The Treasury announced its policy for the disposition of warrants received in connection with investments made under the Capital Purchase Program (“CPP”). For a further discussion of the CPP, please see the October 14, 2008, October 21, 2008 and October 27, 2008 Alerts. Under the CPP, the Treasury received warrants in the institutions receiving funds. In the case of investments in publicly-traded institutions, the Treasury received warrants to purchase common shares (“CPP Warrants”); these CPP Warrants have not been exercised. In the case of institutions that are not publicly-traded, Treasury received warrants to purchase preferred stock or debt; these warrants are no longer outstanding because they were exercised immediately upon closing the initial investment. [Read more →]

Following up on the Capital Purchase Program (“CPP”) terms for mutual holding companies, the Treasury released CPP terms for mutual banks and savings associations. [Read more →]

Today the Treasury announced the terms for the Capital Assistance Program (“CAP”), which is the new capital assistance program that was announced as part of the Financial Stability Plan on February 10th. For further discussion of the Financial Stability Plan, see the February 11, 2009 Alert. The CAP consists of two core elements, a supervisory assessment and access to a government capital investment. Participation in the CAP is required for the largest U.S. banking institutions — those with assets of more than $100 billion — which are not foreign-controlled. U.S. banking organizations with assets of less than $100 billion may also voluntarily participate in the CAP. Applications to participate in the CAP, including those by the large banking organizations who are required to participate in the supervisory assessments, must be submitted by May 25, 2009. For more information click here.

Yesterday U.S. Treasury Secretary Timothy Geithner announced a broad, multi-faceted program, the Financial Stability Plan (the “FSP”), designed to strengthen the financial system through additional capital injections to banks, creation of a public/private investment fund to buy troubled assets, establishment of guidelines for mortgage modification, and expansion of a Federal Reserve lending program aimed at small businesses and communities.

Initial market reaction and financial commentary was negative, largely based on uncertainty regarding the details of the FSP and therefore its implications for affected financial institutions, businesses and consumers going forward. In these circumstances, the Administration can be expected to move rapidly to flesh out the details of the FSP. Set forth below are some areas which financial institutions will likely focus on as the details of the FSP are made known. [Read more →]

Federal Reserve Bank of New York’s Money Market Investor Funding Facility.  As discussed in the October 21, 2008 edition of the Alert, the FRB-NY has created a money market investor funding facility (the “MMIFF”) to provide senior secured funding to a series of special purpose vehicles (the “PSPVs”) to finance until April 30, 2009 the purchase of certain instruments from money market funds.  Since the announcement of that program (the “MMIFF Program”), the FRB-NY has published a “Questions & Answers” (the “Q&A”) in which it has provided additional information about the MMIFF Program, the MMIFF and the PSPVs. [Read more →]

The deadline for participation in the Treasury’s Capital Purchase Program (“CPP”) expired on November 14, 2008 for public banks. In the most recently issued CPP FAQs, the Treasury addressed which banks are deemed “public” banks for purposes of this deadline. For the purposes of the CPP, a “public” bank, savings association, bank holding company, or savings and loan holding company is a company (1) whose securities are traded on a national securities exchange and (2) that is required to file, under the federal securities laws, periodic reports such as annual and quarterly reports on Forms 10-Q and 10-K with either the SEC or its primary federal bank regulator. [Read more →]

The deadline for participation in the Treasury’s Capital Purchase Program (“CPP”) expired on November 14, 2008 for public banks.  In the most recently issued CPP FAQs, the Treasury addressed which banks are deemed “public” banks for purposes of this deadline.  For the purposes of the CPP, a “public” bank, savings association, bank holding company, or savings and loan holding company is a company (1) whose securities are traded on a national securities exchange and (2) that is required to file, under the federal securities laws, periodic reports such as annual and quarterly reports on Forms 10-Q and 10-K with either the SEC or its primary federal bank regulator. [Read more →]

Secretary of the Treasury Paulson announced this morning that the Treasury Department is contemplating a new capital purchase program (CPP) for investing additional TARP funds in banks and, potentially, non-bank financial institutions. That program potentially will include a requirement that a matching investment of private capital be raised by institutions seeking TARP funds under the new CPP. [Read more →]

Certain Matters for Banking Organizations to Consider When Deciding Whether to Raise Capital through the Troubled Asset Relief Program Capital Purchase Program. [Read more →]

The Internal Revenue Service (the “IRS”) on October 14, 2008 issued Notices 2008-100 and 2008-101 (the “Notices”) to provide guidance to banks participating in the Federal government’s Capital Purchase Program (the “CPP”), included as part of the Emergency Economic Stabilization Act of 2008’s Troubled Asset Relief Program (the “TARP”).  The Notices provide for exceptions to the application of certain provisions of Sections 382 and 597 of the Internal Revenue Code of 1986 (the “Code”) in the case of capital infusions from the Treasury Department pursuant to the CCP.  Notice 2008-100 provides guidance to corporations regarding the application of Section 382 of the Code.  Notice 2008-101 provides guidance regarding the application of the “Federal financial assistance” provision contained in Section 597 of the Code. [Read more →]

On October 14, 2008, Secretary of the Treasury Henry Paulson, FRB Chairman Benjamin Bernanke and FDIC Chairman Sheila Bair formally announced and provided further detail on two new programs, the TARP Capital Purchase Program (the “Capital Purchase Program”) and the Temporary Liquidity Guarantee Program (the “Liquidity Program”), designed to strengthen public confidence in the U.S. financial system and address the crisis in the credit markets.  The Treasury announced that through voluntary participation in the Capital Purchase Program, financial institutions may sell preferred shares to the U.S. government. [Read more →]

The FRB adopted an interim final rule (the “Rule”) on the treatment of senior perpetual preferred shares (“Senior Preferred Shares”) issued to the Treasury pursuant to the TARP Capital Purchase Program (the “CPP”).  For a complete discussion of the CPP, please see the discussion in the October 14, 2008 Alert.  The Rule specifically permits bank holding companies to include without limit all Senior Preferred Shares issued under the CPP in Tier 1 capital for purposes of the FRB’s risk-based and leverage capital rules and guidelines for bank holding companies.

On October 20, 2008, the Treasury, in conjunction with the FDIC, FRB, OCC and OTS (collectively, the “Federal Banking Agencies”), released application guidelines for financial institutions interested in participating in the TARP Capital Purchase Program (the “CPP”). [Read more →]