Troubled Asset Relief Program:
Status Update on Treasury's Two Active Investment Programs
GAO-20-218R: Published: Dec 16, 2019. Publicly Released: Dec 16, 2019.
The Treasury Department’s Troubled Asset Relief Program was a response to the 2008 financial crisis. Treasury used TARP to distribute hundreds of billions of dollars in assistance to financial institutions and others.
TARP had 2 investment programs left as of Sept. 30.
The Capital Purchase Program, in which Treasury traded assistance to banks for stock, has received about $227 billion in repayments and income. It has made about $22 billion.
The Community Development Capital Initiative, which helped financial institutions in underserved areas, has received $587 million. Treasury expects to regain all but about $63 million from this program.
[Updated due to a posting error.]
Department of the Treasury
What GAO Found
As of September 30, 2019, seven participants remained in the Troubled Asset Relief Program’s two active investment programs. Those participants included two institutions in the Capital Purchase Program (CPP) and five institutions in the Community Development Capital Initiative (CDCI). Combined, the Department of the Treasury’s (Treasury) total investment for these programs was $205.47 billion. By the end of September 2019, Treasury had received $227.36 billion in proceeds (repayments and income). As of that date, outstanding investments totaled about $40 million.
- Treasury’s total investment for the CPP program has been $204.90 billion; by December 2009, Treasury had disbursed all funds to 707 financial institutions nationwide. As of September 30, 2019, Treasury had received $226.77 billion in repayments and income from its CPP investments and sales of original CPP investments. The original outstanding investment balance was about $20 million and two institutions remained in the program, as of September 30, 2019.
- Treasury’s total investment for the CDCI program has been $570 million for 84 institutions. Of the total investment, Treasury disbursed $207 million through CDCI from July through September 2010. An additional $363 million represented exchanges of investments from CPP into CDCI. As of September 30, 2019, Treasury had received $587 million in repayments and income from CDCI participants. The original outstanding investment balance was $22.75 million and five institutions remained in the program, as of September 30, 2019.
Why GAO Did This Study
The Emergency Economic Stabilization Act of 2008, as amended, provided GAO with broad oversight authorities for actions taken under TARP and included a provision that GAO report at least annually on TARP activities and performance. As a result, GAO has been monitoring, analyzing, and providing updates on TARP programs since 2008.
This report provides an update on the status of Treasury’s investment and participation in the remaining TARP investment programs, as of September 30, 2019. This included CPP, which was designed to provide capital to financially viable financial institutions through the purchase of senior preferred shares that would pay dividends and warrants to purchase shares of common or preferred stock, and CDCI, which was designed to provide capital to Community Development Financial Institutions by purchasing preferred shares and subordinated debentures.
To assess the programs’ status, GAO reviewed Treasury reports on the status of CPP and CDCI. In addition, GAO reviewed information from Treasury officials to identify the agency's current efforts to wind down the program. Finally, GAO used financial and regulatory data to assess the financial condition of institutions remaining in the programs.