Capital Purchase Program
Data File:
Policy Area:
Financial Sector Policy
Economic Target:
Financial Institutions
Action Type:
Equity Purchase
Maximum Amount:
$204.94 billion
Amount Spent:
$9.71 billion
Deficit Impact:
-$17.00 billion Purchase of equity shares of banks by the Department of Treasury, in order to promote lending and market liquidity under the “Capital Purchase Program” of the Troubled Assets Relief Program.
The Capital Purchase Program was the first of the programs implemented under TARP. Through the program, the Treasury will invest up to $250 billion of senior preferred shares in U.S. banks, savings associations, and certain bank and loan holding companies. The maximum amount available for each financial institution is $25 billion or 3 percent of risk-weighted assets, with a mimumum subscription amount of 1 percent of risk-weighted assets. In the program's announcement, the Treasury stated that "companies participating in the program must adopt the Treasury Department's standards for executive compensation and corporate governance," applying to the CEO, CFO, and the next three highly compensated executive officers.
Hundreds of financial instutitions, including the country's largest banks, have participated in the program.
Notes:
Original Treasury statements indicate that the maximum amount for CPP is $250 billion. However, in the report Special Inspector General on TARP report (http://www.sigtarp.gov/reports.shtml) the maximum was listed as $218 billion, although the Treasury could be authorized to spend up to $250 billion through the program. Since then, the Treasury has listed the maximum amount as $205 billion in its report on TARP (http://www.financialstability.gov/latest/reportsanddocs.html). Amount spent indicates loans and purchases minus loan repayments (but not dividends), as of 8/22/2012 (http://www.financialstability.gov/latest/index.html). Deficit impact based on CBO's estimate of CPP's cost as stated in their March 2011 Report on TARP.
Deficit impact is from CBO's March 2011 Report on TARP. Deficit impact for individual banks is either derived from CBO's subsidy rate for the Capital Purchase Program (-4%), as listed in CBO's January 2010 baseline or the amount of dispositions received if the bank has repaid Treasury in full.