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Before the Subcommittee on Domestic Policy, Committee on Oversight and 
Government Reform, House of Representatives: 

United States Government Accountability Office: 

For Release on Delivery: 
Expected at 10:00 A.M. EDT:
Wednesday, March 11, 2009: 

Troubled Asset Relief Program: 

Status of Efforts to Address Transparency and Accountability Issues: 

Statement of Richard J. Hillman, Managing Director: 
Financial Markets and Community Investment: 


Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss our work on the Troubled Asset 
Relief Program (TARP), under which the Department of the Treasury 
(Treasury) has the authority to purchase and insure up to $700 billion 
in troubled assets held by financial institutions through its Office of 
Financial Stability (OFS).[Footnote 1] As you know, Treasury was 
granted this authority in response to the financial crisis that has 
threatened the stability of the U.S. banking system and the solvency of 
numerous financial institutions. The Emergency Economic Stabilization 
Act (the act) that authorized TARP on October 3, 2008, requires GAO to 
report at least every 60 days on findings resulting from our oversight 
of the actions taken under TARP.[Footnote 2] We are also responsible 
for auditing OFS's annual financial statements and for producing 
special reports on any issues that emerge from our oversight. To carry 
out these oversight responsibilities, we have assembled 
interdisciplinary teams with a wide range of technical skills, 
including financial market and public policy analysts, accountants, 
lawyers, and economists who represent combined resources from across 
GAO. In addition, we are building on our in-house technical expertise 
with targeted new hires, re-employed annuitants with related expertise, 
and outside experts. The act also created additional oversight 
entities--the Congressional Oversight Panel (COP) and the Special 
Inspector General for TARP (SIGTARP)--that also have reporting 
responsibilities. We are coordinating our work with COP and SIGTARP and 
are meeting with officials from both entities to share information and 
coordinate our oversight efforts. These meetings help to ensure that we 
are collaborating as appropriate and not duplicating efforts. 

My statement today is based primarily on our January 30, 2009 report, 
the second under the act's mandate, which covers the actions taken as 
part of TARP through January 23, 2009, and follows up on the nine 
recommendations we made in our December 2, 2008 report.[Footnote 3] 
This statement also provides additional information on some recent 
developments related to TARP, including Treasury's new financial 
stability plan. Our oversight work under the act is ongoing, and our 
next report is due to be issued by March 31, 2009, as required. This 
statement focuses on (1) the nature and purpose of activities that have 
been initiated under TARP; and (2) Treasury's efforts to establish a 
management structure for TARP, including a system of internal controls 
over the use of TARP funds. To do this work, we reviewed documents 
related to TARP, including contracts, agreements, guidance, and rules. 
We also met with OFS, contractors, federal agencies, and officials from 
all eight of the first large institutions to receive disbursements. We 
plan to continue to monitor the issues highlighted in the report, as 
well as future and ongoing capital purchases, other more recent 
transactions undertaken as part of TARP (for example, guarantees on 
assets of Citigroup and Bank of America), and the status of other 
aspects of TARP. We conducted this performance audit between December 
2008 and March 2009 in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives. 


Treasury has announced a number of new programs to try to stabilize 
financial markets, but most of its activities during this period have 
continued to fall under its Capital Purchase Program (CPP). As of March 
5, 2009, Treasury had disbursed approximately $300 billion in TARP 
funds, about $197 billion of it for CPP. Treasury has recently 
announced the Financial Stability Plan, which outlines a set of 
measures to address the financial crisis and restore confidence in the 
U.S. financial and housing markets, and a Homeowner Affordability and 
Stability Plan to mitigate foreclosures and preserve homeownership. 
Treasury also has taken important steps since our first report to 
implement all nine of our recommendations. However, due in part to the 
short time that has elapsed since our first report, we continued to 
identify a number of areas that warrant Treasury's ongoing attention. 
We recommended in our latest report that Treasury continue to take 
action to further improve TARP's transparency and accountability and 
more clearly articulate and communicate a strategic vision for TARP. 
Specifically, we recommended that Treasury: 

* expand the scope of the monthly CPP surveys for the 20 largest banks 
to include collecting at least some information from all institutions 
participating in the program; 

* ensure that future CPP agreements include a mechanism that will 
better enable Treasury to track the use of the capital infusions and 
seek to obtain similar information from existing CPP participants; 

* establish a process to ensure compliance with all CPP requirements, 
including those associated with limitations on dividends and stock 
repurchase restrictions; 

* communicate a clearly articulated vision for TARP that incorporates 
actions to preserve homeownership and describes how all individual 
programs are intended to work in concert to achieve that vision; and 
once this vision is clearly articulated, document the skills and 
competencies needed within the department to carry it out; 

* develop a comprehensive system of internal controls over TARP, 
including policies, procedures, and guidance for program activities 
that are robust enough to ensure that the program's objectives and 
requirements are met; 

* continue to expeditiously hire personnel needed to carry out and 
oversee TARP; 

* expedite efforts to ensure that sufficient personnel are assigned and 
properly trained to oversee the performance of all contractors, 
especially for contracts priced on a time-and-materials basis, and move 
toward fixed-price arrangements whenever possible as requirements are 
better defined over time; 

* develop and implement a well-defined and disciplined risk-assessment 
process, which is essential to monitoring the status of programs and 
identifying any risks that previously announced programs will not be 
adequately funded; and: 

* review and renegotiate existing conflict-of-interest mitigation 
plans, as necessary, to enhance specificity and conformity with the new 
interim conflict-of-interest regulation and take continued steps to 
manage and monitor conflicts of interest and enforce mitigation plans. 

Consistent with our recommendations, the recently announced Financial 
Stability Plan outlines some steps that Treasury is taking to improve 
the transparency and accountability of new programs going forward. But 
Treasury still faces several challenges. First, our initial report 
emphasized the lack of monitoring and reporting for CPP investments and 
recommended stronger measures for ensuring that participating 
institutions used the funds to meet the program's purpose and comply 
with CPP requirements on, for example, executive compensation and 
dividend payments. In response to our recommendation, Treasury 
completed its initial survey of the 20 largest institutions to monitor 
lending and other activities and announced plans to analyze quarterly 
monitoring data (call reports) for all reporting institutions.[Footnote 
4] While the monthly survey is a step toward greater transparency and 
accountability for the largest institutions, we continue to believe 
that additional action is needed to better ensure that all 
participating institutions are accountable for their use of TARP funds. 
Second, Treasury has continued to develop a system to ensure compliance 
with CPP requirements, including executive compensation, dividend 
payments, and repurchase of stocks, but it has not yet finalized its 
plans for detecting noncompliance and taking enforcement actions. 
Third, we noted that Treasury had made limited progress in articulating 
and communicating an overall strategic vision for TARP and continued to 
respond to institution-and industry-specific needs. This lack of 
clarity has complicated Treasury's ability to effectively communicate 
to Congress, the financial markets, and the public. As Treasury 
provides more details on its new Financial Stability Plan, its 
strategic approach to addressing the financial crisis may become 

Treasury has made progress in establishing a management structure for 
TARP, including adopting a framework for developing and implementing 
its system of internal control for TARP activities that is consistent 
with our recommendation. However, as of our January report, OFS had yet 
to implement a disciplined risk-assessment process. Treasury has taken 
steps to help ensure a smooth transition to a new administration by 
keeping positions filled and using an expedited hiring process. 
However, it continues to face difficulty providing competitive salaries 
to attract skilled employees. Also, given the TARP's evolving nature 
and the changes under the new administration, Treasury needs to 
identify OFS's long-term organizational needs. Additionally, consistent 
with our recommendation on contracting oversight, Treasury has enhanced 
such oversight by tracking costs, schedules, and performance and 
addressing the training requirements of personnel who oversee the 
contracts. However, as we previously recommended, Treasury needs to 
continue to identify and mitigate conflicts of interest in contracting. 

Treasury Has Continued to Focus on CPP, but a Variety of Other Programs 
Have Been Created or Are Being Planned: 

Treasury has continued to focus on CPP, but a variety of other programs 
have been created or are in progress, as shown in table 1. As of March 
5, 2009, Treasury had disbursed almost 80 percent of the $250 billion 
it had allocated for CPP to purchase almost $197 billion in preferred 
shares of 467 qualified financial institutions (table 1).[Footnote 5] 
Treasury has begun to receive dividend payments relating to capital 
purchases under CPP and other programs. According to Treasury, as of 
February 17, 2009, it had received about $2.4 billion. 

Table 1: Status of TARP Funds as of March 5, 2009: 

Program: Capital Purchase Program; 
Disbursed: $196.8 billion. 

Program: Systemically Significant Failing Institutions; 
Disbursed: $40.0 billion. 

Program: Targeted Investment Program; 
Disbursed: $40.0 billion. 

Program: Automotive Industry Financing Program; 
Disbursed: $23.7 billion. 

Program: Citigroup Asset Guarantee; 
Disbursed: 0.0. 

Program: Bank of America Asset Guarantee; 
Disbursed: 0.0. 

Program: Making Home Affordable Program; 
Disbursed: 0.0. 

Program: Term Asset-backed Securities Loan Facility - 1; 
Disbursed: 0.0. 

Program: Consumer & Business Lending Initiative; 
Disbursed: 0.0. 

Program: Totals; 
Disbursed: $300.5 billion. 

[End of table] 

Source: Treasury OFS, unaudited. 

[End of table] 

Initially, Treasury approved $125 billion in capital purchases for nine 
of the largest public financial institutions that federal banking 
regulators and Treasury considered to be systemically significant to 
the operation of the financial system.[Footnote 6] At the time, these 
nine institutions held about 55 percent of U.S. banking assets. 
Subsequent purchases were made for qualified institutions of various 
sizes (in terms of total assets) and types. As we noted in our January 
report, most of the institutions that received CPP capital were 
publicly held institutions, although a limited number of privately held 
institutions and community development financial institutions (CDFI) 
also received funds.[Footnote 7] 

Treasury has taken a number of important steps toward better reporting 
on and monitoring of CPP. These steps are in keeping with our prior 
recommendations that Treasury bolster its ability to determine whether 
institutions are using CPP proceeds in ways that are consistent with 
the act's purposes and establish mechanisms to monitor compliance with 
program requirements. However, Treasury needs to take further steps in 
this area. Treasury has done an initial survey of the largest 
institutions to monitor their lending and other activities and 
announced plans to analyze quarterly monitoring data (call reports) for 
all reporting institutions. While the monthly survey is a step toward 
greater transparency and accountability for the largest institutions, 
we continue to believe that additional actions are needed to better 
ensure that all participating institutions are held accountable for 
their use of the funds. Without more frequent information on all 
participants, Treasury will have little timely information about the 
changing financial condition of participating institutions, potentially 
limiting the ability of its newly created team of analysts to 
understand how the institutions are using CPP funds and whether the 
program is having the desired effect. In addition, without ensuring 
that future CPP agreements include a mechanism that enables Treasury to 
track the use of capital infusions and that existing CPP participants 
provide similar information, Treasury may have difficulty determining 
whether an institution has used the funds in a manner consistent with 
TARP's purposes. Therefore, we recommended that Treasury expand the 
scope of planned monthly CPP surveys to include collecting at least 
some information from all participating institutions. We also 
recommended that future CPP agreements include a mechanism that enables 
Treasury to track the use of capital infusions and that Treasury seek 
to obtain similar information from existing CPP participants. We will 
continue to monitor Treasury's oversight efforts as well as the 
consistency of the approval process in future work. 

Treasury has also continued to take steps to increase its planned 
oversight of compliance with terms of the CPP agreements, including 
limitations on executive compensation, dividends, and stock 
repurchases. Among these steps, Treasury has named an Interim Chief 
Compliance Officer. However, Treasury has not finalized its plans for 
detecting noncompliance with CPP requirements or for taking enforcement 
actions. Without a more structured mechanism in place to ensure 
compliance and with a growing number of institutions participating in 
the program, ensuring compliance with these important aspects of the 
program will become increasingly challenging. In its recently announced 
Financial Stability Plan, Treasury called for banks receiving 
government funds in the future to be held responsible for appropriate 
use of those funds through (1) stronger restrictions on dividend 
payment and executive compensation, and (2) enhanced reporting to the 
public, including reporting on lending activity. In addition, Treasury 
is in the process of drafting new regulations to implement the 
executive compensation requirements in the American Recovery and 
Reinvestment Act of 2009, which amended the requirements in the 
Emergency Economic Stabilization Act related to executive compensation 
and corporate governance of TARP fund recipients.[Footnote 8] Among 
these amendments is a requirement for the boards of directors of any 
TARP fund recipient to have in place a company-wide policy regarding 
excessive or luxury expenditures, as identified by Treasury. These may 
include excessive expenditures on entertainment or events, office and 
facility renovations, aviation or other transportation services, or 
other activities or events that are deemed unreasonable. We plan to 
monitor how Treasury defines excessive or luxury expenditures and how 
Treasury assures that TARP fund recipients adopt reasonable policies 
and practices to control against such expenditures. We will also 
continue to monitor both the system that Treasury develops to ensure 
compliance with the agreements and the implementation of additional 
oversight and accountability efforts under its new plan. 

Treasury has also continued to make some progress in improving the 
transparency of TARP and a few weeks ago announced its plans for the 
remaining TARP funds. In our December 2008 report, we first raised 
questions about the effectiveness of Treasury's communication strategy 
for TARP with Congress, the financial markets, and the public. These 
questions were further heightened in the COP's January report, which 
raised similar questions about Treasury's strategy for TARP. In 
response to our recommendation about its communication strategy, 
Treasury noted numerous publicly available reports, testimonies, and 
speeches. However, even after reviewing these items collectively, we 
found that Treasury's strategic vision for TARP remained unclear. For 
example, Treasury initially outlined a strategy to purchase whole loans 
and mortgage-backed securities from financial institutions, but changed 
direction to make capital investments in qualifying financial 
institutions as the global community opted to move in this direction. 
However, once Treasury determined that capital infusions were 
preferable to purchasing whole mortgages and mortgage-backed 
securities, it did not clearly articulate how the various programs-- 
including CPP, the Systemically Significant Failing Institutions 
Program (SSFI), and the Targeted Investment Program (TIP)--would work 
collectively to help stabilize financial markets. For instance, 
Treasury has used similar approaches--capital infusions--to stabilize 
healthy institutions under CPP as well as SSFI and TIP, albeit with 
more stringent requirements. Moreover, with the exception of 
institutions selected for TIP being viewed as able to raise private 
capital, both SSFI and TIP share similar selection criteria. Treasury 
also created the Auto Industry Financing Program in December 2008 to 
prevent a disruption of the domestic automotive industry that would 
pose systemic risk to the nation's economy and provided loans to two 
auto companies and two financing companies that, among other business 
lines, provide consumer automotive loans. Further, the same institution 
may be eligible for multiple programs. At least two institutions 
(Citigroup and Bank of America) currently participate in more than one 
program, adding to the confusion about Treasury's strategy and vision 
for implementing TARP. Other actions also have raised additional 
questions about Treasury's strategy. For example, Treasury announced 
the first institution under TIP weeks before the program was 
established. Similarly, the Asset Guarantee Program was established 
after Treasury announced that it would guarantee assets under such a 
program, but many of the details of the program have yet to be worked 

Since our January report, Treasury has taken three key actions related 
to our recommendation about the need for a clearly articulated vision 
for the program. First, on February 10, Treasury announced the 
Financial Stability Plan, which outlined a set of measures to address 
the financial crisis and restore confidence in U.S. financial and 
housing markets. The plan appears to be an approach designed to resolve 
the credit crisis by restarting the flow of credit to consumers and 
businesses, strengthening financial institutions, and providing aid to 
homeowners and small businesses. Next, on February 25, Treasury 
provided the standardized terms and conditions for eligible financial 
institutions participating in the Capital Assistance Program (CAP). 
Under CAP, an eligible institution that is found by its primary banking 
regulator to need additional capital to continue lending and absorb 
losses in a severe economic downturn will be eligible to participate in 
CAP.[Footnote 9] Such institutions will be eligible to receive a 
capital investment from Treasury in the form of preferred securities 
that can be converted into common equity to help absorb losses and 
serve as a bridge to receiving private capital. A key element of 
Treasury's Financial Stability Plan, CAP is designed to ensure that, in 
severe economic conditions, the largest U.S. bank holding companies 
have sufficient capital to support lending to creditworthy homeowners 
and businesses. As part of this effort, the federal banking regulators-
-the Board of Governors of the Federal Reserve System, Office of the 
Comptroller of the Currency, Federal Deposit Insurance Corporation, and 
Office of Thrift Supervision--announced that they will begin conducting 
a one-time forward-looking capital assessment (or stress test) of the 
balance sheets of the 19 largest bank holding companies with assets 
exceeding $100 billion. These institutions are required to participate 
in the coordinated supervisory capital assessment and may obtain 
additional capital from CAP if necessary.[Footnote 10] Regulators noted 
that the capital assessment process for all eligible institutions was 
expected to be completed by April 30, 2009. 

In addition, on March 4, 2009, Treasury unveiled its Making Home 
Affordable program, which is based in part on the use of TARP funds. 
Among other things, the plan is designed to do the following: 

* It will use $75 billion to modify the loans of up to 3-4 million 
homeowners to avoid potential foreclosure. The goal of modifying the 
mortgages of these homeowners is to reduce the amount owed per month to 
sustainable levels (a mortgage debt-to-income ratio of 31 percent). 
Treasury will share the cost of restructuring the mortgages with the 
other stakeholders (e.g., financial institutions holding whole loans or 
investors if loans have been securitized). Treasury announced a series 
of financial incentives for the loan servicers, mortgage holders/ 
investors, and borrowers that are intended to "pay for success," 
encourage borrowers to continue paying on time under the modified loan, 
and encourage servicers and mortgage holders/investors to modify at- 
risk loans before the borrower falls behind on a payment. 

* It includes an initiative to help up to 4-5 million homeowners to 
refinance loans that are owned or guaranteed by Freddie Mac and Fannie 
Mae at current market rates. According to Treasury, these homeowners 
would not otherwise be able to refinance their loans at the conforming 
loan rates because the declining value of their homes has left them 
with little or no equity. Refinancing at current mortgage rates could 
help homeowners save thousands of dollars in their annual mortgage 

* It increases Treasury's funding commitment to Fannie Mae and Freddie 
Mac to ensure the strength and security of the mortgage market and to 
help maintain mortgage affordability. The $200 billion funding 
commitment is based on authority granted to Treasury under the Housing 
and Economic Recovery Act of 2008.[Footnote 11] 

We will continue to monitor the development and implementation of 
Treasury's plan, including how its actions address the challenges we 
have previously identified.[Footnote 12] 

Efforts to Establish a Management Structure for TARP, including a 
System of Internal Control, Are Ongoing: 

Treasury has made progress in establishing its management 
infrastructure for TARP. However, its development of a system of 
internal control is still evolving, hiring for OFS is still ongoing, 
and Treasury is working to improve its oversight of contractors. 

* OFS has adopted a framework for developing and implementing its 
system of internal control for TARP activities. OFS plans to use this 
framework to develop specific policies, drive communications on 
expectations, and measure compliance with internal control standards 
and policies. However, OFS has yet to develop comprehensive written 
policies and procedures governing TARP activities or implement a 
disciplined risk-assessment process. 

* In the hiring area, Treasury took steps to help maintain continuity 
of leadership within OFS during and after the transition to the new 
administration. Specifically, Treasury ensured that interim chief 
positions would be filled to ensure a smooth transition and used direct-
hire authority and various other appointments to bring a number of 
career staff on board quickly. OFS has increased its overall staff 
since our December 2008 report from 48 to 90 employees as of January 
26, which includes an increase of permanent staff from 5 to 38. 
Treasury officials recently told us that the number of permanent staff 
had increased to 60. While progress has been made since our last 
report, the number of temporary and contract staff who will be needed 
to serve long-term organizational needs remains unknown. Because TARP 
has added many new programs since it was first established in October 
and program activities are changing under the new administration, we 
recognize that Treasury may find it difficult to determine OFS's long- 
term organizational needs at this time. However, such considerations 
will be vital to retaining institutional knowledge in the organization. 

* Treasury's use of existing contract flexibilities has enabled it to 
enter into agreements and award contracts quickly in support of TARP. 
However, Treasury's use of time-and-materials contracts, although 
authorized when flexibility is needed, can increase the risk that 
government dollars will be wasted unless adequate mechanisms are in 
place to oversee contractor performance. Although Treasury has improved 
its oversight of contractors, the department itself has identified both 
certification of its Contracting Officer Technical Representatives and 
its use of time-and-materials pricing as high-risk issues that still 
need attention. In addition, while Treasury has taken the important 
step of recently issuing an interim regulation outlining the process 
for reviewing and addressing conflicts of interest among new 
contractors and financial agents, it is still reviewing existing 
contracts or agreements to ensure conformity with the new regulation. 
We believe this step is a necessary component of a comprehensive and 
complete system to ensure that all conflicts are fully identified and 
appropriately addressed. 

In each of these areas, we made additional recommendations. 
Specifically, we recommended that Treasury, in addition to developing a 
comprehensive system of internal controls, develop and implement a well-
defined and disciplined risk-assessment process, because such a process 
is essential to monitoring the status of TARP programs and identifying 
any risks that announced programs will not be adequately funded. We 
also recommended that Treasury continue to expeditiously hire personnel 
needed to carry out and oversee TARP. For contracting oversight, we 
recommended that Treasury expedite efforts to ensure that sufficient 
personnel are assigned and properly trained to oversee the performance 
of all contractors, especially for contracts priced on a time-and-
materials basis, and move toward fixed-price arrangements whenever 
possible as program requirements are better defined over time. We also 
recommended that Treasury review and renegotiate existing conflict-of-
interest mitigation plans, as necessary, to enhance specificity and 
conformity with the new interim conflicts of interest regulation and 
that it take continued steps to manage and monitor conflicts-of-
interest and enforce mitigation plans. We will continue to monitor 
OFS's implementation of the internal control framework and hiring and 
contracting practices, both of which are vital to TARP's effectiveness. 

Mr. Chairman and Members of the Subcommittee, I appreciate the 
opportunity to discuss these critically important issues and would be 
happy to answer any questions that you may have. 


For further information on this testimony, please contact Richard J. 
Hillman on (202) 512-8678 or 

[End of section] 


[1] GAO, Troubled Asset Relief Program: Status of Efforts to Address 
Transparency and Accountability Issues, [hyperlink,] (Washington D.C.: Jan. 30, 
2009) and Troubled Asset Relief Program: Additional Actions Needed to 
Better Ensure Integrity, Accountability, and Transparency, [hyperlink,] (Washington, D.C.: Dec. 2, 

[2] Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-343, 
122 Stat. 3765. The act requires the U.S. Comptroller General to report 
at least every 60 days, as appropriate, on findings resulting from 
oversight of TARP's performance in meeting the act's purposes; the 
financial condition and internal controls of TARP, its representatives, 
and agents; the characteristics of asset purchases and the disposition 
of acquired assets, including any related commitments entered into; 
TARP's efficiency in using the funds appropriated for its operations; 
its compliance with applicable laws and regulations; and its efforts to 
prevent, identify, and minimize conflicts of interest among those 
involved in its operations. 

[3] Information is current as of January 23, 2009, unless otherwise 
noted in the statement. 

[4] Call reports are quarterly reports that collect basic financial 
data of commercial banks in the form of a balance sheet and income 
statement (formally known as Report of Condition and Income). 

[5] Through December 31, 2008, TARP capital purchases and loans totaled 
$247 billion. The Congressional Budget Office (CBO) estimated the 
subsidy cost for these transactions at $64 billion, or 26 percent, 
using valuation procedures similar to those specified in the Federal 
Credit Reform Act and adjusted for market risk as specified in the 
Emergency Economic Stabilization Act. See Congressional Budget Office, 
The Troubled Asset Relief Program: Report on Transactions Through 
December 31, 2008 (Jan. 2009). COP estimated the subsidy cost at $78 
billion, or 31 percent, using multiple valuation methods and an 
evaluation of similar private transactions. See Congressional Oversight 
Panel, February Oversight Report: Valuing Treasury's Acquisitions (Feb. 
6, 2009). In connection with our audit of TARP's financial statements, 
we will be evaluating and testing the credit subsidy model that TARP 
uses to value capital purchases and loans for financial reporting 

[6] While Treasury approved $125 billion to the nine largest 
institutions, it initially disbursed funds to eight. The $10 billion to 
Merrill Lynch was not disbursed until January 9, 2009, after its merger 
with Bank of America was completed. 

[7] CDFIs are specialized financial institution working in market 
niches that are underserved by traditional financial institutions. 
CDFIs provide a range of financial products and services such as 
mortgage financing for low-income and first-time homebuyers and not- 
for-profit developers; flexible underwriting and risk capital for 
needed community facilities; and technical assistance, commercial loans 
and investments to small start-up or expanding businesses in low-income 

[8] Pub. L. No. 111-5, div. B, title VII, § 7001 (Feb. 17, 2009) 
(amending section 111 of EESA). 

[9] According to Treasury and the federal banking regulators, 
eligibility will be consistent with the criteria and deliberative 
process that has been established for identifying qualified financial 
institutions in the existing CPP. 

[10] Eligible institutions with less than $100 billion in risk-weighted 
assets are also eligible to participate in CAP. Risk-weighted assets 
are the total of all assets held by the bank that are weighted for 
credit risk according to a formula established in regulation by the 
Federal Reserve. 

[111] Pub. L. No. 110-289, 122 Stat. 2654 (2008). 

[12] See GAO, Troubled Asset Relief Program: Status of Efforts to 
Address Defaults and Foreclosures in Home Mortages, [hyperlink,] (Washington, D.C.: Dec. 4, 
2008) for a discussion of challenges facing loan modification programs. 

[End of section] 

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