On July 31, 2009, the Federal Deposit Insurance Corporation (FDIC) issued a press release announcing the first test of the funding mechanism for its Legacy Loans Program (LLP), part of the Public-Private Investment Program (PPIP). Specifically, the FDIC announced that it has created a limited liability company (LLC) to receive troubled assets, and that by the end of this summer it plans to have the receiver of a defunct bank transfer loans and other assets into the LLC “on a servicing released basis . . . in exchange for an ownership interest in the LLC.” On June 3, 2009, the FDIC had put the earlier incarnation of the LLP on indefinite hold. See “Treasury, Fed and FDIC Officials Discuss Suspension of Legacy Loans Program, Status of Legacy Securities Program and Future of the TALF at SIFMA and PREA’s Public-Private Investment Program Summit,” Hedge Fund Law Report, Vol. 2, No. 23 (Jun. 10, 2009). The June 3 announcement cancelled a previously planned pilot sale of assets. In its more recent press release, the FDIC said that it would instead “test the funding mechanism contemplated by the LLP in a sale of receivership assets this summer,” drawing on the experience of the Resolution Trust Corporation (RTC) in the late 1980s and early 1990s. The RTC used a number of distinct models of “equity partnership,” but in essence there is one major difference between the goals of the RTC and the LLP: the RTC was charged with distributing the assets of closed institutions, whereas the goal of the LLP is to reinforce the solvency of open banks and jumpstart their lending activities. We examine the restructured LLP from the hedge fund perspective, and in the course of our examination discuss: the RTC precedent; the mechanics of the test program; the background of the LLP; valuation issues; concerns with participation (including tax and “headline risk” concerns); cash and leverage options; and the policy behind the PPIP.