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Capital Purchase Program
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<h2 id="warrants">Warrants</h2> <p>By March 31, 2009 four banks out of over five hundred had returned their <a href="/facts/Preferred_stock/vzqjmC7H">preferred stock</a> obligations. None of the publicly traded banks had yet bought back their warrants owned by the U.S. Treasury by March 31, 2009.<a class="footnote-ref" id="fnref:12" href="#fn:12"><sup>12</sup></a> According to the terms of the U.S. Treasury's investment, the banks returning funds can either negotiate to buy back the warrants at fair market value, or the U.S. Treasury can sell the warrants to third party investors as soon as feasible. Warrants are <a href="/facts/Call_options/UUIsmBxN">call options</a> that add to the number of shares of stock outstanding if they are exercised for a profit. The <a href="/facts/American_Bankers_Association/KmIxD7xU">American Bankers Association</a> (ABA) has lobbied congress to cancel the warrants owned by taxpayers. The call them an "onerous exit fee."<a class="footnote-ref" id="fnref:13" href="#fn:13"><sup>13</sup></a> Yet, if the Capital Purchase Program warrants of Goldman Sachs are representative, then the Capital Purchase Program warrants were worth between $5 billion and $24 billion as of May 1, 2009. Thus canceling the CPP warrants amounts to a $5-billion-to-$24-billion subsidy to the banking industry at taxpayers' expense.<a class="footnote-ref" id="fnref:14" href="#fn:14"><sup>14</sup></a> While the ABA wants the CPP warrants to be written off by taxpayers, Goldman Sachs does not hold that view. A representative of Goldman Sachs was quoted as saying "We think that taxpayers should expect a decent return on their investment and look forward to being able to provide just that when we are permitted to return the TARP money."<a class="footnote-ref" id="fnref:15" href="#fn:15"><sup>15</sup></a> </p> <h2 id="first-nine-financial-institutions">First nine financial institutions</h2> <p>Nine financial institutions received funds on October 28, 2008. These are: </p> <ul><li><a href="/facts/Bank_of_America_Corporation/fXUQI9vp">Bank of America Corporation</a></li> <li><a href="/facts/Bank_of_New_York_Mellon_Corporation/v46dXhKa">Bank of New York Mellon Corporation</a></li> <li><a href="/facts/Citigroup_Incorporated/GjSFJH49">Citigroup Incorporated</a></li> <li><a href="/facts/Goldman_Sachs_Group_Incorporated/cKeyh6CP">Goldman Sachs Group Incorporated</a></li> <li><a href="/facts/JPMorgan_Chase_%26_Company/bVu3VBTV">JPMorgan Chase & Company</a></li> <li><a href="/facts/Morgan_Stanley/7obWgtJF">Morgan Stanley</a></li> <li><a href="/facts/State_Street_Corporation/fRbAPUpN">State Street Corporation</a></li> <li><a href="/facts/Wells_Fargo_and_Company/Yansa3rp">Wells Fargo and Company</a></li> <li><a href="/facts/Merrill_Lynch/bwWt2DSs">Merrill Lynch</a></li></ul> <h2 id="participants">Participants</h2> <p>The following is a list of 42 other participants in the CPP through purchases made on 14 November 2008 and 21 November 2008: </p> <ul><li>Bank of Commerce Holdings</li> <li>1st FS Corporation</li> <li><a href="/facts/UCBH_Holdings,_Incorporated/RuzYpwqt">UCBH Holdings, Incorporated</a></li> <li><a href="/facts/Northern_Trust_Corporation/egsah9mP">Northern Trust Corporation</a></li> <li><a href="/facts/SunTrust_Banks,_Incorporated/IUhNqUuB">SunTrust Banks, Incorporated</a></li> <li><a href="/facts/Broadway_Financial_Corporation/dQ5DJQa6">Broadway Financial Corporation</a></li> <li>Washington Federal, Incorporated</li> <li><a href="/facts/BB%26T_Corporation/REGblwbx">BB&T Corporation</a></li> <li>Provident Bancshares Corporation</li> <li><a href="/facts/Umpqua_Holdings_Corporation/NCoSdSP0">Umpqua Holdings Corporation</a></li> <li><a href="/facts/Comerica_Incorporated/RAr7Rx27">Comerica Incorporated</a></li> <li><a href="/facts/Regions_Financial_Corporation/thHtKdhJ">Regions Financial Corporation</a></li> <li><a href="/facts/Capital_One_Financial_Corporation/NMhw32RE">Capital One Financial Corporation</a></li> <li><a href="/facts/First_Horizon_National_Corporation/pdLxj9Cx">First Horizon National Corporation</a></li> <li><a href="/facts/Huntington_Bancshares/UBNEYsq2">Huntington Bancshares</a></li> <li><a href="/facts/KeyCorp/0FNKp55m">KeyCorp</a></li> <li><a href="/facts/Valley_National_Bancorp/v2RyN11Y">Valley National Bancorp</a></li> <li><a href="/facts/Zions_Bancorporation/nTdK0ekn">Zions Bancorporation</a></li> <li><a href="/facts/Marshall_%26_Ilsley_Corporation/GGJcJ9L4">Marshall & Ilsley Corporation</a></li> <li><a href="/facts/U.S._Bancorp/7m6cwX8b">U.S. Bancorp</a></li> <li><a href="/facts/TCF_Financial_Corporation/vgVIeG3I">TCF Financial Corporation</a></li> <li><a href="/facts/Ameris_Bancorp/9SabP8GJ">Ameris Bancorp</a></li> <li><a href="/facts/Associated_Banc-Corp/lpkJHgBm">Associated Banc-Corp</a></li> <li><a href="/facts/Banner_Corp./MNpISvh0">Banner Corp.</a> / <a href="/facts/Banner_Bank/MNpISvh0">Banner Bank</a></li> <li>Boston Private Financial</li> <li>Cascade Financial Corporation</li> <li>Centerstate Banks of Florida Incorporated</li> <li><a href="/facts/City_National_Corporation/8T1GF0uc">City National Corporation</a></li> <li>Columbia Banking System Incorporated</li> <li>First Community Bancshares Incorporated</li> <li>First Community Corporation</li> <li><a href="/facts/First_Niagara_Financial_Group/FcmFsuNP">First Niagara Financial Group</a></li> <li>Heritage Commerce CorporationHeritage Financial Corporation</li> <li>Hf Financial Corporation</li> <li>Nara Bancorp Incorporated</li> <li><a href="/facts/Pacific_Capital_Bancorp/d6tsjGM1">Pacific Capital Bancorp</a></li> <li>Porter Bancorp Incorporated</li> <li>Severn Bancorp Incorporated</li> <li>Taylor Capital Group</li> <li><a href="/facts/Trustmark_Bank/IMAHClI0">Trustmark Corporation</a></li> <li><a href="/facts/Webster_Financial_Corporation/Cnoc8lEf">Webster Financial Corporation</a></li> <li><a href="/facts/Western_Alliance_Bancorporation/tLLeQW0S">Western Alliance Bancorporation</a></li></ul> <h2 id="references">References</h2> <ol> <li id="fn:1"><p>GA0 Report GAO-09-161 published 12/02/2008 <a href="http://www.gao.gov/new.items/d09161.pdf" target="_blank">http://www.gao.gov/new.items/d09161.pdf</a> <a href="#fnref:1" class="footnote-back-ref">↩</a></p></li> <li id="fn:2"><p>Langley, Paul (2015). Liquidity Lost: The Governance of the Global Financial Crisis. Oxford University Press. pp. 82–86. ISBN 978-0199683789. <a href="978-0199683789" target="_blank">978-0199683789</a> <a href="#fnref:2" class="footnote-back-ref">↩</a></p></li> <li id="fn:3"><p>"Gordon Does Good". The New York Times. October 12, 2008. Retrieved February 5, 2016. <a href="https://www.nytimes.com/2008/10/13/opinion/13krugman.html?_r=0" target="_blank">https://www.nytimes.com/2008/10/13/opinion/13krugman.html?_r=0</a> <a href="#fnref:3" class="footnote-back-ref">↩</a></p></li> <li id="fn:4"><p>Wilson, Linus; Wu, Yan Wendy (December 29, 2009). "Common (Stock) Sense about Risk-Shifting and Bank Bailout". SSRN 1321666. <a href="/wiki/SSRN_(identifier)" target="_blank">/wiki/SSRN_(identifier)</a> <a href="#fnref:4" class="footnote-back-ref">↩</a></p></li> <li id="fn:5"><p>Wilson, Linus (February 2, 2009). "Debt Overhang and Bank Bailouts". SSRN 1336288. <a href="/wiki/SSRN_(identifier)" target="_blank">/wiki/SSRN_(identifier)</a> <a href="#fnref:5" class="footnote-back-ref">↩</a></p></li> <li id="fn:6"><p>"Paulson's Gift" (PDF). Working Paper, University of Chicago. November 5, 2008. Archived from the original (PDF) on March 20, 2009. Retrieved February 2, 2009. <a href="https://web.archive.org/web/20090320100235/http://faculty.chicagobooth.edu/luigi.zingales/research/PSpapers/paulsons_gift.pdf" target="_blank">https://web.archive.org/web/20090320100235/http://faculty.chicagobooth.edu/luigi.zingales/research/PSpapers/paulsons_gift.pdf</a> <a href="#fnref:6" class="footnote-back-ref">↩</a></p></li> <li id="fn:7"><p>McIntire, Mike. Bailout Is a Windfall to Banks, if Not to Borrowers. New York Times January 17, 2009. [1] <a href="https://www.nytimes.com/2009/01/18/business/18bank.html" target="_blank">https://www.nytimes.com/2009/01/18/business/18bank.html</a> <a href="#fnref:7" class="footnote-back-ref">↩</a></p></li> <li id="fn:8"><p>"Summer letter of the President elect" (PDF). The Wall Street Journal. January 15, 2009. <a href="https://www.wsj.com/public/resources/documents/Summersletter11509.pdf" target="_blank">https://www.wsj.com/public/resources/documents/Summersletter11509.pdf</a> <a href="#fnref:8" class="footnote-back-ref">↩</a></p></li> <li id="fn:9"><p>"The Troubled Asset Relief Program Report on Transactions Through December 31, 2008". CBO. January 16, 2009. Retrieved January 26, 2009. <a href="http://www.ritholtz.com/blog/2009/01/cbo-report-on-tarp/" target="_blank">http://www.ritholtz.com/blog/2009/01/cbo-report-on-tarp/</a> <a href="#fnref:9" class="footnote-back-ref">↩</a></p></li> <li id="fn:10"><p>"FACT SHEET FINANCIAL STABILITY PLAN" (PDF). U.S. Treasury. February 10, 2009. Archived from the original (PDF) on March 11, 2009. Retrieved March 11, 2009. <a href="https://web.archive.org/web/20090311205328/http://www.financialstability.gov/docs/fact-sheet.pdf" target="_blank">https://web.archive.org/web/20090311205328/http://www.financialstability.gov/docs/fact-sheet.pdf</a> <a href="#fnref:10" class="footnote-back-ref">↩</a></p></li> <li id="fn:11"><p>"Capital Purchase Program Revenues Have Exceeded Investments, but Concerns about Outstanding Investments Remain". CBO. March 1, 2012. Retrieved October 4, 2012. <a href="http://www.gao.gov/products/GAO-12-301" target="_blank">http://www.gao.gov/products/GAO-12-301</a> <a href="#fnref:11" class="footnote-back-ref">↩</a></p></li> <li id="fn:12"><p>SIGTARP, (2009), Office of the Special Inspector General for the Troubled Asset Relief Program, Quarterly Report to Congress: April 21, 2009, accessed online on May 5, 2009, at http://www.sigtarp.gov/reports/congress/2009/April2009_Quarterly_Report_to_Congress.pdf Archived 2010-01-07 at the Wayback Machine. <a href="http://www.sigtarp.gov/reports/congress/2009/April2009_Quarterly_Report_to_Congress.pdf" target="_blank">http://www.sigtarp.gov/reports/congress/2009/April2009_Quarterly_Report_to_Congress.pdf</a> <a href="#fnref:12" class="footnote-back-ref">↩</a></p></li> <li id="fn:13"><p>Paletta, Damian (2009-04-22). "Financial Firms Lobby to Cut Cost of TARP Exit - WSJ". WSJ. Retrieved 2024-06-05. <a href="https://www.wsj.com/articles/SB124035639380840961" target="_blank">https://www.wsj.com/articles/SB124035639380840961</a> <a href="#fnref:13" class="footnote-back-ref">↩</a></p></li> <li id="fn:14"><p>"The Goldman Sachs Warrants". May 7, 2009. SSRN 1400995. <a href="/wiki/SSRN_(identifier)" target="_blank">/wiki/SSRN_(identifier)</a> <a href="#fnref:14" class="footnote-back-ref">↩</a></p></li> <li id="fn:15"><p>John Carney, Apr. 23, 2009, “Goldman Sachs Is NOT Lobbying to Expunge the TARP Warrants,” accessed online on May 1, 2009 [2] <a href="http://www.businessinsider.com/goldman-sachs-is-not-lobbying-to-expunge-the-tarp-warrants-2009-4" target="_blank">http://www.businessinsider.com/goldman-sachs-is-not-lobbying-to-expunge-the-tarp-warrants-2009-4</a> <a href="#fnref:15" class="footnote-back-ref">↩</a></p></li> </ol>