TARP and SBLF: Impact On Community Banks – Special Inspector General for the Troubled Asset Relief Program, April 25, 2012
“This report provides an overview of the regional and community banks that participated in the most well-known TARP initiative, the Capital Purchase Program (CPP). This report also discusses recent actions that have allowed 137 banks to refinance out of the CPP program into another Government program outside TARP, the Small Business Lending Fund (SBLF), while still leaving hundreds more behind, many of them weaker than those that exited TARP through SBLF. Beginning in late 2008, the U.S. Department of the Treasury (Treasury) invested $204.9 billion of TARP money through CPP into 707 banks of all sizes, from global giants with assets of more than $1 trillion to local institutions with just one or two offices. In return, the banks agreed to give Treasury an ownership interest in the form of preferred stock and warrants to purchase more stock. They also agreed to pay Treasury quarterly dividends or interest, and to abide by other restrictions including rules on executive compensation. Those obligations were meant in part to encourage banks to repay the Government and exit CPP…This report explains the structure of the remaining CPP banks as they relate to the structure of the banking industry as a whole, particularly the community banking sector. It examines the impact of TARP on community banks. It analyzes the TARP banks that exited TARP through SBLF versus banks that remain in TARP. It also examines the current status of TARP banks in the six months since SBLF closed to new entrants.”
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