Capital Purchase Program

Treasury created the Capital Purchase Program (CPP) in October 2008 to stabilize the financial system by providing capital to viable financial institutions of all sizes throughout the nation.  With a strengthened capital base, financial institutions have an increased capacity to lend to U.S. businesses and consumers and to support the U.S. economy.

Through the CPP, Treasury will invest up to $250 billion in U.S. banks that are healthy, but desire an extra layer of capital for stability or lending.  Since its inception in October 2008, the CPP has strengthened regional, small and large financial institutions as well as Community Development Financial Institutions in over 48 states and Puerto Rico and the District of Columbia.  Treasury and the nation’s federal banking agencies (FBA), which include the FDIC, the Federal Reserve, The Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS), are currently in the process of analyzing and evaluating the applications that have been received for the CPP.

Under this voluntary program, Treasury will provide capital to viable financial institutions through the purchase of up to $250 billion of senior preferred shares on standardized terms, which will include warrants for future Treasury purchases of common stock. The CPP is available to qualifying U.S. controlled banks, savings associations, and certain bank and savings and loan holding companies engaged solely or predominately in financial activities permitted under the relevant law.  Financial institutions participating in the CPP will pay the Treasury a five percent dividend on senior preferred shares for the first five years following the Treasury’s investment and a rate of nine percent per year, thereafter.  Banks may repay Treasury under the conditions established in the purchase agreements as amended by the American Recovery and Reinvestment Act, and Treasury may sell these shares when market conditions stabilize.

Treasury worked with the nation’s financial regulators, which include the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS), to develop a single, streamlined application form for qualified and interested financial institutions to use for participation in the CPP.  The application period for publicly-held financial institutions to participate in the CPP closed on November 14, 2008 and the application period for privately-held institutions closed on December 8, 2008.  The application period for S-corporations ended on February 13, 2009, and Treasury is currently working on the development of a term sheet for mutual institutions.  The federal banking regulators are currently evaluating all submitted CPP applications and continue to send qualifying applications to Treasury for final approval.

• Fact Sheet
• Application Documents
• FAQs on Capital Purchase Program Deadline
• Completed Transactions
• Contracts
• Capital Purchase Program Repayment Related
• FAQs issued in February 2009 – Logistics
• FAQs issued in May 2009 – Additional guidance on repayments
• FAQ on Capital Purchase Program and the Employ American Workers Act
• Capital Purchase Program Repayment Documents
  • Repurchase Document for Public Institutions
  • Repurchase Document for Private Institutions
  • Repurchase Document for Warrants for Public Institutions
• Repurchasing Warrants under the CPP Contract
• FAQs on Capital Purchase Program Expansion for Small Banks
• FAQs on Capital Assistance Program
• FAQ on Application Deadline for the Capital Assistance Program
• TARP Standards for Compensation and Corporate Governance
• TARP Warrents Valuation Methods by Robert A. Jarrow

• Fact Sheet: Capital Purchase Program
• More: CPP Contracts
• FAQ: CPP Guidelines Under the American Recovery and Reinvestment Act