The Treasury Department on Friday released the application it will use to hire asset managers to oversee the investments the government is making in financial companies.

Under its Capital Purchase Program, the Treasury will hire the asset managers to monitor the institutions' financial condition, capital structure, and the risks they face.

"The size of the overall portfolio will reach hundreds of billions of dollars, and will likely involve securities and obligations issued by thousands of public and private financial institutions. The portfolio mandate will last at least several years," the agency said.

The Treasury said it expects the managers to provide "detailed analysis and recommendations on corporate actions, proxy voting, disclosures, consents, waivers, and other business events that could have an impact on Treasury's ownership stake and compliance responsibilities."

Finally, the asset managers will monitor institutions' compliance with the program's executive compensation limits and dividend restrictions.

The Treasury announced last month that it would take nonvoting preferred stock in exchange for injecting $250 billion in financial institutions. The first $125 billion was split among the nine largest financial companies, and to date 26 smaller banks have requested or received nearly $42 billion more.

Also on Friday, Sens. Robert Menendez of New Jersey and Charles Schumer of New York sent a letter to Treasury Secretary Henry Paulson voicing concern that banks are misusing the capital purchase funds.

"If the money is used to acquire healthy banks and create a financial empire or to increase dividends, then this rescue package will be transformed into merely a give-away to banks, which is not in the taxpayers' best interest," the senators wrote.

The senators said that when the program was authorized, the expectation was banks would use the capital to make new loans, not to acquire other banks or increase dividends to shareholders.

In its notice about hiring asset managers, the Treasury reiterated that it could create other initiatives to shore up the financial industry.

"In addition to" the Capital Purchase Program, "the Treasury may establish other programs under the act where the Treasury will obtain equity securities and debt obligations and warrants of public and private financial institutions," the agency said. "Asset managers selected pursuant to this notice will manage the assets obtained under these other programs as well as the" Capital Purchase Program.

The Treasury has not provided any further detail.

It also has not rolled out its Troubled Asset Relief Program, which was the original intent of the Oct. 3 rescue law. That program was supposed to buy troubled assets from financial institutions, perhaps through reverse auctions. The agency has said it would hire asset managers for that program as well.

The deadline to apply to be an asset manager in the capital program is Nov. 13. (Publicly traded banks have until Nov. 14 to apply for capital; the deadline for private and mutually owned banks was extended but without a new date.)

To qualify, an asset manager must have at least $100 million under management and 10 years of experience, and must disclose potential conflicts of interest.

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