Simpson Thacher & Bartlett will advise the US government as it makes private equity-style plays, using $250 billion to buy preferred equity stakes in banks to shore up the US financial sector.
The New York-based law firm is among the dominant firms that work in the private equity industry, notably representing private equity firms like KKR and The Blackstone Group.
The government hired Simpson as the sole advisor for the emergency bank equity plan. Simpson is headed up by chairman Richard Beattie. Lee Meyerson, a New York partner who specialises in transactions involving financial institutions, will lead the contract.
The Wall Street Journal said in a report Tuesday that Simpson will counsel officials primarily on the structure of the programme.
The $250 billion bailout is part of the US government's $700 billion distressed assets relief program. The government has pledged to use the bail out package to buy the “toxic debt” of companies as a way to end the financial turmoil in global markets.
Other countries have made the same moves, including the UK, which pledged to pump £37 billion into the Royal Bank of Scotland, Lloyds TSB and HBOS.
The government also said Tuesday it hired Bank of New York Mellon to serve as custodian for the implementation of the $700 billion bail out package. BNY Mellon will provide accounting for the portfolio, hold all cash and assets in the portfolio, provide pricing and asset valuation services and assist with other services, the Treasury said. The firm also will serve as auction manager for securitised assets.
BNY, together with its advisory firms, banks and trust companies, manages around $69 billion in alternative investments.