In his speech to the Independent Community Bankers of America, Treasury Secretary Geithner announced that the Treasury will re-open the Capital Purchase Program (“CPP”) application window for banks with total assets under $500 million and raise from 3% of risk-weighted assets to 5% the amount for which qualifying institutions can apply. The application window is being reopened for all term sheets – public and private corporations, Subchapter S corporations, and mutual institutions. For further discussion of the CPP, please see the October 14, 2008, October 21, 2008, and October 27, 2008 Alerts for discussion of the CPP generally and for public institutions, the November 18, 2008 Alert for a discussion of the CPP for private institutions and the April 14, 2009 and April 21, 2009 Alerts for discussion of the CPP for mutual institutions. Current CPP participants will be allowed to reapply, and will have an expedited approval process. The Treasury will also extend the deadline for small banks to form a holding company for the purposes of the CPP. Both the window to form a holding company and the window to apply or re-apply for CPP will be open for six months. The Treasury plans to fund these additional capital investments under the CPP using the proceeds of the repayments it expects to receive from some of the largest banks.
Alert May 19, 2009