---
kind: "section"
citation: "12 U.S.C. § 5223"
title: "12"
title_heading: "Banks and Banking"
number: "5223"
heading: "Minimization of long-term costs and maximization of benefits for taxpayers"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/5223"
units:
  - "Chapter 52 — Emergency Economic Stabilization"
  - "Subchapter I — Troubled Assets Relief Program"
---

# §5223. Minimization of long-term costs and maximization of benefits for taxpayers

- (a) **Long-term costs and benefits—**
  - (1) **Minimizing negative impact—** The [Secretary](/usc/12/5202.md?p=7) shall use the authority under this chapter in a manner that will minimize any potential long-term negative impact on the taxpayer, taking into account the direct outlays, potential long-term returns on assets purchased, and the overall economic benefits of the program, including economic benefits due to improvements in economic activity and the availability of [credit](/usc/12/5481.md?p=7), the impact on the savings and pensions of individuals, and reductions in losses to the Federal Government.
  - (2) **Authority—** In carrying out [paragraph (1)](#a-1), the [Secretary](/usc/12/5202.md?p=7) shall—
    - (A) hold the assets to maturity or for resale for and until such time as the [Secretary](/usc/12/5202.md?p=7) determines that the market is optimal for selling such assets, in order to maximize the value for taxpayers; and
    - (B) sell such assets at a price that the [Secretary](/usc/12/5202.md?p=7) determines, based on available financial analysis, will maximize return on investment for the Federal Government.
  - (3) **Private sector participation—** The [Secretary](/usc/12/5202.md?p=7) shall encourage the private sector to participate in purchases of [troubled assets](/usc/12/5202.md?p=9), and to [invest](/usc/12/1861.md?p=b-6) in [financial institutions](/usc/12/5202.md?p=5), consistent with the provisions of this section.
- (b) **Use of market mechanisms—** In making purchases under this chapter, the [Secretary](/usc/12/5202.md?p=7) shall—
  - (1) make such purchases at the lowest price that the [Secretary](/usc/12/5202.md?p=7) determines to be consistent with the purposes of this chapter; and
  - (2) maximize the efficiency of the use of taxpayer resources by using market mechanisms, including auctions or reverse auctions, where appropriate.
- (c) **Direct purchases—** If the [Secretary](/usc/12/5202.md?p=7) determines that use of a market mechanism under [subsection (b)](#b) is not feasible or appropriate, and the purposes of the chapter are best met through direct purchases from an individual [financial institution](/usc/12/5202.md?p=5), the [Secretary](/usc/12/5202.md?p=7) shall pursue additional measures to ensure that prices paid for assets are reasonable and reflect the underlying value of the asset.
- (d) **Conditions on purchase authority for warrants and debt instruments—**
  - (1) **In general—** The [Secretary](/usc/12/5202.md?p=7) may not purchase, or make any commitment to purchase, any troubled asset under the authority of this chapter, unless the [Secretary](/usc/12/5202.md?p=7) receives from the [financial institution](/usc/12/5202.md?p=5) from which such assets are to be purchased—
    - (A) in the case of a [financial institution](/usc/12/5202.md?p=5), the securities of which are traded on a national securities exchange, a warrant giving the right to the [Secretary](/usc/12/5202.md?p=7) to receive nonvoting common stock or preferred stock in such [financial institution](/usc/12/5202.md?p=5), or voting stock with respect to which,[^1] the [Secretary](/usc/12/5202.md?p=7) agrees not to exercise voting power, as the [Secretary](/usc/12/5202.md?p=7) determines appropriate; or
    - (B) in the case of any [financial institution](/usc/12/5202.md?p=5) other than one described in [subparagraph (A)](#d-1-A), a warrant for common or preferred stock, or a senior debt instrument from such [financial institution](/usc/12/5202.md?p=5), as described in [paragraph (2)(C)](#d-2-C).
  - (2) **Terms and conditions—** The terms and conditions of any warrant or senior debt instrument required under [paragraph (1)](#d-1) shall meet the following requirements:
    - (A) **Purposes—** Such terms and conditions shall, at a minimum, be designed—
      - (i) to provide for reasonable participation by the [Secretary](/usc/12/5202.md?p=7), for the benefit of taxpayers, in equity appreciation in the case of a warrant or other equity security, or a reasonable interest rate premium, in the case of a debt instrument; and
      - (ii) to provide additional protection for the taxpayer against losses from sale of assets by the [Secretary](/usc/12/5202.md?p=7) under this chapter and the administrative expenses of the [TARP](/usc/12/5202.md?p=8).
    - (B) **Authority to sell, exercise, or surrender—** The [Secretary](/usc/12/5202.md?p=7) may sell, exercise, or surrender a warrant or any senior debt instrument received under this subsection, based on the conditions established under [subparagraph (A)](#d-2-A).
    - (C) **Conversion—** The warrant shall provide that if, after the warrant is received by the [Secretary](/usc/12/5202.md?p=7) under this subsection, the [financial institution](/usc/12/5202.md?p=5) that issued the warrant is no longer listed or traded on a national securities exchange or securities association, as described in [paragraph (1)(A)](#d-1-A), such warrants shall convert to senior debt, or contain appropriate protections for the [Secretary](/usc/12/5202.md?p=7) to ensure that the Treasury is appropriately compensated for the value of the warrant, in an amount determined by the [Secretary](/usc/12/5202.md?p=7).
    - (D) **Protections—** Any warrant representing securities to be received by the [Secretary](/usc/12/5202.md?p=7) under this subsection shall contain anti-dilution provisions of the type employed in capital market transactions, as determined by the [Secretary](/usc/12/5202.md?p=7). Such provisions shall protect the value of the securities from market transactions such as stock splits, stock distributions, dividends, and other distributions, mergers, and other forms of reorganization or recapitalization.
    - (E) **Exercise price—** The exercise price for any warrant issued pursuant to this subsection shall be set by the [Secretary](/usc/12/5202.md?p=7), in the interest of the taxpayers.
    - (F) **Sufficiency—** The [financial institution](/usc/12/5202.md?p=5) shall guarantee to the [Secretary](/usc/12/5202.md?p=7) that it has authorized shares of nonvoting stock available to fulfill its obligations under this subsection. Should the [financial institution](/usc/12/5202.md?p=5) not have sufficient authorized shares, including preferred shares that may carry dividend rights equal to a multiple number of common shares, the [Secretary](/usc/12/5202.md?p=7) may, to the extent necessary, accept a senior debt note in an amount, and on such terms as will compensate the [Secretary](/usc/12/5202.md?p=7) with equivalent value, in the event that a sufficient shareholder vote to authorize the necessary additional shares cannot be obtained.
  - (3) **Exceptions—**
    - (A) **De minimis—** The [Secretary](/usc/12/5202.md?p=7) shall establish de minimis exceptions to the requirements of this subsection, based on the size of the cumulative transactions of [troubled assets](/usc/12/5202.md?p=9) purchased from any one [financial institution](/usc/12/5202.md?p=5) for the duration of the program, at not more than $100,000,000.
    - (B) **Other exceptions—** The [Secretary](/usc/12/5202.md?p=7) shall establish an exception to the requirements of this subsection and appropriate alternative requirements for any participating [financial institution](/usc/12/5202.md?p=5) that is legally prohibited from issuing securities and debt instruments, so as not to allow circumvention of the requirements of this section.

## Footnotes

[^1]: So in original. The comma probably should not appear.

## Source credit

(Pub. L. 110–343, div. A, title I, § 113, Oct. 3, 2008, 122 Stat. 3777.)

## Notes

### Editorial Notes

### References in Text

This chapter, referred to in text, was in the original “this Act” and was translated as reading “this division”, meaning div. A of Pub. L. 110–343, Oct. 3, 2008, 122 Stat. 3765, known as the Emergency Economic Stabilization Act of 2008, to reflect the probable intent of Congress. For complete classification of division A to the Code, see Short Title note set out under section 5201 of this title and Tables.