able to increase their funding to U.S. consumers and businesses.

I am joined here this morning by Chairman Bernanke and Chairman Bair, who have also taken extraordinary actions to support investor confidence in our financial system, so that funds will again flow through our banks to the U.S. economy. Each of them will describe their actions.

Combined, our actions are extensive, powerful and transformative. They demonstrate that the government will do what is necessary to restore the flow of funds on which our economy depends and will act to avoid, where possible, the failure of any systemically important institution.

These three steps significantly strengthen financial institutions and improve their access to funding, enabling them to increase financing of the consumption and business investment that drive U.S. economic growth. Market participants here and around the world can take confidence from the powerful actions taken today and our broad commitment to the health of the global financial system.

We are acting with unprecedented speed taking unprecedented measures that we never thought would be necessary. But they are necessary to get our economy back on an even keel, and secure the confidence and future of our markets, our economy and the economic well-being of all Americans.

Treasury Department and Infrastructure Consortium for Africa Host Africa Power Symposium

Washington, DC –Assistant Secretary of the Treasury for International Affairs Clay Lowery and African Development Bank President Donald Kaberuka today addressed a group of African finance ministers, power project developers, and financiers at a seminar on attracting private investment in Africa's power sector.  The seminar, which was hosted by the Treasury Department and the Infrastructure Consortium for Africa, follows up on discussions during Secretary Paulson's trip to Ghana, Tanzania and South Africa last November. 

Underinvestment in infrastructure, particularly in the power sector, constrains economic performance in Africa, and major investments in infrastructure are needed to boost productivity and competitiveness. The World Bank estimates that, to meet demand in the power sector alone, sub-Saharan Africa would need to invest over $30 billion a year, or around 4.5 percent of the continent's GDP, for ten years.  Mobilizing private financing is essential given the magnitude of investment needs and the constraints on public finance.

Assistant Secretary Lowery stated, "African economies have made great strides in recent years.  But to truly unlock Africa's economic potential, we must address infrastructure bottlenecks, particularly in power generation.  African businesses must have clean, reliable, affordable energy to be competitive in world markets."

Participants discussed the financing constraints on private investment in many sub-Saharan African countries and ways in which to address those constraints.  The discussion highlighted the primary role of African governments in creating an environment conducive to private investment, including critical regulatory and legal reforms.

In addition to the primary role of governments, participants also discussed the important supporting role of donors to help catalyze private investment.

·         The United States Agency for International Development (USAID) announced the establishment of the Africa Infrastructure Program (AIP).  Through AIP, USAID is committing over $25 million to provide African governments with specialized project finance transaction experts to help expedite the financial closure of commercially and financially viable electricity projects in the Sub-Saharan region.  By providing project finance, legal, technical, and environmental expertise to support the contract negotiation progress on targeted projects, AIP seeks to leverage more than $1 billion of new investments within Sub-Saharan Africa with the next two years.

·         The Infrastructure Consortium for Africa (ICA) unveiled a new guide, "Attracting Investors to African Public-Private Partnerships," that will help the public sector in Africa to attract private sector investment through effective project advertising, management, and implementation. The guide, prepared with a grant from the multi-donor Public-Private Infrastructure Advisory Facility, will enhance the chances of developing effective public-private partnerships by overcoming major obstacles to project delivery by having the right information, on the right projects, for the right partners, at the right time.  To read the electronic version of the guide please visit:  http://www.icafrica.org/en/news/article/view/attracting-investors-to-african-infrastructure-projects-a-new-guide/

·         ICA also announced that it would continue its outreach to the private sector through the formation of a new working group that will strengthen communication between the public and private sectors on key issues surrounding infrastructure finance.  ICA aims to develop a workplan for the group and convene its first meeting by the time of the AfDB Annual Meetings in May 2009.  For more information about ICA, please contact Mr. Andrew Roberts at a.roberts@afdb.org or visit ICA's website at:  http://www.icafrica.org/en/

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October 13, 2008
hp1201

Treasury Hires Investment Adviser Under the Emergency Economic Stabilization Act

Washington- The U.S. Treasury Department today announced that EnnisKnupp and Associates will serve as its investment adviser for the implementation of the Troubled Asset Relief Program authorized under the Emergency Economic Stabilization Act. Treasury hired the Chicago-based firm Saturday and the firm began work immediately to help the Department administer the complex portfolio of troubled assets the Department will purchase.

Treasury hired the investment consultant for assistance as it evaluates potential asset managers and other vendors. The firms' duties also will include developing and maintaining investment policies and guidelines and assisting with the oversight of the portfolio's multiple asset managers. This oversight will include helping Treasury to determine asset allocations for each manager, evaluating the performance and costs, identifying conflicts of interest and identifying strategic investment and market issues impacting the overall portfolio.

The investment adviser also will conduct research on mortgage whole loan asset managers and on servicing organizations. Additionally, the firm will identify qualified minority- and women-owned businesses to provide services for the portfolio.

Treasury hired EnnisKnupp using a procurement contract under the Federal Acquisition Regulation. Treasury competitively solicited offers from six firms under compelling urgency to quickly establish the Troubled Asset Relief Program. Three firms made offers.

The contract will last for one year. More information on this contract is posted at www.fedbizopps.gov (Federal Business Opportunities website) and at https://www.fpds.gov (Federal Procurement Data System).

EnnisKnupp is one of the largest investment consulting firms in the world with aggregate assets of more than $835 billion under advisement for over 155 retainer clients, as well as approximately $1 trillion in project-related engagements. Accustomed to working with large, complex institutional investors, particularly those that operate in highly visible and transparent environments, they serve a diverse client base. Their clients include public, corporate, and jointly-trusteed retirement funds, as well as not-for-profit organizations, foundations, and other endowed institutions. EnnisKnupp has grown to 121 employees, of which 93 are consulting professionals, and as a result the firm has extensively deep bench strength and resources that are devoted to providing world class service to clients. EnnisKnupp comprehensive advisory services encompass traditional investment consulting combined with complete coverage of all alternatives consulting needs for private equity, real estate, and opportunistic strategies. In addition, they are leading experts in fiduciary services, which includes fiduciary audits and operational reviews, investment program structure and monitoring, board/committee governance, strategic planning and organizational design, and trustee education. EnnisKnupp remains dedicated to maintaining its strict independence from financial service providers, which ensures that the advice clients receive is unconflicted and always in their best interest.

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REPORTS

• Contract

G-7 Finance Ministers and Central Bank Governors Plan of Action

Washington-- The G-7 agrees today that the current situation calls for urgent and exceptional action. We commit to continue working together to stabilize financial markets and restore the flow of credit, to support global economic growth. We agree to:

1. Take decisive action and use all available tools to support systemically important financial institutions and prevent their failure.
2. Take all necessary steps to unfreeze credit and money markets and ensure that banks and other financial institutions have broad access to liquidity and funding.
3. Ensure that our banks and other major financial intermediaries, as needed, can raise capital from public as well as private sources, in sufficient amounts to re-establish confidence and permit them to continue lending to households and businesses.
4. Ensure that our respective national deposit insurance and guarantee programs are robust and consistent so that our retail depositors will continue to have confidence in the safety of their deposits.
5. Take action, where appropriate, to restart the secondary markets for mortgages and other securitized assets. Accurate valuation and transparent disclosure of assets and consistent implementation of high quality accounting standards are necessary.

The actions should be taken in ways that protect taxpayers and avoid potentially damaging effects on other countries. We will use macroeconomic policy tools as necessary and appropriate. We strongly support the IMF's critical role in assisting countries affected by this turmoil. We will accelerate full implementation of the Financial Stability Forum recommendations and we are committed to the pressing need for reform of the financial system. We will strengthen further our cooperation and work with others to accomplish this plan.

Treasury Announces Conclusion of Enrollment Period for Temporary Money Market Guarantee Program and Technical Correction

Washington- The Treasury Department announced today a technical correction that would permit additional money market funds to participate in Treasury's Temporary Money Market Fund Guarantee Program.  Funds that have a policy of maintaining a stable net asset value or share price that is greater than $1.00 and had such policy on September 19, 2008 are now eligible to participate, provided the fund meets all of the other original requirements.

The enrollment deadline for these funds that are now eligible as a result of this technical correction is 11:59 p.m. Washington, DC time on October 10, 2008. 

This technical correction does not extend the original deadline for funds that maintain a stable share price of $1.00 and that qualified under the program originally announced on September 29, 2008.  As previously announced, the enrollment period for Treasury's Temporary Money Market Fund Guarantee Program will close today at 11:59 p.m.  Eligible funds should ensure that the required documentation is delivered to Treasury by the deadline. 

October 6, 2008
hp-1185

Treasury Announces Solicitations for Financial Agents under the Emergency Economic Stabilization Act

Washington, DC--The Treasury Department posted today three solicitations for financial agents to provide services that are needed for the effective implementation of the Troubled Asset Relief Program authorized under the Emergency Economic Stabilization Act. The three services being sought are:

• Custodian, Accounting, Auction Management, and Other Infrastructure Services
• Securities Asset Management Services
• Whole Loan Asset Management Services

All interested and eligible parties that meet the requirements and guidelines required of each service should submit requests by the 5 p.m. (EDT) on Oct. 8, 2008. Treasury expects to announce the results of initial selections from these three competitions next week. In some cases more than one financial agent may be chosen.

These services are being obtained through the Treasury's authority to retain financial agents to provide services on its behalf as provided for under the Emergency Economic Stabilization Act. These are not contracts governed by the provisions of the Federal Acquisition Regulation. More information on Treasury's procurement authorities under this Act can be found at: http://www.treasury.gov/press/releases/hp1179.htm.

Kashkari Appointed Interim Assistant Secretary for Financial Stability

Washington– Secretary Henry M. Paulson, Jr. today designated Neel Kashkari as the Interim Assistant Secretary of the Treasury for Financial Stability pursuant to the Emergency Economic Stabilization Act of 2008. In this capacity, Kashkari will oversee the Office of Financial Stability including the Troubled Asset Relief Program.

Kashkari is currently Assistant Secretary of the Treasury for International Economics and Development.  In this role, he is responsible for developing and executing policies for the Department to foster a more conducive investment climate for the U.S., as well as to support global economic growth.  He will continue to hold this position, but while acting in his new role, his International Affairs responsibilities will be delegated to Assistant Secretary for International Affairs Clay Lowery.

Kashkari joined the Treasury Department in July 2006 as Senior Advisor to Secretary Paulson.  In that role, he was responsible for developing the President's Twenty in Ten energy security plan, enhancing Treasury's engagement with India, particularly in the area of infrastructure development, and developing and executing the Department's response to the housing crisis, including the formation of the HOPE NOW Alliance, the development of the subprime fast-track loan modification plan, and Treasury's initiative to kick-start a covered bond market in the United States.

Prior to joining the Treasury Department, Kashkari was a Vice President at Goldman, Sachs & Co. in San Francisco, where he led Goldman's IT Security Investment Banking practice, advising public and private companies on mergers and acquisitions and financial transactions. Prior to his career in finance, Kashkari was a R&D Principal Investigator at TRW in Redondo Beach, California where he developed technology for NASA space science missions such as the James Webb Space Telescope.

Originally from Stow, Ohio, Kashkari graduated from the University of Illinois at Urbana-Champaign with a Bachelor's and Master's degree in Engineering. He also received an M.B.A. in Finance from the Wharton School. He and his wife reside in Maryland. 

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October 6, 2008
HP-1181

Asset Manager Selection Process

Washington--Treasury today released the following document outlining the process for selecting asset managers pursuant to the Emergency Economic Stabilization Act of 2008.

REPORTS

• Asset Manager Selection Process

Interim Guidelines for Conflicts of Interest

Washington, DC-- Treasury issued the following interim guidelines for potential conflicts of interest related to the authorities granted under the Emergency Economic Stabilization Act of 2008:

These procedures outline the process for reviewing and addressing actual or potential conflicts of interest (COIs) among contractors performing services in conjunction with the Emergency Economic Stabilization Act of 2008 (EESA). Section 108 of the EESA requires Treasury to develop guidelines for addressing COIs as soon as practicable after enactment of the law. These procedures should be considered interim guidelines and will remain in effect until final guidelines are developed.

EESA contracts raise potential for "impaired objectivity" COIs. Under such COIs, the contractor's judgment or objectivity may be impaired due to the fact that the substance of the contractor's performance has the potential to affect other interests of the contractor. EESA contractors may also face potential COIs if they obtain access to sensitive, non-public information (belonging to Treasury or to third parties) while performing the contract. To address this latter type of COI, it may be necessary to restrict the disclosure of such information or to include restrictions on the dissemination of information within the contractor's organization. Lastly, contractor employees are not always subject to the same ethical restrictions that are imposed by law on Federal Government employees. Therefore, EESA contracts may create a potential for personal COIs involving individual employees of a contractor.

Treasury officials should adhere to the following guidelines for addressing COIs arising with EESA contractors:

• Where appropriate, Treasury may obtain non-disclosure agreements and COI agreements in advance of supplying an offeror a solicitation.
• The solicitation should instruct prospective offerors that they must disclose any actual or potential COIs (including those associated with an affiliate, consultant, or subcontractor) which could arise from performance of the contract. The solicitation will indicate that, if actual or potential COIs are identified, the prospective offeror must submit a mitigation plan as part of its initial proposal. In some situations, Treasury may also desire to include provisions requiring that the prospective offeror identify personal COIs among employees who would be performing the work, and include measures in its mitigation plan for addressing such personal COIs.
• The solicitation should include an evaluation factor or criteria whereby Treasury will assess the likely effectiveness of the proposed COI mitigation plan.
• The solicitation will identify any minimum requirements or standards for the COI mitigation plan. For example, if Treasury requires that the mitigation plan will address certain specific issues, offerors should be so advised in the solicitation.
• If the contractor will owe a fiduciary duty to Treasury in performing the contract, the solicitation should include a statement to that effect. This provision will become part of the resulting contract.
• The solicitation should include non-disclosure provisions which, at a minimum, apply to the prime contractor. In some situations, Treasury may also desire to include provisions requiring that the prime contractor obtain comparable non-disclosure and/or COI agreements from subcontractors or individual employees.
• The solicitation should state that Treasury will oversee and enforce the proposed mitigation plan as part of the contract.
• The Treasury Senior Procurement Executive will review and approve all provisions related to COIs prior to issuance of the solicitation.
• The solicitation should require that mitigation plans be submitted with offerors' initial proposals. Treasury's evaluators, source selection personnel, and legal counsel will examine the proposed mitigation plans to determine the extent to which those plans provide sufficient protection against actual or potential COIs.
• The severity of a COI is necessarily dependent upon the circumstances of the case and the nature of the contractual action. Treasury personnel should not assume that a mitigation plan which is acceptable under one situation would also be acceptable under different circumstances.
• The contracting officer may negotiate the mitigation plan with the offeror, taking into account the type of procurement being conducted.
• Notwithstanding the submission of a mitigation plan, it is possible that contractor COIs may exist which cannot be effectively neutralized or mitigated. An offeror with an unacceptable mitigation plan will not be eligible for award unless conflicts are waived by the agency head or designee.
• It is possible that a COI may be waived by the agency head or a designee. Any request for such a waiver should first be coordinated with the Treasury Senior Procurement Executive.
• Upon award of the contract, the successful offeror's mitigation plan will be formally incorporated into the contract, making the mitigation plan a contractually binding obligation.

 

Treasury Distributes 1.147 Million Additional Stimulus Checks in September

Washington, DC--The Treasury Department announced today that it distributed 1.147 million stimulus payments, totaling $672 million in the month of September. As of the end of September, a total of 115.957 million payments have been distributed totaling $94.061 billion since disbursements started April 28.

While mass disbursement of stimulus checks ended July 11, small batches of payments continue to be sent out to American households. The Treasury Department will announce updates monthly until the end of the year. The Treasury Department also reminds Americans, especially those seniors and veterans who do not normally file a tax return, to file a return by the October 15th filing deadline to receive a stimulus payment this year.

October 2, 2008
HP-1171

Treasury Designates Corporate Network Tied
to the Amezcua Contreras Organization

Washington, D.C.– The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today named 10 individuals and six companies tied to the Amezcua Contreras Organization, a major Mexican drug trafficking organization, as Specially Designated Narcotics Traffickers (SDNTs).  The designees, all based in Mexico, are now subject to economic sanctions pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act).

"We are further sanctioning the Amezcua Contreras Organization today to degrade and dismantle its network of associates and companies producing methamphetamines for distribution in the United States and elsewhere.  We applaud the Mexican authorities' recent seizures of illicit pseudoephedrine shipments, and will continue to take steps in support of their efforts to target the diversion of methamphetamine precursor materials" said OFAC Director Adam J. Szubin.

Today's designation includes key Amezcua Contreras associates Adan Amezcua Contreras, Jaime Ladino Avila, Patricia Amezcua Contreras, Gerardo Alvarez Vazquez, and Telesforo Baltazar Tirado Escamilla, owner of Productos Farmaceuticos Collins, S.A. de C.V.  Today's designation also includes Jalisco businessman Carlos Lomeli Bolanos, who reportedly assisted in the illicit diversion of methamphetamine precursor materials to the Amezcua Contreras Organization.  Included as well are Javier Pulido Valdivia and Rosalinda Rendon Poblete, the owner and general director, respectively, of Laboratorios Willmar, S.A. de C.V., and Luis Alfonso Tirado Diaz and Rolando Tirado Diaz, both senior managers at Productos Farmaceuticos Collins, S.A. de C.V.

The financial and supply network included among today's designations is comprised of companies in the Mexican states of Jalisco and Baja California, including three pharmaceutical companies, Productos Farmaceuticos Collins, S.A. de C.V.; Laboratorios Willmar, S.A. de C.V., and Lomedic, S.A. de C.V.; a natural health products company, Salud Natural Mexicana, S.A. de C.V.; an automobile parts store, American Tune Up, S.A. de C.V.; and a pharmacy company, Farmacia Jerlyne, S.A. de C.V.

On June 1, 2000, the President identified Jose de Jesus and Luis Ignacio Amezcua Contreras as significant foreign narcotics traffickers pursuant to the Kingpin Act.  They are currently imprisoned in Mexico.  The Amezcua Contreras Organization, which the President identified as a significant foreign narcotics trafficker on June 1, 2006, continues to produce methamphetamine in Mexico and distribute it to the United States.  The Amezcua Contreras Organization controls a network of businesses in Mexico that supplies precursor materials for methamphetamine production.  Most notably, multiple tons of pseudoephedrine-based cold medicines that were manufactured or purchased by some of the companies designated today were illicitly diverted to the Amezcua Contreras Organization for the purpose of manufacturing methamphetamine.

This action is part of ongoing efforts under the Kingpin Act to apply financial measures against significant foreign narcotics traffickers worldwide.  Internationally, more than 475 businesses and individuals associated with 75 drug kingpins have been designated by OFAC pursuant to the Kingpin Act since June 2000.

Today's designation would not have been possible without key support from the Drug Enforcement Administration (DEA), Mexico.

The designation action freezes any assets the 16 designees may have under U.S. jurisdiction and prohibits U.S. persons from conducting transactions or dealings in the property interests of the designated individuals and entities.  Penalties for violations of the Kingpin Act range from civil penalties of up to $1,075,000 per violation to more severe criminal penalties.  Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5,000,000.  Criminal fines for corporations may reach $10,000,000.  Other individuals face up to 10 years in prison for criminal violations of the Kingpin Act and fines pursuant to Title 18 of the United States Code.   

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REPORTS

• "Designation Chart"

September 30, 2008
hp-1169

Treasury Designates FARC International Commission Members

Washington, DC-- The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today designated eight international representatives of the Revolutionary Armed Forces of Colombia (FARC), a narco-terrorist organization.  Today's action was taken pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act), which applies economic sanctions against significant foreign narcotics traffickers and organizations, like the FARC. 

"Today's designation exposes eight `International Commission members' of the FARC," said Adam J. Szubin, Director of OFAC.  "Through their service to the FARC as international representatives and negotiators, these persons provide material support to a narco-terrorist organization.  OFAC is relentless in its pursuit of exposing those who fuel and support the terrorist activities of the FARC."

The following eight individuals designated today have been identified as the key members of the FARC's International Commission: Jairo Alfonso Lesmes Bulla ("Javier Calderon"), Efrain Pablo Trejo Freire, Orlay Jurado Palomino ( "Commander Hermes"), Ovidio Salinas Perez ("El Embajador"), Jorge Davalos Torres, Francisco Antonio Cadena Collazos ("El Cura Camilo"), Nubia Calderon de Trujillo ("Esperanza"), and Liliana Lopez Palacios ("Olga Lucia Marin").  These International Commission members represent the FARC in Argentina, Chile, Uruguay, Paraguay, Brazil, Peru, Ecuador, Venezuela, Panama, Mexico, and Canada.

As representatives of the FARC and members of its International Commission, these individuals work abroad to obtain recruits, support, and protection for the FARC's acts of terrorism.  Some are also themselves violent criminals.  On August 6, 2008, Colombian authorities arrested Jairo Alfonso Lesmes Bulla, the FARC's International Commission member for Argentina, Chile, Uruguay, and Paraguay, in Bogota, Colombia for plotting to assassinate the former Interior and Justice Minister Fernando Londoño Hoyos and the brother of Colombian Vice President Francisco Santos.  Orlay Jurado Palomino, the FARC International Commission member for Venezuela, is wanted in Colombia on charges of kidnapping, rebellion, and terrorism.  In August 2005, the Brazilian Federal Police arrested Francisco Antonio Cadena Collazos, the FARC's International Commission Member for Brazil, in Sao Paulo at the request of Colombian authorities on criminal charges of rebellion.  The Brazilian government later released Cadena Collazos and granted him refugee status.  Nubia Calderon de Trujillo was recently granted asylum by Nicaragua, even though she is a member of an internationally recognized narco-terrorist organization.

In 2003, President George W. Bush identified the FARC as a significant foreign narcotics trafficker, or drug kingpin, pursuant to the Kingpin Act.  In 2001, the State Department designated the FARC as a Specially Designated Global Terrorist pursuant to Executive Order 13224, and in 1997 the State Department designated the FARC as a Foreign Terrorist Organization. This OFAC action continues ongoing efforts under the Kingpin Act to apply financial measures against significant foreign narcotics traffickers and their organizations worldwide.  In addition to the 75 drug kingpins that have been designated by the President, 468 businesses and individuals have been designated by OFAC pursuant to the Kingpin Act since June 2000. 

Today's action freezes any assets the designated entities and individuals may have under U.S. jurisdiction and prohibits U.S. persons from conducting financial or commercial transactions involving those assets.  Penalties for violations of the Kingpin Act range from civil penalties of up to $1,075,000 per violation to more severe criminal penalties.  Criminal penalties for corporate officers may include up to 30 years in prison and fines of up to $5,000,000.  Criminal fines for corporations may reach $10,000,000.  Other individuals face up to 10 years in prison for criminal violations of the Kingpin Act and fines pursuant to Title 18 of the United States Code.

For a complete list of the individuals and entities designated today, please visit:
http://www.treasury.gov/offices/enforcement/ofac/actions/index.shtml

To view previous OFAC actions directed against the FARC, please visit:

• Treasury Action against the FARC on September 12, 2008.
• Treasury Action against the FARC on July 31, 2008.
• Treasury Action against the FARC on May 7, 2008. 
• Treasury Action against the FARC on April 22, 2008. 
• Treasury Action against the FARC on January 15, 2008. 
• Treasury Action against the FARC on November 1, 2007. 
• Treasury Action against the FARC on September 28, 2006. 
• Treasury Action against the FARC on February 19, 2004.

REPORTS

• Designation Chart

September 29, 2008
HP-1165

Treasury Releases New Guidance Helping Soldiers Keep Health FSAs Funds

Washington, DC--The Treasury Department and Internal Revenue Service today issued Notice 2008-82, which protects reservists from losing funds in their health Flexible Spending Arrangement (health FSA) accounts after being called to active duty.  

The Heroes Earnings Assistance and Relief Tax Act of 2008, enacted June 17, 2008, provided a special rule allowing "qualified reservist distributions" (QRDs) of unused amounts in a health FSA to reservists called to active duty.  Under the existing rules for health FSAs, distributions could only be made to reimburse substantiated medical expenses, and any funds left unspent at the end of the plan year would be lost.  This special rule allows reservists to make a distribution before leaving for active duty so as not to lose those savings.

The guidance clarifies that:

• The provision is optional for employers;
• Health FSAs must be amended if an employer wants to allow QRDs; a transition rule allows plans to be amended effective retroactively to provide for QRDs prior to January 1, 2010;
• QRDs are included in the income and wages for the reservist;
• Employees may request a QRD when they receive an order or call to active duty, and before the last day of the plan year (and grace period, if applicable); and
• Employers may allow employees to continue to participate in the health FSA after the QRD if amounts remain in the health FSA.

Notice 2008-82 is attached. 

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REPORTS

• Notice 2008-82

Frequently Asked Questions About Treasury’s Temporary Guarantee Program for Money Market Funds

How does an investor sign up to participate in the Treasury's Temporary Guarantee Program for Money Market Funds?

While the program protects the shares of all money market fund investors as of September 19, 2008, each money market fund makes the decision to sign up for the program. Investors cannot sign up for the program individually.

How will investors know if their money market fund participates in the program?

Investors should contact their money market fund directly to determine if it is participating in the program.

What type of funds does the program cover?

All money market mutual funds that are regulated under Rule 2a-7 of the Investment Company Act of 1940, are publicly offered, are registered with the Securities and Exchange Commission and maintain a stable share price of $1 will be eligible to participate in the program. This includes both taxable and non-taxable funds.

Is an investor in a fund that is managed like a money market fund but that is not registered with the SEC covered?

No, the program only covers money market funds that are regulated under Rule 2a-7 of the Investment Company Act of 1940, are publicly offered, are registered with the Securities and Exchange Commission and maintain a stable share price of $1 will be eligible to participate in the program. This includes both taxable and non-taxable funds.

When will my fund be covered by the program?

Each fund must decide to participate in the program. If your fund participates in the program, your investment as of September 19, 2008 will be covered.

How much of an investor's money market fund is insured? What happens if the number of shares held in an investor's account increase above the level at the close of business on September 19, 2008? What happens if the number of shares held in an investor's account decreases below the level at the close of business on September 19, 2008?

The program provides a guarantee based on the number of shares held at the close of business on September 19, 2008. Any increase in the number of shares held in an account after the close of business on September 19, 2008 will not be guaranteed. If the number of shares held in an account fluctuates over the period, investors will be covered for either the number of shares held as of the close of business on September 19, 2008 or the current amount, whichever is less.

Examples include:

1. If an investor owned 100 shares in a money market fund as of close of business September 19, 2008, but owns 50 shares on the day the guarantee payment is made, after the fund breaks the buck, then that investor will be guaranteed for 50 shares. 
   
   
2. If an investor owned 100 shares in a money market fund as of close of business September 19, 2008, but owns 150 shares on the day the guarantee payment is made, after the fund breaks the buck, then that investor will be guaranteed for 100 shares. The fund, upon liquidation, will distribute proceeds to the shareholder for the additional 50 shares, at net asset value. 
   
   
3. If an investor owned 100 shares in a fund as of close of business September 19, 2008, subsequently sold 50 shares and later bought 25 shares, the investor owns 75 shares on the day the guarantee payment is made and will be guaranteed for 75 shares. 
   
   
4. If an investor owned no shares in a fund as of close of business September 19, 2008, but owns 100 shares on the day the guarantee payment is made, none of the investor's shares are guaranteed by the program and the investor will receive the net asset value directly from the fund.

What if another fund in an investor's fund family breaks the buck before this program starts? Is the investor covered?

The program provides a guarantee on a fund-by-fund basis up to the amount of shares held as of the close of business on September 19, 2008. The performance of a different fund, even one in the same fund family of the investor's fund, doesn't affect the investor's fund's eligibility. Investors should contact their fund to determine if their fund participates in the program.

When does the program terminate?

The program is designed to address temporary dislocations in credit markets. The program will be in effect for an initial three month term, after which the Secretary of the Treasury will review the need and terms for the program and the costs to provide the coverage. The Secretary has the option to extend the program up to the close of business on September 18, 2009. In order to maintain coverage, funds would have to renew their participation in the program after each extension. If the Secretary chooses not to extend the program at the end of the initial three month period, the program will terminate.

Who provides this guarantee? Are investors able to get all of their money back whenever they want?

The U.S. Treasury Department, through the Exchange Stabilization Fund, is providing this guarantee. In the event that a participating fund breaks the buck and liquidates, a guarantee payment should be made to investors through their fund within approximately 30 days, subject to possible extensions at the discretion of the Treasury.

Is shareholder in a fund that broke the buck before September 19, 2008 covered?

No. This does not meet the program's eligibility criteria noted above.

What should shareholders in a participating fund that breaks the buck do? Who should they call?

If your fund enrolled in the program you will be covered and do not need to take any action. Shareholders should contact their fund directly.

Who should a fund contact if it has further questions about this program?

Please e-mail the Treasury Department at moneymarketfundsguaranteeprogram@do.treas.gov.

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Treasury Announces Temporary Guarantee Program for Money Market Funds

Washington- The U.S. Treasury Department today opened its Temporary Guarantee Program for Money Market Funds. The U.S. Treasury will guarantee the share price of any publicly offered eligible money market mutual fund – both retail and institutional – that applies for and pays a fee to participate in the program.

All money market mutual funds that are regulated under Rule 2a-7 of the Investment Company Act of 1940, maintain a stable share price of $1, and are publicly offered and registered with the Securities and Exchange Commission will be eligible to participate in the program. Treasury first announced this program on Friday, September 19.

The temporary guarantee program provides coverage to shareholders for amounts that they held in participating money market funds as of the close of business on September 19, 2008. The guarantee will be triggered if a participating fund's net asset value falls below $0.995, commonly referred to as breaking the buck.

The program is designed to address temporary dislocations in credit markets. The program will exist for an initial three month term, after which the Secretary of the Treasury will review the need and terms for extending the program. Following the initial three month term, the Secretary has the option to renew the program up to the close of business on September 18, 2009. The program will not automatically extend for the full year without the Secretary's approval, and funds would have to renew their participation at the extension point to maintain coverage. If the Secretary chooses not to renew the program at the end of the initial three month period, the program will terminate.

To participate in the program, the Treasury Department will require money market funds with a net asset value per share greater than or equal to $0.9975 as of the close of business on September 19, 2008, to pay an upfront fee of 0.01 percent, 1 basis point, based on the number of shares outstanding on that date. Funds with net asset value per share of greater than or equal to $0.995 and below $0.9975 as of the close of business on September 19, 2008, will be required to pay an upfront fee of 0.015 percent, 1.5 basis points, based on the number of shares outstanding on that date. These fees will only cover the first three months of participation in the program.

Funds with a net asset value below $0.995 as of the close of business on September 19, 2008, may not participate in the program.

While the program protects the accounts of investors, each money market fund makes the decision to sign-up for the program. Investors cannot sign-up for the program individually. Funds should apply by October 8, 2008 for the program using the forms on the program webpage: http://www.treas.gov/offices/domestic-finance/key-initiatives/money-market-fund.shtml.

Eligible funds include both taxable and tax-exempt money market funds. The Treasury and the IRS issued guidance that confirmed that participation in the temporary guarantee program will not be treated as a federal guarantee that jeopardizes the tax-exempt treatment of payments by tax-exempt money market funds.

President George W. Bush approved the use of existing authorities by Secretary Henry M. Paulson, Jr. to make available as necessary the assets of the Exchange Stabilization Fund to guarantee the payment

The Exchange Stabilization Fund was established by the Gold Reserve Act of 1934, as amended, and has approximately $50 billion in assets. This Act authorizes the Secretary of the Treasury, with the approval of the President, "to deal in gold, foreign exchange, and other instruments of credit and securities" consistent with the obligations of the U.S. government in the International Monetary Fund to promote international financial stability. More information on the Exchange Stabilization Fund can be found at http://www.treas.gov/offices/international-affairs/esf/

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Treasury Advisory Committee on the Auditing Profession Adopts Final Report

Washington - The U.S. Treasury Department's Advisory Committee on the Auditing Profession, led by co-chairs Arthur Levitt, Jr. and Donald T. Nicolaisen, voted today to adopt its Final Report containing more than 30 recommendations to improve the sustainability of the public company auditing profession.

"The Advisory Committee members, particularly Co-Chairs Levitt and Nicolaisen, have devoted a great amount of effort and time developing the recommendations to sustain a vibrant and robust auditing profession," said Treasury Secretary Henry M. Paulson, Jr.  "Their work will contribute to and shape the necessary work of encouraging investor confidence in our financial markets."

Recommendations focused on three specific areas: improving accounting education and strengthening human capital; enhancing auditing firm governance, transparency, responsibility, communications, and audit quality; and increasing audit market competition and auditor choice.  For more information, please see the Final Report Fact Sheet.

Secretary Paulson created the committee in May 2007 to examine key issues facing the auditing profession to encourage greater investor confidence. He tapped former Securities and Exchange Commission Chairman Levitt and former SEC Chief Accountant Nicolaisen as co-chairmen to lead the committee.

"The health of the U.S. accounting industry is an essential element in the coming decade of transparency which will impact every business, legislative, and rule-making judgment both domestically and internationally. Reliable numbers from accountants mindful of their public responsibilities are critical to the competitive success of U.S. companies," Co-Chair Levitt said.  "The continuing health of auditing firms, both large and small, has been the mandate of a diverse commission representing both industry and investor interests.  This final report will provide industry and policymakers with a template for change." 

"This is the first study of its kind since enactment of Sarbanes-Oxley and the Committee's work reinforces the critical role of the independent auditor to enabling trust and confidence in our capital markets," said Co-Chair Nicolaisen. "The Committee members brought exceptional intellect and experience to the process and I'm extremely appreciative of their efforts to work toward consensus views.  Their recommendations are sound and their enactment will strengthen the auditing profession."

Committee members represented a diverse set of views, including investors, auditors, financial institutions, large and small public companies, lawyers, former regulators, and universities.

Secretary Paulson hosted a conference at Georgetown University in March 2007 to examine ways to improve the competitiveness of U.S. capital markets. Secretary Paulson and conference participants identified financial reporting and investor confidence as major factor in our domestic markets' competitiveness.  The Committee held its first meeting in October 2007.  

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REPORTS

• Fact Sheet

Fact Sheet: Final Report of the Advisory Committee on the Auditing Profession

The U.S. Treasury Department's Advisory Committee on the Auditing Profession adopted a Final Report containing more than 30 recommendations to improve the sustainability of the public company auditing profession.  The report is separated into three sections by principal areas of focus.

Human Capital recommendations focused on improving accounting education and strengthening human capital, including:

• Implementation of accounting education curricula and content that continuously evolves to reflect current market developments to help prepare new entrants to the profession.
• Improvement of the representation and retention of minorities in the auditing profession through mentoring programs and recruiting at community colleges.
• Ensuring an adequate supply of qualified accounting faculty through public and private sector funding to meet future demands and help prepare students to execute high quality audits.
• Development and maintenance of demographic data on the accounting profession so that the profession can understand the human capital situation and its impact on the profession's future and sustainability.
• Study of the future of education for the accounting profession, including the potential for graduate schools of accounting, to determine the best way to educate students to deal with the challenging financial reporting and auditing environment.

Firm Structure and Finances recommendations focused on enhancing auditing firm governance, transparency, responsibility, communications, and audit quality, including:

• Creation of a national center at the Public Company Accounting Oversight Board to provide a forum for auditing firms and other market participants to share their fraud detection experiences in order to improve audit quality.
• Granting accountants licensed in one state with reciprocity to practice in other states to foster a more efficient operation of the capital markets given the multi-state operations of many public companies and multi-state practices of many auditing firms.
• Exploration of the feasibility of appointing independent members with full voting power to firm boards and/or advisory boards to improve the governance and transparency of auditing firms.
•  Enhancement of disclosure requirements regarding public company auditor changes will improve transparency and enhance investor confidence.
• Enhancements to make the auditor's standard reporting model more useful to investors by including more relevant information, such as key accounting estimates and judgments.
• Mandating the engagement partner's signature on the auditor's report to improve accountability among auditing firms.
•  Requirement for larger auditing firms to produce a public annual report with relevant firm information and file on a confidential basis with the PCAOB audited financial statements to improve transparency at auditing firms.

The Concentration and Competition recommendations focused on ways to increase audit market competition and auditor choice, including:

• Having the PCAOB monitor potential sources of catastrophic risk at auditing firms to prevent reduced auditor choice and significant market disruptions.
• Creation of a mechanism for the preservation and rehabilitation of troubled larger public company auditing firms to prevent reduced auditor choice and significant market disruptions.
•  Development and publication of key indicators of audit quality and effectiveness to promote competition and choice in the industry based on audit quality.
•  Promotion of the understanding of and compliance with auditor independence requirements to enhance investor confidence in the quality of audit processes and audits.
• Adoption of annual shareholder ratification of public company auditors by all public companies to enhance the audit committee's oversight to ensure that the auditor is suitable for the company's size and financial reporting needs.
• Enhancement of collaboration and coordination between the PCAOB and its foreign counterparts so that investors can be confident that auditing firms of all sizes are contributing effectively to audit quality.

Treasury Provides Further Clarity For Guaranty Program for Money Market Funds

Washington – The U.S. Treasury Department is continuing to develop the specific details surrounding the temporary guaranty program for money market funds that was announced on September 19, 2008.

While these details are being finalized, Treasury is making the following clarifications:

1. All money market mutual funds that are regulated under Rule 2a-7 of the Investment Company Act of 1940 and are publicly offered and registered with the Securities and Exchange Commission will be eligible to participate in the program.

2. Eligible funds include both taxable and tax-exempt money market funds. The Treasury and the IRS intend to issue guidance that will confirm that participation in the temporary guaranty program will not be treated as a federal guaranty that jeopardizes the tax-exempt treatment of payments by tax-exempt money market funds.

3. The temporary guaranty program will be designed to provide coverage to shareholders for amounts held by them in such funds as of the close of business on September 19, 2008.

4. Further details on other aspects of the temporary guaranty program and the required documentation for funds to participate will be provided in the coming days.

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FACT SHEET:
Proposed Treasury Authority to Purchase Troubled Assets

Washington –  The Treasury Department has submitted legislation to the Congress requesting authority to purchase troubled assets from financial institutions in order to promote market stability, and help protect American families and the US economy. This program is intended to fundamentally and comprehensively address the root cause of our financial system's stresses by removing distressed assets from the financial system. When the financial system works as it should, money and capital flow to and from households and businesses to pay for home loans, school loans and investments that create jobs.  As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to significantly damage our financial system and our economy, undermining job creation and income growth.  The following description reflects Treasury's proposal as of Saturday afternoon.

Scale and Timing of Asset Purchases. Treasury will have authority to issue up to $700 billion of Treasury securities to finance the purchase of troubled assets. The purchases are intended to be residential and commercial mortgage-related assets, which may include mortgage-backed securities and whole loans. The Secretary will have the discretion, in consultation with the Chairman of the Federal Reserve, to purchase other assets, as deemed necessary to effectively stabilize financial markets.  Removing troubled assets will begin to restore the strength of our financial system so it can again finance economic growth. The timing and scale of any purchases will be at the discretion of Treasury and its agents, subject to this total cap. The price of assets purchases will be established through market mechanisms where possible, such as reverse auctions. The dollar cap will be measured by the purchase price of the assets. The authority to purchase expires two years from date of enactment.

Asset and Institutional Eligibility for the Program. To qualify for the program, assets must have been originated or issued on or before September 17, 2008. Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets.

Management and Disposition of the Assets. The assets will be managed by private asset managers at the direction of Treasury to meet program objectives. Treasury will have full discretion over the management of the assets as well as the exercise of any rights received in connection with the purchase of the assets. Treasury may sell the assets at its discretion or may hold assets to maturity. Cash received from liquidating the assets, including any additional returns, will be returned to Treasury's general fund for the benefit of American taxpayers.

Funding. Funding for the program will be provided directly by Treasury from its general fund.  Borrowing in support of this program will be subject to the debt limit, which will be increased by $700 billion accordingly.  As with other Treasury borrowing, information on any borrowing related to this program will be publicly reported at the end of the following day in the Daily Treasury Statement. (http://www.fms.treas.gov/dts/)

Reporting. Within three months of the first asset purchases under the program, and semi-annually thereafter, Treasury will provide the appropriate Congressional committees with regular updates on the program. 

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Treasury Announces Guaranty Program for Money Market Funds

Washington- The U.S. Treasury Department today announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry. For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund – both retail and institutional – that pays a fee to participate in the program.

President George W. Bush approved the use of existing authorities by Secretary Henry M. Paulson, Jr. to make available as necessary the assets of the Exchange Stabilization Fund for up to $50 billion to guarantee the payment in the circumstances described below.

Money market funds play an important role as a savings and investment vehicle for many Americans; they are also a fundamental source of financing for our capital markets and financial institutions. Maintaining confidence in the money market fund industry is critical to protecting the integrity and stability of the global financial system.

Concerns about the net asset value of money market funds falling below $1 have exacerbated global financial market turmoil and caused severe liquidity strains in world markets. In turn, these pressures have caused a spike in some short term interest and funding rates, and significantly heightened volatility in exchange markets. Absent the provision of such financing, there is a substantial risk of further heightened global instability.

Maintenance of the standard $1 net asset value for money market mutual funds is important to investors. If the net asset value for a fund falls below $1, this undermines investor confidence. The program provides support to investors in funds that participate in the program and those funds will not "break the buck".

This action should enhance market confidence and alleviate investors' concerns about the ability for money market mutual funds to absorb a loss. Investors in money market mutual funds with a net asset value that falls below $1 would be notified that their fund triggered the insurance program.

The Exchange Stabilization Fund was established by the Gold Reserve Act of 1934. This Act authorizes the Secretary of the Treasury, with the approval of the President, "to deal in gold, foreign exchange, and other instruments of credit and securities" consistent with the obligations of the U.S. government in the International Monetary Fund to promote international financial stability. More information on the Exchange Stabilization Fund can be found at http://www.treas.gov/offices/international-affairs/esf/.

Treasury Designates Iranian Military Firms

Washington - The U.S Department of the Treasury today designated six Iranian military firms that are owned or controlled by entities previously designated for their roles in Iran's nuclear and ballistic missile programs, including Iran's Ministry of Defense and Armed Forces Logistics (MODAFL) and Defense Industries Organization (DIO).

"Iran attempts to shield its procurement activities behind a maze of entities, essentially hoodwinking those still doing business with Iran into facilitating illicit transactions for the transport of dual use, missile-related items," said Stuart Levey, Under Secretary for Terrorism & Financial Intelligence.

Iran Electronics Industries , Shiraz Electronics Industries , Iran Communications Industries , Iran Aircraft Manufacturing Industrial Company , Farasakht Industries, and Armament Industries Group were designated today pursuant to Executive Order 13382, an authority aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters, and at isolating them from the U.S. financial and commercial systems.  Designations under E.O. 13382 are implemented by Treasury's Office of Foreign Assets Control and they prohibit all transactions between the designees and any U.S. person, and freeze any assets the designees may have under U.S. jurisdiction.

Treasury prepared these designations in close coordination with the Commerce Department's Bureau of Industry and Security as well as the Justice Department.  The designations complement Commerce's and Justice's criminal investigation of Iranian procurement front companies.

Iran Electronics Industries , as well as two subsidiary organizations, Shiraz Electronics Industries  and Iran Communications Industries , are being designated because they are owned or controlled by Iran's MODAFL.  MODAFL, which was designated under Executive Order 13382 on October 25, 2007, controls other previously designated entities DIO, and Aerospace Industries Organization, which is the overall manager and coordinator of Iran's missile program.

Iran Electronics Industries (IEI) offers a diversified range of military products including electro-optics and lasers, communication equipment, telecommunication security equipment, electronic warfare equipment, new and refurbished radar tubes, and missile launchers.  IEI manufactures military tactical communication systems and also electronic field telephones and switchboards.  IEI also manufactures night vision systems and laser range finders in addition to binoculars and periscopes.

Shiraz Electronics Industries is engage in the production of various electronics equipment for the Iranian military, including radars, microwave electron vacuum tubes, naval electronics, avionics and control systems, training simulators, missile guidance technology, and electronic test equipment.

Iran Communications Industries (ICI) is Iran's leading manufacturer of military and civilian communication equipment and systems.  ICI offers more than seventy-five products, including tactical communications and encryption systems that meet a wide range of the Iranian military's requirements.

Iran Aircraft Manufacturing Industrial Company (HESA) is being designated because it is owned or controlled by MODAFL, and also because it has provided support to the Iranian Revolutionary Guard Corps (IRGC).  The IRGC, which was designated under Executive Order 13382 on October 25, 2007, is considered to be the military vanguard of Iran and has been outspoken about its willingness to proliferate ballistic missiles capable of carrying WMD.

HESA utilizes its own facilities for the inspection, maintenance, repair overhaul research, development, and manufacture of military and civilian aircraft and related military logistic systems.  HESA conducts research on, development of, production of, and flight operations for unmanned aerial vehicles (UAVs) in Iran.  The IRGC utilizes the "Ababil" UAV, manufactured by HESA.  HESA produces different variants of the Ababil UAV, which can be used for surveillance and attack.  Farasakht Industries is a subsidiary of HESA that specializes in the manufacturing of various aerospace tools and equipment.

Armament Industries Group is also being designated because it is owned or controlled by and acts on behalf of Iran's DIO.  Armament Industries Group is directly subordinate to DIO and is known to manufacture arms such as gun howitzers, multiple rocket launchers, sniper rifles and a variety of machine guns.  DIO was designated under Executive Order 13382 on March 30, 2007, for having engaged in activities that materially contribute to the development of Iran's nuclear and missile programs.

 Identifying Information

ARMAMENT INDUSTRIES GROUP
AKA:                         
"AIG-Armament Industries Group"

Addresses:                 
Pasdaran Ave., P.O. Box 19585/777
Tehran, Iran
Sepah Islam Road, Karaj Special Road Km 10, Iran

FARASAKHT INDUSTRIES
Address:                     
P.O. Box 83145-311, Kilometer 28, Esfahan -- Tehran Freeway
Shahin Shahr, Esfahan, Iran

IRAN AIRCRAFT MANUFACTURING INDUSTRIAL COMPANY

AKAs:                        
HESA
Hava Peyma Sazi-E Iran
Hevapeimasazi;
Havapeyma Sazi Iran
Havapeyma Sazhran
Iran Aircraft Manufacturing Industries
Karkhanejate Sanaye Havapaymaie Iran
Iran Aircraft Manufacturing Company
IAMCO
IAMI
HESA Trade Center

Address:                     
P.O. Box 83145-311, 28 km Esfahan -- Tehran Freeway
Shahin Shahr, Esfahan, Iran

Shahih Shar Industrial Zone Isfahan, Iran

P.O. Box 81465-935, Esfahan, Iran

P.O. Box 8140, No. 107 Sepahbod Gharany Ave, Tehran, Iran

P.O. Box 14155-5568, No. 27 Shahamat Ave, Vallie Asr Sqr,
Post Code 15946, Tehran, Iran

IRAN COMMUNICATION INDUSTRIES
AKAs:                        
ICI
IRAN COMMUNICATIONS INDUSTRIES GROUP
SANAYE MOKHABERAT IRAN

Addresses:                 
P.O. Box 19295-4731, Pasdaran Avenue, Tehran, Iran

P.O. Box 19575-131, 34 Apadana Avenue, Tehran, Iran

Shahid Langari Street, Nobonyad Square Ave., Pasdaran, Tehran, Iran

IRAN ELECTRONICS INDUSTRIES
AKAs:                                   
IEI
Sanaye Electronic Iran
Sasad Iran Electronics Industries
Sherkat Sanayeh Electronics Iran

Company Registration Number: 
829

Addresses:                 
P.O. Box 19575-365
Shahied Langari Street, Noboniad Sq, Pasdaran Aye, Saltanad Abad, Tehran, Iran

P.O. Box 71365-1174, Hossain Abad/Ardakan Road, Shiraz, Iran

SHIRAZ ELECTRONICS INDUSTRIES
AKAs:                        
Shiraz Electronic Industries
SEI

Addresses:                 
P.O. Box 71365-1589, Shiraz, Iran

Hossain Abad Road, Shiraz, Iran

Treasury Announces Supplementary Financing Program

Washington- The Federal Reserve has announced a series of lending and liquidity initiatives during the past several quarters intended to address heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week.  To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio.

The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the Federal Reserve.  The program will consist of a series of Treasury bills, apart from Treasury's current borrowing program, which will provide cash for use in the Federal Reserve initiatives.

Announcements of and participation in auctions conducted under the Supplementary Financing Program will be governed by existing Treasury auction rules.  Treasury will provide as much advance notification as possible regarding the timing, size, and maturity of any bills auctioned for Supplementary Financing Program purposes.

Treasury Designates Individuals and Entities Fueling Violence in Iraq

Washington, DC--The U.S. Department of the Treasury today designated five individuals and two entities under Executive Order (E.O.) 13438 for threatening the peace and stability of Iraq and the Government of Iraq.  Four of the individuals designated today commit, direct, support, or pose a significant risk of committing acts of violence against Iraqi citizens, Iraqi government officials, and Coalition Forces.

"These individuals are targeting and planning attacks against innocent Iraqis, the Government of Iraq, Coalition Forces, and U.S. troops. Their lethal and destabilizing tactics, especially by Iran's Qods Force, are intended to undermine Iraq as it strives for peace and prosperity," said Stuart Levey, Under Secretary for Terrorism and Financial Intelligence. 

One of the individuals designated today is a member of Iran's Qods Force, the arm of the Islamic Revolutionary Guard Corps (IRGC) that is responsible for providing material support to Lebanese Hizballah, Hamas, Palestinian Islamic Jihad, and the Popular Front for the Liberation of Palestine – General Command. Further, the Qods Force provides lethal support in the form of weapons, training, funding, and guidance to select groups of Iraqi Shia militants who target and kill Coalition and Iraqi forces and Iraqi civilians. The IRGC–Qods Force was named a Specially Designated Global Terrorist by the Treasury Department on October 25, 2007.

The Syria-based individual and entities designated today act for and on behalf of, or are owned and controlled by, Syria-based Specially Designated National Mish'an Al-Jaburi, who was designated by Treasury under E.O. 13438 in January 2008 for providing financial, material, and technical support for acts of violence that threaten the peace and stability of Iraq.

Today's action follows President Bush's issuance of E.O. 13438 on July 17, 2007, which targets insurgent and militia groups in Iraq and their supporters. Designations under E.O. 13438 are administered by Treasury's Office of Foreign Assets Control and prohibit all transactions between the designees and any U.S. person and freeze any assets the designees may have under U.S. jurisdiction. Treasury previously designated four individuals and one entity under E.O. 13438 in January 2008.

Identifying Information

ABDUL REZA SHAHLAI
AKAs:                        
Abdol Reza Shahlai
Abdul Reza Shala'i
`Abd-al Reza Shalai
`Abdorreza Shahlai
Abdolreza Shahla'i
Abdul-Reza Shahlaee
Hajj Yusef
Haji Yusif
Hajji Yasir
Hajji Yusif
`Yusuf Abu-al-Karkh'
Year of Birth:             
Circa 1957
Location:                    
Kermanshah, Iran
Alt. Location:             
Mehran Military Base, Ilam Province, Iran

Iran-based Abdul Reza Shahlai--a deputy commander in the IRGC–Qods Force--threatens the peace and stability of Iraq by planning Jaysh al-Mahdi (JAM) Special Groups attacks against Coalition Forces in Iraq.  Shahlai has also provided material and logistical support to Shia extremist groups--to include JAM Special Groups--that conduct attacks against U.S. and Coalition Forces.  In one instance, Shahlai planned the January 20, 2007 attack by JAM Special Groups against U.S. soldiers stationed at the Provincial Joint Coordination Center in Karbala, Iraq.  Five U.S. soldiers were killed and three were wounded during the attack.

In late-August 2006, Shahlai provided material support to JAM Special Groups by supplying JAM Special Groups members with 122mm grad rockets, 240mm rockets, 107mm Katyushas, RPG-7s, 81mms, 60mm mortars, and a large quantity of C-4.

Shahlai also approved and coordinated the training of JAM Special Groups.  As of May 2007, Shahlai served as the final approving and coordinating authority for all Iran-based Lebanese Hizballah training for JAM Special Groups to fight Coalition Forces in Iraq.  In late-August 2006, Shahlai instructed a senior Lebanese Hizballah official to coordinate anti-aircraft rocket training for JAM Special Groups.

AKRAM 'ABBAS AL-KABI
AKAs:                        
Akram Abas al-Ka'bi
Sheik Akram al-Ka'abi
Shaykh Abu-Akram al-Ka'abi
Abu-Muhammad
Karumi
Abu 'Ali
Nationality:                
Iraqi
Year of Birth:             
Circa 1976
Alt. Year of Birth:     
Circa 1973
Place of Birth:            
al 'Amarah, Iraq
Alt. Place of Birth:     
al Kalamiy, Iraq

JAM Special Groups leader Akram 'Abbas al-Kabi threatens the peace and stability of Iraq and the Government of Iraq by planning and leading attacks against members of the Government of Iraq and Coalition Forces.  As of early-2008, al-Kabi was planning multiple attacks against Coalition Forces in order to show that JAM Special Groups were capable of conducting operations even when there was a freeze.  In one instance, in late-February 2008, JAM Special Groups led by al-Kabi claimed responsibility for mortar and rocket attacks against Coalition and Iraqi Security Forces in Baghdad's International Zone.  In March 2008, al-Kabi also led JAM Special Groups members who launched rockets into the International Zone.  Additionally, as of February 2008, al-Kabi sanctioned attacks targeting Coalition Forces to include indirect fire attacks against the International Zone.

Al-Kabi also provided financial and material support to Shia militia groups that committed acts of violence in Iraq.  In one instance, in early-April 2008, al-Kabi paid a JAM Special Groups leader 50 million Iraqi dinars (approximately $41,684 USD) for carrying out three separate improvised explosive device (IED) attacks against Coalition Forces in Baghdad.  As of February 2008, al-Kabi had also allegedly provided funding to JAM Special Groups for recruitment purposes.  Separately, as of early-2008, al-Kabi was providing weapons for large-scale military operations against Coalition Forces.

HARITH SULAYMANAL-DARI
AKAs:                        
Harith Al-Dari
Harith Al-Dhari
Harith Al-Dari Al-Zawbai
Harith S. Al-Dhari
Hareth Al Dari
Hareth Al-Dauri
Harith Dari Al-Zawba'i
Harith Al-Duri
Year of Birth:             
1941
Place of Birth:            
Baghdad, Iraq
Citizenship                 
Iraqi
Nationality:                
Iraqi
Passport Number:       
N348171/IRAQ
Title:                           
Secretary General of the Muslim Ulema Council
Alt. Title:                    
Leader of the Muslim Scholars Association
Location:                    
Jordan
Alt Location:              
Akashat, Iraq
Alt Location:              
Abu Ghuraib, Iraq
Alt Location:              
Qatar
Alt Location:              
Egypt

Jordan-based Harith Al-Dari-the Secretary General of the Muslim Ulama Council (MUC)-threatens the peace and stability of Iraq and the Government of Iraq by ordering and directing attacks against civilians and Iraqi and Coalition Forces.  As of mid-May 2008, Al-Dari ordered leaders of Al-Qa'ida in Iraq (AQI)-affiliated cells to attack Coalition Forces and the Sons of Iraq--local citizens who support Coalition and Iraqi Security Force operations against AQI and Sunni extremists by serving as auxiliary police forces. Two of these cells--both under Al-Dari's control--emplace IEDs along Coalition convoy routes and conduct small arms fire attacks against the Sons of Iraq at checkpoints.  Previously, in early-December 2005, Al-Dari ordered and was responsible for the kidnapping of four foreign nationals in Iraq by a group under Ansar al-Sunna, a Specially Designated Global Terrorist.

Separately, in early-October 2006, Al-Dari directed a plot to bring IEDs into the International Zone, Baghdad.  Although foiled, the plot was intended to be part of other coordinated attacks, to include plans to assassinate the commander of U.S. Forces in Iraq and the U.S. and British ambassadors to Iraq.  Al-Dari also ordered a MUC advisor to plan and direct late-November 2005 attacks against Coalition and Iraqi forces.

Al-Dari has also provided financial and material support to terrorist and insurgent groups that conduct attacks against Coalition and Iraqi Forces.  As of mid-April 2008, Al-Dari continuously travels between Lebanon, Syria, Jordan, and Saudi Arabia to elicit monetary and material donations that finance two Sunni terrorist groups in Baghdad.  The groups--using funds provided by Al-Dari to purchase large amounts of bomb-making material, explosives, and weapons--emplace IEDs, launch mortars and rockets, and conduct sectarian violence.  Additionally, as of mid-April 2008, Al-Dari was in charge of funding for the AQI-affiliated Mujahidin Army (MA), to include distributing funds collected by foreign "investors" to support MA operations.  As of mid-2008, Al-Dari allegedly arranged financing for an AQI-affiliated group whose operational plans included emplacing IEDs, launching rockets, and conducting assassinations of political and religious figures that cooperated with the United States.  Additionally, as of early-2008, Al-Dari provided financial support to a Sunni extremist cell formed for the purpose of carrying out attacks on Multi-National Force – Iraq.

Previously, in June 2006, Al-Dari provided financial and logistical support for an attack against Iraqi forces.  Al-Dari owned a front company that received a money transfer of $5 million USD to finance a chemical mortar attack against Iraqi forces.  The money transfer was intended to provide logistical support for the attack, to include facilitating the use of Al-Dari's farm house and complex as a staging area and paying for the billeting of the foreign fighters slated to carry out the attack.

AHMAD HASSAN KAKA AL-UBAYDI
AKAs:                        
Ahmed Hassan Kaka al-Obeidi
Ali Al Nobani
Hazim Kaka
Nationality:                
Iraqi
Year of Birth:             
1949
Place of Birth:            
Baghdad, Iraq
Passport Number:       
F032516
Date of Issue:             
19760504
Place of Issue:            
Baghdad, Iraq
Location:                    
Al Humayra village, Taza sub district, Iraq
Alt. Location:             
Kurdi Al Nasir village, Iraq

Iraq-based Ahmad Hassan Kaka Al-Ubaydi--a former Iraqi Intelligence Service officer and a Ba'th Party official--leads a network of Kirkuk, Iraq-based insurgents that commits and poses a significant risk of committing acts of violence that threaten the peace and stability of Iraq and the Government of Iraq.  Kaka also provides financial support for acts of violence that have the purpose or effect of threatening the peace and stability of Iraq and the Government of Iraq.

In 2005, Kaka was identified as the leader of a Kirkuk-based network that attacked Coalition and Iraqi forces with IEDs and plotted assassinations of Iraqi government officials.  As of late-October 2007, Kaka directs assassinations of Iraqi Kurds and in one instance authorized a member of his network to assassinate tribal leaders because of their cooperation with U.S. and Iraqi forces.

Kaka also plans acts of violence targeting Kirkuk. In February 2007, Kaka planned to take over Kirkuk using sophisticated weapons and numerous armed fighters.
 
In addition to directing and planning acts of violence against Coalition and Iraqi forces, Kaka provided financial support for vehicle borne improvised explosive devices (VBIED) attacks in Iraq.  As of August 2007, Kaka and his group purchased sedans to use as VBIEDs against Coalition and Iraqi government forces in Kirkuk, and certain government facilities in Mosul, Iraq.  Previously, in May 2007, Kaka was providing funding to a group that manufactured IEDs to attack Coalition Forces.

RAW'A AL-USTA
AKAs:                        
Raw'a al-Ousta
Raw'ah al-Usta
Raw'ah al-Ustah
Rawa al-`Usta
Rawaa Alousta
Raw'ah Al-Astah
Nationality:                
Syrian
Year of Birth:             
1982
Location:                    
Damascus, Syria

AL-RA'Y SATELLITE TELEVISION CHANNEL
AKAs:                        
Satellite Television Channel Al Ra'y
Al-Ra'y Satellite Channel
Al-Ra'i Satellite Channel
Al Ra'y satellite television station
Al Raie TV C