The Treasury Department on Tuesday chose Bank of New York Mellon ( BK) as custodian of the $700 billion government rescue plan recently enacted by Congress.

Bank of New York Mellon immediately began the work of providing custodial, accounting, auction management and other infrastructure services needed to run the portfolio of complex assets the government intends to purchase under the troubled asset relief program, or TARP.

The New York-based bank beat out 70 competitors, 10 of which met the government's eligibility requirements and minimum qualifications, for the three-year contract. Earlier published reports had identified State Street ( STT) as one competitor. Pimco and BlackRock ( BLK) are in the running to manage the fund's assets.

Neel Kashkari, Treasury's interim assistant secretary for financial stability, said on Monday the TARP has begun hiring key staff and is still seeking accounting firms and companies to review proposals and manage assets. It will spend up to $700 billion to acquire a wide range of troubled assets that banks have been unable to price or sell, including mortgage-backed securities, as well as whole loans.

On Tuesday, Treasury, the Federal Reserve and the Federal Deposit Insurance Corp. unveiled a sweeping plan to invest up to $250 billion of the program into U.S. bank equity.

This article was written by a staff member of TheStreet.com.

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