Page 1 GAO-16-91R TARP: Status of Remaining Investment Programs

441 G St. N.W.

Washington, DC 20548

November 3, 2015

Congressional Committees

Troubled Asset Relief Program: Status of Remaining Investment Programs 

The Emergency Economic Stabilization Act of 2008 (EESA) initially authorized $700 billion to 

assist financial institutions and markets, businesses, homeowners, and consumers through the 

Troubled Asset Relief Program (TARP).1 TARP investments and programs were intended to 

provide confidence that the U.S. government would help address the greatest threat the 

financial markets and economy had faced since the Great Depression. As the severity and 

immediacy of the 2008 financial crisis began to diminish, Congress reduced the authorized 

amount to a maximum of $475 billion as part of the Dodd-Frank Wall Street Reform and 

Consumer Protection Act.2 TARP costs were not expected to reach the authorized amounts, 

and over time the projected costs had declined as financial institutions repaid some assistance 

and the government exited programs.

Under EESA, the Department of the Treasury (Treasury) established initiatives through TARP to 

help stabilize the U.S. financial system, restart economic growth, and prevent avoidable 

foreclosures, including a variety of bank investment, credit market, housing, and other 

programs. Treasury established the Office of Financial Stability (OFS) to carry out TARP 

activities. These activities included injecting capital into key financial institutions, implementing 

programs to address problems in the securitization markets, providing assistance to the 

automobile industry, and offering incentives for modifying residential mortgages.

EESA provided GAO with broad oversight authorities for actions taken under TARP and 

included a provision that GAO report at least every 60 days on TARP activities and 

performance.3 As a result, we have continued to monitor and provide updates on TARP 

programs.4 This 60-day report provides an update on the status of Treasury’s returns on

 1

Pub. L. No. 110-343, tit. I, 122 Stat. 3765, 3767-3780 (codified as amended at 12 U.S.C. §§ 5211-5241).

2

Pub. L. No. 111-203, § 1302, 124 Stat. 1376, 2133 (2010) (codified at 12 U.S.C. §5225(a)).

3

Section 116 of EESA, 122 Stat. at 3783-3786 (codified at 12 U.S.C. § 5226).

4

See, for example, our recent reports on TARP programs: GAO, Troubled Asset Relief Program: Status of GAO 

Recommendations, GAO-15-813 (Washington, D.C.: Sept. 4, 2015); Troubled Asset Relief Program: Treasury Could 

More Consistently Analyze Potential Benefits and Costs of Housing Program Changes, GAO-15-670 (Washington, 

D.C.: July 6, 2015); Community Development Capital Initiative: Status of the Program Investments and Participants, 

GAO-15-542 (Washington, D.C.: May 5, 2015); Troubled Asset Relief Program: Treasury Continues to Wind down 

Most Programs, but Housing Programs Remain Active, GAO-15-197 (Washington, D.C.: Jan. 6, 2015); Financial 

Audit: Office of Financial Stability (Troubled Asset Relief Program) Fiscal Years 2014 and 2013 Financial Statements, 

GAO-15-132R (Washington, D.C.: Nov. 7, 2014); and Troubled Asset Relief Program: Treasury Could Better Analyze 

Data to Improve Oversight of Servicers’ Practices, GAO-15-5 (Washington, D.C.: Oct. 6, 2014).
Page 2 GAO-16-91R TARP: Status of Remaining Investment Programs

investment and participation for TARP investment programs that were winding down as of 

August 31, 2015. Specifically, this report looks at 

• the Capital Purchase Program (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 

stock5 and

• the Community Development Capital Initiative (CDCI), which was designed to provide 

capital to Community Development Financial Institutions (CDFI) by purchasing preferred 

shares and subordinated debentures.

6

Scope and Methodology

We defined TARP programs that were winding down as those that were closed to additional 

participants but have participants that had not exited the program. We reviewed relevant 

documentation from Treasury—such as its Monthly Report to Congress and Monthly TARP 

Update reports, obtained information from Treasury officials, and reviewed prior TARP reports 

issued by GAO. This report contains the most recently available public data found in Treasury’s 

reports at the time of our review, including obligations and disbursements as well as number of 

participants. Generally, we used data that were current as of August 31, 2015. However, in 

some cases, the most recently available data had “as of dates” before August 31, 2015.

7 We 

determined that the financial information used in this report is sufficiently reliable to assess the 

status of CPP and CDCI based on the results of our audits of fiscal years 2009 through 2014 

financial statements for TARP. As part of the financial statement audits, we tested OFS’s 

internal controls over financial reporting. We conducted this performance audit from September 

2015 through November 2015 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.

Summary

As of August 31, 2015, two investment programs—CPP and CDCI—were winding down.

8

Combined, Treasury’s total investment for these programs was almost $206 billion and the 

 5

Preferred shares are a class of ownership in a corporation that generally has a higher claim on the assets and 

earnings than common stock. A warrant is an option to buy shares of common stock or preferred stock at a 

predetermined price on or before a specified date. 

6

CDFIs are financial institutions that provide financing and related services to communities and populations that lack 

access to credit, capital, and financial services. Although CDFIs include banks, thrifts, credit unions, loan funds, and 

venture capital funds, only institutions that have a federal banking or credit union regulator (i.e., banks, thrifts, and 

credit unions) could apply for CDCI assistance. Subordinated debentures are bonds whose claim on income and 

assets of the issuer in the event of default or if the issuer files for bankruptcy is ranked below the claims of senior 

bondholders, but above all classes of equity.

7

GAO’s financial statement audit of Treasury’s Office of Financial Stability, planned to be issued in November 2015, 

will provide more complete information on TARP programs. 

8

GAO defines “winding down” as TARP programs closed to additional participants but have participants that had not 

exited the program.
Page 3 GAO-16-91R TARP: Status of Remaining Investment Programs

outstanding investments (the amount Treasury has disbursed that participants owe) at the end 

of August 2015 totaled about $0.73 billion. Enclosures 1 and 2 provide details of these two 

programs. 

• CPP: Treasury’s total investment for this program was about $205 billion; by December 

2009, Treasury had disbursed all funds to 707 financial institutions nationwide. As of 

August 31, 2015, Treasury had received about $227 billion in repayments and income 

from its CPP investments and sales of original CPP investments, exceeding the amount 

originally disbursed by about $22 billion. Its outstanding investment balance stood at 

about $0.27 billion, and 20 institutions remained in the program. 

• CDCI: Treasury’s total investment for this program was approximately $0.57 billion for 84 

institutions. By September 2010, Treasury had disbursed $0.21 billion and approximately 

$0.36 billion represented exchanges by banks of investments under CPP into CDCI. As 

of August 31, 2015, Treasury had received approximately $0.16 billion in repayments 

and income from CDCI participants. The outstanding investment balance was $0.46 

billion, and 63 institutions remained in the program. 

Agency Comments

We provided Treasury with a draft copy of this report for review and comment. Treasury 

provided technical comments that we have incorporated as appropriate.

We are sending copies of this report to the appropriate congressional committees. This report 

will also be available at no charge on our website at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact Daniel Garcia-Diaz at 

(202) 512-8678 or garciadiazd@gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. In addition to the 

contact named above, Karen Tremba, Assistant Director; Anne Akin, Analyst-in-Charge; Emily 

Chalmers; William Chatlos; Rachel DeMarcus; and Marc Molino made key contributions to this 

report.

Daniel Garcia-Diaz 

Director 

Financial Markets and 

Community Investment

Enclosures – 2
Page 4 GAO-16-91R TARP: Status of Remaining Investment Programs

List of Congressional Committees

The Honorable Thad Cochran

Chairman 

The Honorable Barbara A. Mikulski 

Vice Chairwoman 

Committee on Appropriations 

United States Senate

The Honorable Richard Shelby

Chairman 

The Honorable Sherrod Brown

Ranking Member 

Committee on Banking, Housing, and Urban Affairs 

United States Senate

The Honorable Mike Enzi

Chairman 

The Honorable Bernie Sanders

Ranking Member 

Committee on the Budget 

United States Senate

The Honorable Orrin G. Hatch

Chairman 

The Honorable Ron Wyden

Ranking Member 

Committee on Finance 

United States Senate

The Honorable Harold Rogers

Chairman 

The Honorable Nita Lowey

Ranking Member 

Committee on Appropriations 

House of Representatives

The Honorable Tom Price

Chairman

The Honorable Chris Van Hollen

Ranking Member 

Committee on the Budget 

House of Representatives

The Honorable Jeb Hensarling

Chairman 

The Honorable Maxine Waters

Ranking Member 

Committee on Financial Services 

House of Representatives
Page 5 GAO-16-91R TARP: Status of Remaining Investment Programs

The Honorable Sam Johnson

Acting Chairman 

The Honorable Sander M. Levin

Ranking Member 

Committee on Ways and Means

House of Representatives
Page 6 GAO-16-91R TARP: Status of Remaining Investment Programs

Congressional Committees

Status

Treasury continues to wind down the Capital Purchase Program (CPP), 

and as of August 2015 repayments and income had exceeded the total 

amount of original outlays. Treasury disbursed almost $205 billion to 707 

financial institutions nationwide from October 2008 through December 

2009. As of August 31, 2015, Treasury had received about $227 billion in 

repayments and income from its CPP investments, exceeding the amount 

originally disbursed by about $22 billion. The repayments and income 

amounts included almost $200 billion in repayments and sales of original 

CPP investments, as well as about $12 billion in dividends and interest, 

almost $7 billion in proceeds in excess of costs, and about $8 billion from 

the sale of warrants (see fig.1). After accounting for write-offs and realized 

losses from sales totaling about $5 billion, CPP had about $0.27 billion in 

outstanding investments as of August 31, 2015.Treasury estimated a 

lifetime income of about $16 billion for CPP as of June 30, 2015.

Figure 1: Status of the Capital Purchase Program (CPP) as of August 31, 2015

a

End date is the date on which the program stopped acquiring new assets and no longer received 

funding. 

b

The total amount of repayments includes $363 million from institutions that transferred to the 

Community Development Capital Initiative and $2.2 billion from institutions that transferred to the 

Small Business Lending Fund.

c

Figure as of June 30, 2015. 

Background

CPP was created to help stabilize 

the financial markets and banking 

system by providing capital to 

financially viable and regulated 

financial institutions and was the 

largest investment program 

initiated under TARP. 

The program started in October 

2008 and was closed to new 

participants in December 2009. 

Qualified financial institutions were 

eligible to receive an investment of 

1 percent to 3 percent of their riskweighted assets, up to a maximum 

of $25 billion. In exchange for the 

investment, Treasury generally 

received senior preferred shares 

that would pay dividends and 

warrants to purchase shares of 

common or preferred stock. Since 

the end of 2014, all of the 

institutions with outstanding 

preferred share investments have 

been required to pay dividends at a 

9 percent rate, rather than the 5 

percent rate that had been in place 

for the previous 5 years. 

Institutions are allowed to repay 

CPP investments with the approval 

of their primary federal bank 

regulator and afterward to 

repurchase warrants.

For more information, contact Daniel GarciaDiaz at (202) 512-8678 or 

garciadiazd@gao.gov

TROUBLED ASSET RELIEF PROGRAM

Capital Purchase Program

Enclosure 1
Page 7 GAO-16-91R TARP: Status of Remaining Investment Programs
Page 8 GAO-16-91R TARP: Status of Remaining Investment Programs

Congressional Committees

Status

Treasury continues to manage the Community Development Capital 

Initiative (CDCI), which is closed to new investments. Treasury’s total 

investment for this program was approximately $0.57 billion for 84 

institutions. Treasury disbursed $0.21 billion through CDCI from February

through September 2010 (see fig. 4). In addition, approximately $0.36 

billion represented exchanges by banks of investments under the Capital 

Purchase Program (CPP) into CDCI. As of August 31, 2015, Treasury had 

received approximately $0.16 billion in principal repayments and dividend 

income from CDCI participants, and the program’s outstanding investment 

balance stood at $0.46 billion. As of the same date, Treasury had written 

off approximately $0.01 billion and CDCI participants had paid 

approximately $0.05 billion in dividends. Treasury has lowered its 

estimates of the program’s lifetime cost over the last 4 years as market 

conditions have improved and institutions have begun to repay their 

investments. In November 2010, for instance, Treasury had estimated the 

program’s lifetime cost at about $0.29 billion, but as of June 30, 2015, 

estimated lifetime costs stood at $0.09 billion.

Figure 4: Status of the Community Development Capital Initiative (CDCI) as of 

August 31, 2015

Note: Treasury began holding common stock for CDCI on October 28, 2011 after entering into an 

agreement with one institution to convert all of its preferred stock held by Treasury for common stock.

a

Treasury first announced CDCI in October 2009. The program first provided capital to CDFIs in 2010. 

b

End date is the date on which the program stopped acquiring new assets and no longer received 

funding. 

c

Figure as of June 30, 2015. 

As of August 31, 2015, 63 of the original 84 CDCI institutions remained in 

the program (see fig. 5). Of the 21 institutions that had exited the program, 

Background

Treasury created CDCI to help 

mitigate the adverse impacts of the 

financial crisis on communities 

underserved by traditional banks. 

CDCI provided capital to certain 

Community Development Financial 

Institutions, including banks, thrifts, 

and credit unions, which offer 

financial services to low- and 

moderate-income, minority, and 

underserved communities.

Treasury announced the program 

in October 2009 and it was closed 

to new participants in September

2010. 

For more information, contact Daniel GarciaDiaz at (202) 512-8678 or 

garciadiazd@gao.gov

TROUBLED ASSET RELIEF PROGRAM

Community Development Capital Initiative

Enclosure 2
Page 9 GAO-16-91R TARP: Status of Remaining Investment Programs

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Page 10 GAO-16-91R TARP: Status of Remaining Investment 

Programs

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 11 GAO

-16-91R TARP: Status of Remaining Investment 

Programs