GOVERNMENT 

SUPPORT FOR BANK 

HOLDING 

COMPANIES

Statutory Changes to 

Limit Future Support 

Are Not Yet Fully 

Implemented

Report to Congressional Requesters

November 2013

GAO-14-18

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-18, a report to 

congressional requesters

November 2013

GOVERNMENT SUPPORT FOR BANK HOLDING 

COMPANIES

Statutory Changes to Limit Future Support Are Not 

Yet Fully Implemented 

Why GAO Did This Study

The federal government extended 

unprecedented support to financial 

institutions to stabilize financial 

markets during the financial crisis. 

While these actions helped to avert a 

more severe crisis, they raised 

questions about the appropriate scope 

of government safety nets for financial 

institutions. GAO was asked to review 

the benefits that large bank holding 

companies (those with more than $500 

billion in assets) have received from 

actual and implied government 

support. 

This is the first of two reports GAO will 

issue on this topic. This report 

examines (1) actual government 

support for banks and bank holding 

companies during the financial crisis, 

and (2) recent statutory and regulatory 

changes related to government support

for banks and bank holding companies. 

GAO reviewed relevant statutes, 

regulations, and agency documents; 

analyzed program transaction data; 

and interviewed regulators, 

representatives of financial institutions, 

and academics. In a second report to 

be issued in 2014, GAO will examine 

any funding or other economic 

advantages the largest bank holding 

companies have received as a result of 

implied government support.

What GAO Recommends

GAO recommends that the Federal 

Reserve Board establish timeframes 

for completing its process for drafting 

procedures related to its emergency 

lending authority to ensure timely 

compliance with Dodd-Frank Act 

requirements. The Federal Reserve 

Board accepted this recommendation. 

What GAO Found

During the 2007-09 financial crisis, the federal government’s actions to stabilize 

the financial system provided funding support and other benefits to bank holding 

companies and their subsidiaries. Agencies introduced new programs with 

broad-based eligibility that provided funding support to eligible institutions, which 

included entities that were part of a bank holding company and others. Programs 

that provided the most significant support directly to bank holding companies or 

their subsidiaries included Department of the Treasury capital investment 

programs, Federal Reserve System lending programs, and Federal Deposit 

Insurance Corporation (FDIC) guarantee programs. Together these actions 

helped to stabilize financial conditions, while participating firms also accrued 

benefits specific to their own institutions, such as liquidity benefits from programs 

that allowed them to borrow at longer maturities and at interest rates that were 

below possible market alternatives. At the end of 2008, program use—measured 

for each institution as the percentage of total assets supported by the 

programs—was higher on average for banks and bank holding companies with 

$50 billion or more in total assets than for smaller firms. The six largest bank 

holding companies were significant participants in several emergency programs 

but exited most by the end of 2009. Differences in program use were driven in 

part by how institutions funded themselves. For example, while smaller banks 

relied more on deposit funding, larger bank holding companies relied more on 

short-term funding markets and participated more in programs that assisted 

these markets. In addition to these programs, the Board of Governors of the 

Federal Reserve System (Federal Reserve Board) granted several regulatory 

exemptions to allow banks to provide liquidity support to their nonbank affiliates 

and for other purposes. Finally, government assistance to individual troubled 

firms benefited these firms, their counterparties, and the financial system.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank 

Act) contains provisions that aim to modify the scope of federal safety nets, 

restrict future government support and strengthen regulatory oversight for the 

banking sector, but implementation is incomplete and the effectiveness of some 

provisions remains uncertain. Agencies have finalized certain changes to 

traditional safety nets for insured banks, but impacts of provisions to limit the 

scope of transactions that benefit from these safety nets will depend on how they 

are implemented. The act also places restrictions on emergency authorities used 

by regulators during the crisis to assist financial firms. For example, it prohibits 

the use of these authorities to rescue a specific failing firm. The Federal Reserve 

Board is required by the act to establish policies and procedures implementing 

changes to its emergency authority under Section 13(3) of the Federal Reserve 

Act, but it has not completed its process for drafting the required procedures or 

set time frames for doing so. Setting time frames could help ensure more timely 

completion of these procedures. FDIC has made progress toward implementing 

its new authority under the Dodd-Frank Act to resolve a large failing firm. FDIC 

continues to work to address potential obstacles to the viability of its resolution 

process as an alternative to bankruptcy, such as challenges that could arise 

when resolving more than one failing firm. Finally, the Federal Reserve Board

has finalized certain enhanced prudential standards for the largest financial firms

intended to reduce the risks these firms could pose to the financial system.

View GAO-14-18. For more information, 

contact Lawrance Evans, Jr. at (202) 512-

4802 or EvansL@gao.gov.
Page i GAO-14-18 Government Support for Bank Holding Companies

Letter 1 

Background 4

Government Actions to Stabilize Markets Resulted in Significant 

Support to Bank Holding Companies 12

Dodd-Frank Aims to Restrict Future Government Support, but 

Implementation Is Incomplete and Effectiveness Remains 

Uncertain 42

Conclusions 58

Recommendation for Executive Action 60

Agency Comments and Our Evaluation 60

Appendix I Objectives, Scope and Methodology 63

Appendix II Overview of Selected Federal Government Programs That 

Provided Emergency Funding Support to Banking Entities 

during the 2007-2009 Financial Crisis 68

Appendix III Methodology for Analysis of Pricing and Terms for Financial 

Stability Programs 75

Appendix IV Use of Financial Stability Programs by Banking 

Organizations of Different Sizes 78

Appendix V Comments from the Board of Governors of the Federal 

Reserve System 97

Appendix VI Comments from the Department of the Treasury 99

Appendix VII GAO Contact and Staff Acknowledgments 100

Contents 
Page ii GAO-14-18 Government Support for Bank Holding Companies

Tables

Table 1: Overview of Largest Emergency Programs That Provided 

General Funding Support to Bank Holding Companies or 

Their Subsidiaries 14

Table 2: Pricing Terms for Commercial Paper Funding Facility 26

Table 3. Numbers and average assets of banking organizations in 

analysis sample by size and quarter, June 30, 2008 to 

December 31, 2012. 80

Table 4: Participation Rates and Average Loan Amounts 

Outstanding as a Percent of Assets at Quarter-End for 

Participating Banking Organizations for CPFF, PDCF, 

TAF, and TSLF, June 30, 2008 through December 31, 2009 83

Table 5: Participation Rates and Average Investment Amounts 

Outstanding as a Percentage of Assets at Quarter-End for 

Participating Banking Organizations for CPP and TIP, 

December 31, 2008 to December 31, 2012 86

Table 6: Participation Rates in DGP and TAGP and Average DGPGuaranteed Debt and TAGP-Guaranteed Deposits 

Outstanding as a Percentage of Assets at Quarter-End for 

Participating Banking Organizations, December 31, 2008, 

through December 31, 2012 89

Table 7. Average outstanding amounts of equity provided, loans 

provided, and liabilities guaranteed by emergency 

programs for select bank holding companies and for 

banking organizations by size at year end, 2008-2012. 91

Figures

Figure 1. Emergency Capital Program Subsidy Estimates 28

Figure 2: Section 23A Exemptions for Firms by Total Assets, 2000-

2011 33

Figure 3: Average CPFF, PDCF, TAF, and TSLF Loan Amounts 

Outstanding as a Percentage of Assets at Quarter-End for 

Banking Organizations by Size, June 30, 2008, through 

December 31, 2012. 82

Figure 4: Average CPP and TIP Investment Amounts Outstanding 

as a Percentage of Assets at Quarter-End for All Banking 

Organizations by Size, December 31, 2008 through 

December 31, 2012. 85

Figure 5: Average DGP-Guaranteed Debt and TAGP-Guaranteed 

Deposits Outstanding as a Percentage of Assets at 
Page iii GAO-14-18 Government Support for Bank Holding Companies

Quarter-End for All Banking Organizations by Size,

December 31, 2008, through December 31, 2012 88

Abbreviations

ABCP asset-backed commercial paper

ABS asset-backed securities

AMLF Asset-Backed Commercial Paper Money Market Mutual 

Fund Liquidity Facility

BEA Bureau of Economic Analysis

CBO Congressional Budget Office

CDCI Community Development Capital Initiative

CDS credit default swaps

COP Congressional Oversight Panel

CPFF Commercial Paper Funding Facility

CPP Capital Purchase Program

DGP Debt Guarantee Program

EESA Emergency Economic Stabilization Act of 2008

FDIC Federal Deposit Insurance Corporation

FHLB Federal Home Loan Bank

FOMC Federal Open Market Committee

FRBNY Federal Reserve Bank of New York

FSOC Financial Stability Oversight Council

GSE government-sponsored enterprise

IDI insured depository institution

ILC industrial loan corporation

LIBOR London Interbank Offered Rate

MBS mortgage-backed securities

MMMF money market mutual fund

NIC National Information Center

OCC Office of the Comptroller of the Currency
Page iv GAO-14-18 Government Support for Bank Holding Companies

OIS overnight indexed swap

OLA Orderly Liquidation Authority

PDCF Primary Dealer Credit Facility 

SPOE Single Point-of-Entry

TAF Term Auction Facility

TAGP Transaction Account Guarantee Program

TALF Term Asset-Backed Securities Loan Facility

TARP Troubled Asset Relief Program

TIP Targeted Investment Program

TLGP Temporary Liquidity Guarantee Program

TSLF Term Securities lending Facility

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Page 1 GAO-14-18 Government Support for Bank Holding Companies

441 G St. N.W.

Washington, DC 20548

November 14, 2013

The Honorable Sherrod Brown

Chairman

Financial Institutions and Consumer Protection Subcommittee

Committee on Banking, Housing, and Urban Affairs

United States Senate

The Honorable David Vitter

United States Senate

During the financial crisis of 2007-2009, the federal government extended 

unprecedented amounts of assistance to financial institutions to stabilize 

financial markets and the broader economy. This support included the 

creation of temporary programs that extended more than $1 trillion in 

loans, provided hundreds of billions of dollars of capital, and guaranteed 

hundreds of billions of dollars of other liabilities for participating financial 

institutions. On a few occasions, the federal government provided 

additional capital and other support to individual large troubled institutions 

to prevent a bankruptcy that could have further destabilized markets.

While these government interventions helped to avert a more severe 

crisis, they raised questions about moral hazard and the appropriate 

scope of government safety nets for financial institutions.1 In particular, 

extraordinary support for troubled financial institutions led to debate about 

how to decrease the likelihood of future rescues of failing institutions and 

limit the potential for federal safety nets intended for insured depository 

institutions to provide a backstop for activities conducted outside these 

institutions.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act) includes provisions intended to prevent government rescues of 

individual financial institutions, place new restrictions on emergency 

authorities used by regulators to assist financial institutions during the last 

financial crisis, and subject a designated group of large financial 

institutions to stricter regulatory oversight, among other changes.2

 

1

Moral hazard can occur when market participants expect similar emergency actions in 

future crises, thereby weakening their incentives to properly manage risks. 

2

Pub. L. No. 111-203, 124 Stat. 1376 (2010).

 
 

Page 2 GAO-14-18 Government Support for Bank Holding Companies

Nevertheless, market observers have continued to debate whether some 

of the largest and most complex financial institutions—including bank 

holding companies with more than $500 billion in total consolidated 

assets—may continue to benefit from expectations of extraordinary 

government support that could potentially give them funding and other 

economic advantages relative to smaller competitors.

You asked us to review the economic benefits that the largest bank 

holding companies (those with more than $500 billion in total consolidated 

assets) have received as a result of actual or perceived government 

support. This is the first of two reports we will issue on this topic. In this 

report, we review (1) support banks and bank holding companies 

received as a result of government efforts to stabilize financial markets 

during the financial crisis of 2007-2009, and (2) recent statutory and 

regulatory changes related to government support for banks and bank 

holding companies and factors that could impact the effectiveness of 

these changes. In terms of scope, the first section of this report 

addresses benefits that bank holding companies and their subsidiaries 

received during the crisis from actual government support provided 

through emergency actions taken. It does not address benefits that some 

institutions may have received and may continue to receive from 

perceived government support—that is, support that market participants 

may expect the federal government to provide to these institutions in the 

event that they face large losses that threaten them with failure. In a 

second report to be issued in 2014, we will address questions about 

whether the largest bank holding companies have received funding or 

other economic advantages as a result of expectations that the 

government would not allow them to fail. That report will include the 

results of our original empirical analysis of funding costs for large bank 

holding companies.

To address the objectives for this report, we reviewed relevant statutes, 

regulations, agency documents and data, related studies, and prior GAO 

work. To describe government actions that extended support for banks 

and bank holding companies during the crisis, we included information 

and analyses from prior GAO work on the Troubled Asset Relief Program 

(TARP), the emergency programs of the Board of Governors of the 

Federal Reserve System (Federal Reserve Board), and other emergency 

assistance provided to the banking sector. To obtain perspectives on the 

benefits that bank holding companies and their subsidiaries received from 

emergency government actions, we reviewed papers by staff of financial 

regulators and other experts and interviewed federal financial regulators, 

representatives of bank holding companies that received emergency
 

Page 3 GAO-14-18 Government Support for Bank Holding Companies

government assistance, trade associations, and academics. To describe 

the amount of funding support that institutions of various sizes received 

from emergency government programs, we obtained and analyzed 

program transaction data for the programs introduced by the Department 

of the Treasury (Treasury), the Federal Reserve Board, and the Federal 

Deposit Insurance Corporation (FDIC) that provided the most significant 

funding support directly to bank holding companies or their subsidiaries. 

For selected programs, we compared the terms of this assistance (such 

as interest rates and fees) to indicators of pricing for market alternatives 

that might have been available to program participants. While this 

analysis provides a measure of program pricing versus potential market 

alternatives, it does not produce a precise quantification of the benefits 

that accrued to participating financial institutions. To compare the extent 

to which banking organizations of various sizes used these emergency 

programs, we calculated the percentage of banking organization assets 

that were supported by emergency programs—either through capital 

injections, loans, or guarantees—at quarter-end dates for 2008 through 

2012. Finally, we obtained and analyzed Federal Reserve Board 

documentation of Federal Reserve Board decisions to grant exemptions 

to Section 23A of the Federal Reserve Act and approve applications from 

financial companies to convert to bank holding company status.3

Our scope did not include an analysis of any benefits that banks or bank 

holding companies may have received from any expectations of future 

government support. As discussed earlier, we will cover any benefits to 

banking entities from perceived government support in our second report.

For parts of our work that involved the analysis of computer-processed 

data, such as transaction data for the agencies’ emergency programs, we 

assessed the reliability of these data and determined that they were 

sufficiently reliable for our purposes. Appendix I contains additional 

information about the data sources used and our assessment of the 

reliability of these data. Appendices III and IV contain additional 

information about our methodology for the data analyses in our first 

objective.

To address our second objective, we reviewed information on statutory 

and regulatory changes related to the authority to provide government 

support for banks and bank holding companies, including prior GAO work 

 

3

Pub. L. No. 63-43, § 23A, 38 Stat. 251, 272 (1913) (12 U.S.C. § 371c).
 

Page 4 GAO-14-18 Government Support for Bank Holding Companies

on implementation of the Dodd-Frank Act. To update the status of 

agencies’ efforts to implement these changes, we reviewed agencies’ 

proposed and final rules, and interviewed staff from FDIC, the Federal 

Reserve Board, the Office of the Comptroller of the Currency (OCC), and 

Treasury. We identified statutory provisions or requirements that agencies 

had not fully implemented and interviewed agency staff about planned 

steps to complete implementation. We also reviewed relevant 

congressional testimonies and other public statements by agency 

officials. To describe factors that could impact the effectiveness of these 

provisions, we reviewed prior GAO work on the potential impacts of 

Dodd-Frank Act provisions. To obtain additional perspectives on factors 

that could impact the effectiveness of these provisions, we interviewed 

and reviewed the public statements and analyses of agency officials, 

academics, and market experts. Appendix I contains additional 

information on our scope and methodology.

We conducted this performance audit from January 2013 through 

November 2013 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.

Bank holding companies are companies that own or control one or more 

banks. In the United States, most banks insured by FDIC are owned or 

controlled by a bank holding company. In addition to bank subsidiaries 

engaged in traditional banking activities of deposit-taking and lending, 

many U.S. bank holding companies also own or control nonbank 

subsidiaries, such as broker-dealers and insurance companies. The Bank 

Holding Company Act of 1956, as amended, establishes the legal 

framework under which bank holding companies operate and establishes 

their supervision, with the Federal Reserve Board having authority over 

bank holding companies and their banking and nonbanking interests.4

 

4

Pub. L. No. 84-511, 70 Stat. 133 (codified at 12 U.S.C. §§ 1841-1852). 

Background 

Bank Holding Companies
 

Page 5 GAO-14-18 Government Support for Bank Holding Companies

The Bank Holding Company Act also limits the types of activities that 

bank holding companies may conduct, either directly or through their 

nonbank affiliates. The restrictions, which are designed to maintain the 

general separation of banking and commerce in the United States, allow 

bank holding companies to engage only in banking activities and those 

activities that the Federal Reserve Board has determined to be “closely 

related to banking,” such as extending credit, servicing loans, and 

performing appraisals of real estate and tangible and intangible personal 

property, including securities.5 Under amendments to the Bank Holding 

Company Act made by the Gramm-Leach-Bliley Act, also known as the 

Financial Services Modernization Act of 1999, a bank holding company 

can elect to become a financial holding company that can engage in a 

broader range of activities that are financial in nature.6 The GrammLeach-Bliley Act defined a set of activities as financial in nature and 

authorized the Federal Reserve Board, with the agreement of Treasury, 

to determine whether an additional activity is financial in nature or 

incidental or complementary to a financial activity.7 For example, financial 

holding companies are permitted to engage in securities underwriting and 

dealing, but would be prohibited, for example, from selling commercial 

products. Large U.S. bank holding companies typically are registered as 

financial holding companies and own a number of domestic bank 

subsidiaries, as well as nonbank and foreign subsidiaries.

The largest U.S. bank holding companies have grown substantially in size 

and scope in recent decades. Since 1990, in part due to waves of 

mergers, the share of total bank holding company assets controlled by 

the largest 10 firms increased from less than 30 percent to more than 60 

 

5

§ 4(c)(6), 70 Stat. at 137 (codified at 12 U.S.C. § 1843(k)(4)(F)). 

6

Pub. L. No. 106-102, 113 Stat. 1338 (1999) (codified in scattered sections of 12, 15 

U.S.C). In order to be a financial holding company: (1) all depository institutions controlled 

by the bank holding company must be and remain well capitalized; (2) all depository 

institutions controlled by the bank holding company must be and remain well managed; 

and (3) the bank holding company must have made an effective election to become a 

financial holding company. 12 C.F.R. § 225.81(b).

7

§ 103(a), 113 Stat. at 1342 (codified at 12 U.S.C. § 1843(k)). The financial holding 

company can engage in activities that the Federal Reserve Board determines (1) are 

financial in nature or incidental to such financial activity, or (2) are complementary to a 

financial activity and do not pose a substantial risk to the safety and soundness of 

depository institutions or the financial system generally. Id.
 

Page 6 GAO-14-18 Government Support for Bank Holding Companies

percent, as of July 2012.

8 Some bank holding companies grew to become 

large financial conglomerates that offer a wide range of products that cut 

across the traditional financial sectors of banking, securities, and 

insurance. Following the enactment of the Gramm-Leach-Bliley Act in 

1999, the assets held in nonbank subsidiaries or at the holding company 

level grew to account for a progressively larger share of total bank holding 

company assets. Greater involvement by bank holding companies in 

nontraditional banking businesses has been accompanied by an increase 

in the proportion of bank holding company income that is generated by 

fee income, trading, and other noninterest activities. As large bank 

holding companies have broadened the scope of their activities and their 

geographic reach, they have become more organizationally complex. A 

simple indicator of organizational complexity is the number of separate 

legal entities within the bank holding company; the largest four U.S. bank 

holding companies each had at least 2,000 as of June 30, 2013.9

The 2007-2009 financial crisis raised concerns that some U.S. bank 

holding companies—as well as some nonbank financial institutions—had 

grown so large, interconnected, and leveraged that their failure could 

threaten the stability of the U.S. financial system and the global economy.

The Dodd-Frank Act includes several provisions intended to reduce the 

risk of a failure of a large, complex financial institution, the damage that 

such a failure could do to the economy, and the likelihood that a failing 

institution would receive government support. For example, the act directs 

the Federal Reserve Board to impose enhanced prudential standards and 

oversight on bank holding companies with $50 billion or more in total 

consolidated assets and nonbank financial companies designated by the 

 

8

An important factor contributing to merger activity was a statutory change removing 

barriers to geographic expansion by banks. The Riegle-Neal Interstate Banking and 

Branching Efficiency Act of 1994 authorized interstate mergers between adequately 

capitalized and managed banks starting in June 1997, regardless of whether the 

transaction would be prohibited by state law, though states had the right to opt out of that 

arrangement if they passed legislation prior to June 1997 prohibiting merger transactions 

with out-of-state banks. Pub. L. No. 103-328, 108 Stat. 2338 (codified at scattered 

sections of 12 U.S.C.). Previously, most banks that wanted to operate across state lines 

had to establish a bank holding company and, with certain restrictions, acquire or charter 

a bank in each state in which they wanted to operate. With the advent of interstate 

branching, banks that previously were not permitted to expand across state lines could do 

so by acquiring existing banks, and some multistate bank holding companies could 

consolidate their operations into a single bank with multistate branches.

9

One limitation of this indicator is that some legal entities may be vehicles for tax purposes 

and therefore may not result in a significant increase in organizational complexity.
 

Page 7 GAO-14-18 Government Support for Bank Holding Companies

Financial Stability Oversight Council (FSOC) for supervision by the 

Federal Reserve Board.10

The federal government maintains programs—frequently referred to as 

safety nets—to reduce the vulnerability of depository institutions to runs 

that could threaten the health of the banking system and the broader 

economy.11 Following a series of banking crises in the early 1900s, the 

government created two programs generally considered to form the core 

of these safety nets: the Federal Reserve System’s discount window and 

FDIC deposit insurance. By making emergency liquidity available to 

solvent depository institutions through the discount window and reducing 

incentives for depositors to withdraw their funds, these safety nets were 

intended to help ensure that depository institutions could continue to lend 

and provide other important services, even during turbulent economic 

conditions. In addition to the discount window and deposit insurance, the 

Federal Reserve Board and FDIC have other emergency authorities 

related to maintaining financial stability. Moreover, the Federal Home 

Loan Bank System serves to provide liquidity to the banking system that

helps to foster stability. In part because access to federal safety nets 

potentially reduced incentives for insured depositors to monitor and 

restrain the risk-taking of banks, banks were also subjected to federal 

supervision and regulation.

The Federal Reserve System, in its role as the lender of last resort, 

operates discount window programs, which provide a backup source of 

liquidity through collateralized loans for depository institutions to help 

ensure the stable flow of credit to households and businesses.12 During 

normal market conditions, banks and other depository institutions in 

generally sound financial condition can obtain discount window loans to 

address short-term funding needs arising from unexpected funding 

 

10Pub. L. No. 111-203, § 165, 124 Stat. 1376, 1423 (2010) (codified at 12 U.S.C. § 5365). 

11This inherent vulnerability arises from the role of banks in using deposits that are 

available upon demand to fund long-term, illiquid loans. 

12The Federal Reserve System consists of the Federal Reserve Board—a federal 

agency—and 12 regional Reserve Banks. The Federal Reserve Board has delegated 

some of its responsibilities for supervision and regulation to the Reserve Banks. The 

Federal Reserve Act authorizes the Reserve Banks to make discount window loans to the 

extent authorized by the Federal Reserve Board. Pub. L. No. 63-43, §§ 10B, 13, 38 Stat. 

251 (codified at of 12 U.S.C. §§ 347b(a), 343). 

Federal Safety Net 

Programs for the Banking 

Sector 

Discount Window
 

Page 8 GAO-14-18 Government Support for Bank Holding Companies

pressures. In a financial crisis, discount window lending can provide 

broader liquidity support to the banking system that can help mitigate 

strains in financial markets. The Federal Reserve Board authorizes the 

Reserve Banks to offer three discount window programs to depository 

institutions: primary credit, secondary credit, and seasonal credit, each 

with its own terms.13 The primary credit program is the principal discount 

window program and extends credit to depository institutions in generally 

sound condition on a very short-term basis (usually overnight). The 

secondary credit program is available to extend credit on a very shortterm basis for depository institutions that are not eligible for primary 

credit, with the purpose of helping institutions to return to market sources 

of funds. The seasonal credit program generally extends loans to small 

depository institutions that face seasonal fluctuations in their funding 

needs. Section 10B of the Federal Reserve Act provides the statutory 

framework for these programs and, among other things, requires all 

discount window loans to be secured to the satisfaction of the lending 

Reserve Bank.14

FDIC deposit insurance covers deposit accounts—including checking and 

savings accounts, money market deposit accounts, and certificates of 

deposit—at insured depository institutions up to the insurance limit and is 

backed by the full faith and credit of the U.S. government. Federal deposit 

insurance was created to reduce the incentive for depositors to withdraw 

funds from banks during a financial panic and maintain stability and 

confidence in the nation’s banking system. During the 1800s and early 

1900s, a number of states adopted different versions of deposit insurance 

to insure bank obligations in response to a wave of bank failures.

However, these state insurance funds were later unable to cope with 

economic events during the 1920s, which led to calls for a system of 

federal deposit insurance to maintain financial stability. The Banking Act 

of 1933, which created FDIC by an amendment to the Federal Reserve 

Act, authorized FDIC to provide deposit insurance to banks and went into 

effect on January 1, 1934.15 The deposit insurance fund, administered by 

FDIC to resolve failed banks and thrifts, protects depositors from losses 

due to institution failures up to a limit. The deposit insurance fund is 

 

1312 C.F.R. § 201.4(a)-(c).

1412 U.S.C. § 347b(a). 

15Pub. L. No. 73-66, 48 Stat. 162 (codified in scattered sections of 12 U.S.C.). The 

Banking Act of 1933 is also known as the Glass-Steagall Act. 

Deposit Insurance
 

Page 9 GAO-14-18 Government Support for Bank Holding Companies

primarily funded by fees from assessments on insured depository 

institutions. If necessary, FDIC can borrow from Treasury, the Federal 

Financing Bank, and the Federal Home Loan Banks. As discussed later in 

this report, the Dodd-Frank Act permanently increased the deposit 

insurance limit from $100,000 to $250,000 and changed the base used to 

determine an insured depository institution’s risk-based assessment to be 

paid into the deposit insurance fund.16

In addition to the discount window and deposit insurance, during the 

2007-2009 financial crisis the Federal Reserve Board and FDIC used 

their emergency authorities to assist individual failing institutions. As 

discussed later in this report, the Dodd-Frank Act changed these 

authorities so that emergency lending can no longer be provided to assist 

a single and specific firm but rather can only be made available through a 

program with broad-based eligibility—that is, a program that provides 

funding support to institutions that meet program requirements and 

choose to participate.17

• Federal Reserve emergency lending authority. Prior to the DoddFrank Act, emergency lending authority under Section 13(3) of the 

Federal Reserve Act permitted the Federal Reserve Board, in unusual 

and exigent circumstances, to authorize a Reserve Bank to extend 

credit to individuals, partnerships, or corporations, if the Reserve Bank 

determined that adequate credit was not available from other banking 

institutions, and if the extension of credit was secured to the 

satisfaction of the lending Reserve Bank.18 During the financial crisis 

of 2007-2009, the Federal Reserve Board invoked this authority on a 

number of occasions to authorize one or more Reserve Banks to 

provide emergency assistance to particular institutions or to establish 

new programs to provide liquidity support to important credit markets.

• FDIC open bank assistance. The FDIC Improvement Act of 1991 

included a systemic risk exception to the requirement that FDIC 

resolve failed banks using the least costly method.19 Under this 

 

16Pub. L. No. 111-203, §§ 331, 334-335, 124 Stat. 1376, 1538-40 (2010).

17§1101(a), 124 Stat. at 2113.

18Pub. L. No. 63-43, § 13(3), 38 Stat. 251 (codified at 12 U.S.C. § 343).

19Pub. L. No. 102-242, § 141, 105 Stat. 2236, 2275 (codified at 12 U.S.C. § 

1823(c)(4)(G)). 

Emergency Authorities 
 

Page 10 GAO-14-18 Government Support for Bank Holding Companies

exception, FDIC could provide assistance to a failing bank if 

compliance with its requirements to resolve the bank using the least 

costly approach would have “serious adverse effects on economic 

conditions and financial stability”—that is, would cause systemic 

risk—and if such assistance would “avoid or mitigate such adverse 

effects.”

20 FDIC could act under the exception only under a process 

that included recommendations from the FDIC Board of Directors and 

Federal Reserve Board and approval by the Treasury Secretary.21

The agencies invoked this authority during the crisis to authorize FDIC 

to provide guarantees to particular banks and to introduce new 

guarantee programs with broad-based eligibility. As discussed later in 

this report, the Dodd-Frank Act effectively removed FDIC’s authority 

to provide assistance to failing banks outside of a receivership.

The Federal Home Loan Bank (FHLB) System also serves to provide 

funding support to depository institutions during normal and strained 

market conditions. The FHLB System is a government-sponsored 

enterprise (GSE) that consists of 12 Federal Home Loan Banks (FHLB) 

and is cooperatively owned by member financial institutions, which 

include banks, thrifts, insurance companies, and credit unions. The 

primary mission of the FHLB System is to promote housing and 

community development by making loans, known as advances, to 

member financial institutions. These institutions are required to secure 

FHLB advances with high-quality collateral (such as single-family 

mortgages) and may use FHLB advances to fund mortgages. To raise the 

funds necessary to carry out its activities, the FHLB System issues debt 

in the capital markets at favorable rates compared to commercial 

borrowings due to market perceptions that the federal government would 

intervene to support the FHLB System in a crisis, thereby reducing its risk 

of default. When credit markets become strained, as they did during the 

most recent crisis, the FHLB System can serve as an important backup 

source of liquidity for member institutions that meet the FHLBs’ collateral 

and other requirements.

 

20Id.

21Id. For more information about this the systemic risk exception, see GAO, Federal 

Deposit Insurance Act: Regulators’ Use of Systemic Risk Exception Raises Moral Hazard 

Concerns and Opportunities Exist to Clarify the Provision, GAO-10-100 (Washington, 

D.C.: Apr. 15, 2010).

Federal Home Loan Bank 

System 
 

Page 11 GAO-14-18 Government Support for Bank Holding Companies

The 2007-2009 financial crisis was the most severe that the United States 

has experienced since the Great Depression. The dramatic decline in the 

U.S. housing market that began in 2006 precipitated a decline in the price 

of financial assets that were associated with housing, particularly 

mortgage-related assets based on subprime loans. Some institutions 

found themselves so exposed to declines in the values of these assets 

that they were threatened with failure—and some failed—because they 

were unable to raise the necessary capital as the value of their lending 

and securities portfolios declined. Uncertainty about the financial 

condition and solvency of financial entities led banks to dramatically raise 

the interest rates they charged each other for funds and, in late 2008, 

interbank lending effectively came to a halt. The same uncertainty also 

led money market funds, pension funds, hedge funds, and other entities 

that provide funds to financial institutions to raise their interest rates, 

shorten their terms, and tighten credit standards. As their funding became 

increasingly difficult to obtain, financial institutions responded by raising 

the prices and tightening their credit standards for lending to households 

and nonfinancial businesses. The liquidity and credit crisis made the 

financing on which businesses and individuals depend increasingly 

difficult to obtain as cash-strapped banks tightened underwriting 

standards, resulting in a contraction of credit to the economy. By late 

summer of 2008, the potential ramifications of the financial crisis included 

the continued failure of financial institutions, increased losses of individual 

wealth, reduced corporate investments, and further tightening of credit 

that would exacerbate the emerging global economic slowdown that was 

beginning to take shape.

Because financial crises can result in severe damage to the economy and 

the road to recovery can be long, governments and monetary authorities 

have historically undertaken interventions, even though some of the 

resulting actions raise concerns about moral hazard and can pose a risk 

of losses to taxpayers.22 Given its severity and systemic nature, the 

recent global financial crisis prompted substantial interventions starting in 

late 2007, after problems in the subprime mortgage market intensified. As 

discussed further in the next section of this report, these interventions

included the creation of temporary government programs to support 

 

22For a more detailed discussion of the economic losses associated with the 2007-2009 

financial crisis, see GAO, Financial Regulatory Reform: Financial Crisis Losses and 

Potential Impacts of the Dodd-Frank Act, GAO-13-180 (Washington, D.C.: Jan. 16, 2013).

2007-2009 Financial Crisis
 

Page 12 GAO-14-18 Government Support for Bank Holding Companies

important credit markets and financial institutions that intermediate credit 

in the economy by channeling funds from savers to borrowers.

From 2007 through 2009, the federal government’s actions to stabilize the 

financial system provided funding support and other benefits to bank 

holding companies and their bank and nonbank financial subsidiaries.

The Federal Reserve Board, Treasury, and FDIC introduced new 

programs with broad-based eligibility that provided funding support to 

institutions that met program requirements and chose to participate.23

Selected programs—for which eligibility was not restricted exclusively to 

institutions that were part of a bank holding company—included Federal 

Reserve System lending programs, Treasury capital investment 

programs, and FDIC programs that guaranteed uninsured deposits and 

new debt issues. Isolating the impact of individual interventions is difficult, 

but collectively these actions likely improved financial conditions by 

enhancing confidence in financial institutions and the financial system. 

Bank holding companies and their subsidiaries also accrued benefits 

specific to their own institutions, including liquidity benefits from programs 

that allowed them to borrow at lower interest rates and at longer 

maturities than might have been available in the markets. Programs 

generally were made available to institutions of various sizes, and 

differences in the use of programs by institutions of various sizes were 

driven in part by differences in how institutions funded themselves. For 

example, compared to smaller bank holding companies, larger bank 

holding companies relied less on deposits as a source of funding and 

more on short-term credit markets and participated more in programs 

created to stabilize these markets. At the end of 2008, use of these 

programs—measured for each institution as the percentage of total 

assets supported by the programs—was larger on average for larger 

banking organizations—those with $50 billion or more in total assets—

than for smaller banking organizations. The six largest bank holding 

companies were significant participants in several emergency programs 

but exited most of the programs by the end of 2009. Differences in 

program use across banking organizations of various sizes diminished as 

 

23This report focuses on those emergency programs that provided the most significant 

direct funding support to bank holding companies or their subsidiaries. As a result, we do 

not include an analysis of the Term Asset-Backed Securities Loan Facility, or the PublicPrivate Investment Partnership, among others, because these programs did not provide 

significant direct support to bank holding companies or their subsidiaries. 

Government Actions 

to Stabilize Markets 

Resulted in 

Significant Support to 

Bank Holding 

Companies 
 

Page 13 GAO-14-18 Government Support for Bank Holding Companies

institutions exited the programs. In addition to programs that provided 

broad-based support, the Federal Reserve Board granted a number of 

regulatory exemptions to allow banks to provide liquidity support to their 

nonbank affiliates and for other purposes. Finally, some large bank 

holding companies benefitted from individual institution assistance or 

regulatory relief. For example, government assistance to prevent the 

failures of large institutions benefited recipients of this assistance and 

other market participants.

During the financial crisis, the Federal Reserve System, Treasury, and 

FDIC introduced new programs with broad-based eligibility to provide 

general funding support to the financial sector and to stabilize the 

financial system. Given this report’s focus on bank holding companies, 

this section focuses on the financial stability programs that provided the 

most significant funding support directly to bank holding companies or 

their bank or nonbank subsidiaries. Table 1 provides an overview of the 

size, purpose, terms, and conditions of these programs, which included:

• the Federal Reserve System’s Term Auction Facility (TAF); Primary 

Dealer Credit Facility (PDCF); Term Securities Lending Facility 

(TSLF); and Commercial Paper Funding Facility (CPFF);

• Treasury’s Capital Purchase Program (CPP); and

• FDIC’s Temporary Liquidity Guarantee Program (TLGP), which had 

two components: the Debt Guarantee Program (DGP) guaranteed 

certain newly issued senior unsecured debt, and the Transaction 

Account Guarantee Program (TAGP) guaranteed certain previously 

uninsured deposits.

Institutions eligible for these programs included both entities that were 

part of a bank holding company structure and entities that were not. The 

Federal Reserve System designed its emergency programs to address 

disruptions to particular credit markets and to assist participants in these 

markets. For example, the Federal Reserve System’s programs that 

targeted support to repurchase agreement markets provided assistance 

to securities firms that were subsidiaries of bank holding companies and 

securities firms that were not. The Federal Reserve System’s CPFF 

purchased commercial paper from participating bank holding companies 

and other financial and nonfinancial firms that met the program’s eligibility 

requirements. Treasury’s CPP and FDIC’s TLGP provided support 

primarily to insured depository institutions (banks and thrifts) and bank 

and savings and loan holding companies.

Crisis Programs with 

Broad-Based Eligibility 

Provided Funding Support 

to Bank Holding 

Companies and Their 

Subsidiaries
 

Page 14 GAO-14-18 Government Support for Bank Holding Companies

Table 1: Overview of Largest Emergency Programs That Provided General Funding Support to Bank Holding Companies or 

Their Subsidiaries

Dollars in billions

Programs

Peak dollar 

amount Purpose Key terms

Federal Reserve System

TAF – Term Auction 

Facility

(Dec. 12, 2007–Mar. 8, 

2010)

a $493 Auctioned 1 and 3-month 

discount window loans to 

depository institutions to 

address strains in term 

interbank lending markets. 

Eligible Institutions. Depository institutions eligible for the 

primary credit discount window program and expected to 

remain so over the TAF loan term.

Interest rate. The interest rate was determined by auction.

For each auction, winning bidders were awarded loans at 

the same interest rate.

b

Collateral eligibility. Based on discount window 

requirements.

PDCF - Primary Dealer 

Credit Facility

c

(Mar. 16, 2008–Feb. 1, 

2010)

$130 Provided overnight cash loans 

to primary dealers against 

eligible collateral to address 

strains in the repurchase 

agreement markets.

Eligible institutions. Primary dealers, a designated group of 

broker-dealers and banks that transacted with the Federal 

Reserve Bank of New York in its conduct of open market 

operations.

Interest rate and fees. The interest rate was equal to the 

primary credit rate - the rate charged on discount window 

loans in the primary credit program. The Federal Reserve 

Bank of New York charged a frequency-based fee, ranging 

from 10 to 40 basis points, to dealers who accessed the 

facility on more than 45 out of 180 business days.

d

Collateral eligibility. Initially limited to collateral eligible for 

open market operations (e.g., Treasury and agency 

securities) as well as investment-grade corporate 

securities, municipal securities, and asset-backed 

securities (ABS); later expanded to include all securities 

eligible to be pledged in the triparty repurchase 

agreements system, including noninvestment grade 

securities and equities

TSLF - Term Securities 

Lending Facility

(Mar. 11, 2008–Feb. 1, 

2010)

$236 Auctioned loans of U.S. 

Treasury securities to primary 

dealers against eligible 

collateral to address strains in 

the repurchase agreement 

markets. 

Eligible institutions. Primary dealers (same as PDCF)

Interest rate. The interest rate was determined by auction 

(similar to TAF). For each auction, winning bidders were 

awarded loans at the same interest rate.

Collateral eligibility. TSLF auctioned loans of securities 

against two schedules of collateral. Schedule 1 included all 

collateral eligible for open market operations. Schedule 2 

collateral initially included Schedule 1 collateral as well as 

highly-rated mortgage-backed securities (MBS). Schedule 

2 collateral was later expanded to include investment 

grade corporate and municipal securities, MBS, and ABS.
 

Page 15 GAO-14-18 Government Support for Bank Holding Companies

Dollars in billions

Programs

Peak dollar 

amount Purpose Key terms

CPFF - Commercial 

Paper Funding Facility

(Oct. 7, 2008–Feb. 1, 

2010)

$348 Purchased asset-backed 

commercial paper (ABCP) and 

unsecured commercial paper 

from eligible issuers.

Eligible issuers. All U.S. issuers (including those with a 

foreign parent) with eligible commercial paper. To be 

eligible, commercial paper was required to have received 

the highest rating from at least one major credit rating 

agency.

Interest rate. The interest rate was set at a fixed spread 

above the daily 3-month overnight indexed swap (OIS) rate 

to control for changes in short-term interest rates.e

Credit surcharge. To provide additional loss protection, 

issuers of unsecured paper were required to pay a credit 

surcharge of 100 basis points. Commercial paper issues 

guaranteed by TLGP were exempt from the surcharge.

This 

spread was 100 basis points for unsecured commercial 

paper and 300 basis points for ABCP.

Department of the Treasury (Treasury)

CPP - Capital Purchase 

Program 

(Oct. 14, 2008–Dec. 31, 

2009)

$205 The first and largest initiative 

under Treasury’s Troubled 

Asset Relief Program; provided 

capital to eligible financial 

institutions by purchasing 

preferred shares and 

subordinated debt.

Eligible institutions. Qualifying institutions generally 

included U.S.-controlled depository institutions, bank 

holding companies, and most savings and loan holding 

companies.

Dividends. Senior preferred shares paid dividends at a rate 

of 5 percent annually for the first 5 years and 9 percent 

annually thereafter. Treasury also received warrants to 

purchase shares of stock or a senior debt instrument.

Interest on subordinated debt. For certain issuers, 

Treasury received subordinated debt rather than preferred 

shares to protect these institutions’ special tax status.

Interest rates for this debt were set at 7.7 percent for the 

first 5 years and 13.8 percent for the remaining years.

Federal Deposit Insurance Corporation (FDIC)

TLGP – Temporary 

Liquidity Guarantee 

Programf

• DGP – Debt 

Guarantee Program 

(Guarantees expired 

Dec. 31, 2012)

(Announced 

Oct. 14, 2008)

• TAGP – Transaction 

Account Guarantee 

Program (Expired 

Dec. 31, 2010)

Approx. 

$346 debt 

and approx. 

$835 

deposits

 g

DGP guaranteed certain 

newly-issued senior unsecured 

debt of eligible institutions to 

improve liquidity in term 

funding markets.

TAGP temporarily extended an 

unlimited deposit guarantee to 

domestic noninterest-bearing 

transaction accounts at 

participating insured depository 

institutions to limit further 

outflows of these deposits.

Eligible institutions. FDIC insured depository institutions 

(IDI); U.S. bank and savings and loan holding companies; 

and affiliates of IDIs upon application.

DGP fees. FDIC assessed fees on each DGP-guaranteed 

debt issuance based on time to maturity. Following 

extensions of the DGP, FDIC also assessed surcharges.

Surcharges for holding companies and affiliates of IDIs 

were twice as high as those for IDIs.

TAGP fees. FDIC assessed a fee of 10 basis points on the 

quarter-end balance of eligible deposits over $250,000.

Beginning in 2010, FDIC instead assessed risk-based fees 

of 15, 20, or 25 basis points of quarter-end balances over 

$250,000.

Source: FDIC, Federal Reserve System, and Treasury documents.

Note: This table includes the emergency programs that provided the most significant funding support 

directly to bank holding companies and their subsidiaries. Bank holding companies and their 

subsidiaries benefited from other emergency government programs, such as programs that assisted 

money market mutual funds. Dates in parentheses are the program announcement dates, and where 

relevant, the date the program or assistance was closed or terminated. The peak dollar amount 
 

Page 16 GAO-14-18 Government Support for Bank Holding Companies

shown for CPP represents the total dollar amount invested through CPP. For all other programs, the 

peak dollar amount shown represents the peak dollar amount outstanding.

a

12 C.F.R. § 201.4(e).

b

U.S. branches and agencies of foreign institutions that met program requirements were eligible to 

participate in TAF. The Reserve Banks extend discount window credit to U.S. depository institutions 

(including U.S. branches and agencies of foreign banks) under three programs, one of which is the 

primary credit program. Primary credit is available to generally sound depository institutions, typically 

on an overnight basis. To assess whether a depository institution is in sound financial condition, its 

Reserve Bank can regularly review the institution’s condition, using supervisory ratings and data on 

adequacy of the institution’s capital.

c

TAF loans were collateralized based on haircut requirements for the discount window program. For 

TAF loans, Reserve Banks accepted as collateral any assets that were eligible to secure discount 

window loans.

d

Several primary dealers were subsidiaries of large U.S. bank holding companies or large foreign 

banking organizations. U.S. bank holding companies with primary dealer subsidiaries included 

Citigroup Inc., Bank of America Corporation, Goldman Sachs Group, Inc., JP Morgan Chase & Co., 

and Morgan Stanley. Goldman Sachs Group, Inc. and Morgan Stanley were not bank holding 

companies when PDCF and TSLF launched in March 2008, but both firms participated in these 

programs after they converted to bank holding companies in September 2008.

e

The OIS rate is an interest rate that tracks expectations of the future federal funds rate.

f

12 C.F.R. § 370. 

g

The Dodd-Frank Act provided temporary unlimited deposit insurance coverage for noninterestbearing transaction accounts at all FDIC-insured institutions from December 31, 2010 through 

December 31, 2012. This coverage essentially was similar to that offered by TAGP. Pub. L. No. 111-

203, § 343, 124 Stat. 1376, 1544 (2010).

Bank holding companies also benefited from other government programs, 

such as programs that targeted support to other market participants. For 

example, in the absence of Treasury and Federal Reserve System 

programs to guarantee and support money market mutual funds,

respectively, such funds may have reduced their purchases of money 

market instruments issued by subsidiaries of bank holding companies and 

other firms, thereby exacerbating funding pressures on these firms. Other 

significant government programs included the Term Asset-Backed 

Securities Loan Facility (TALF), which was created by the Federal 

Reserve System to support certain securitization markets, and other 

programs created by Treasury under TARP authority.24

While the Federal Reserve System and FDIC provided expanded support 

through traditional safety net programs for insured banks during the crisis, 

 

24For more information about TALF, see GAO, Troubled Asset Relief Program: Treasury 

Needs to Strengthen Its Decision-Making Process on the Term Asset-Backed Securities 

Loan Facility, GAO-10-25 (Washington, D.C.: Feb. 5, 2010). For more information about 

CPP and other TARP programs, see GAO, Troubled Asset Relief Program: One Year 

Later, Actions Are Needed to Address Remaining Transparency and Accountability 

Challenges, GAO-10-16 (Washington, D.C.: Oct. 8, 2009).
 

Page 17 GAO-14-18 Government Support for Bank Holding Companies

some of the emergency government programs provided funding support 

at the bank holding company level—where it could be used to support 

both bank and nonbank subsidiaries—or directly to nonbank entities. In 

late 2007, the Federal Reserve Board took a series of actions to ease 

strains in interbank funding markets, including lowering the target federal 

funds rate, easing terms at the discount window, and introducing a new 

program—TAF—to auction term loans to banks.25 However, in part due to 

statutory and regulatory restrictions on the ability of insured banks to 

provide funding support to their nonbank affiliates, agencies determined 

that emergency government support to insured banks was not sufficient 

to stem disruptions to important credit markets. Nonbank credit markets—

such as repurchase agreement and debt securities markets—had grown 

to rival the traditional banking sector in facilitating loans to consumers and 

businesses, and agencies determined that actions to address disruptions 

to these markets were needed to avert adverse impacts to the broader 

economy. For example, in March 2008, the Federal Reserve Board 

authorized PDCF and TSLF to address strains in repurchase agreement 

markets by providing emergency loans to broker-dealers, a few of whom 

were owned by U.S. bank holding companies.26 When the crisis 

intensified in September 2008 following the failure of Lehman Brothers 

Holdings Inc.—a large broker-dealer holding company—the Federal 

Reserve Board modified terms for its existing programs and took other 

actions to expand funding support for both bank and nonbank entities.27

 

25To ease stresses in these markets, on August 17, 2007, the Federal Reserve Board 

approved two temporary changes to discount window terms: (1) a reduction of the 

discount rate—the interest rate at which the Reserve Banks extended collateralized loans 

at the discount window—by 50 basis points; and (2) an extension of the discount window 

lending term from overnight to up to 30 days, with the possibility of renewal. One basis 

point is equivalent to 0.01 percent or 1/100th of a percent. On March 16, 2008, the 

Federal Reserve Board further reduced the spread of the primary credit rate over the 

target federal funds rate to 25 basis points and increased the maximum maturity of 

discount window loans to 90 days. 

26In March 2008, U.S. bank holding companies with primary dealer subsidiaries included 

Citigroup, Inc., Bank of America Corporation, and JP Morgan Chase & Co. Morgan 

Stanley and Goldman Sachs Group Inc. also had subsidiaries that were primary dealers 

and in September 2008, both firms converted to bank holding companies.

27On September 14, 2008, the Federal Reserve Board announced that TSLF-eligible 

collateral would be expanded to include all investment-grade debt securities and PDCFeligible collateral would be expanded to include all securities eligible to be pledged in the 

triparty repurchase agreements system, including noninvestment-grade securities and 

equities. On September 29, 2008, the Federal Reserve Board also announced expanded 

support through TAF by doubling the amount of funds that would be available in each TAF 

auction cycle from $150 billion to $300 billion.
 

Page 18 GAO-14-18 Government Support for Bank Holding Companies

In September 2008, Treasury and the Federal Reserve System 

introduced new temporary programs to address liquidity pressures on 

money market funds and to help ensure that these funds could continue 

to purchase money market instruments issued by bank holding 

companies and other firms.28 In addition, in October 2008, Congress 

enacted legislation under which Treasury provided capital investments to 

banks, bank holding companies, and other institutions; the legislation also 

temporarily increased FDIC’s deposit insurance limit from $100,000 to 

$250,000.29 Also that month, the Federal Reserve System created CPFF 

to support commercial paper markets, and FDIC introduced TLGP, under 

which it guaranteed previously uninsured transaction accounts and 

certain newly issued senior unsecured debt for participating insured 

depository institutions, bank and savings and loan holding companies, 

and approved affiliates of insured depository institutions. For a more 

detailed discussion of the circumstances surrounding the creation of 

these programs, see appendix II.

Isolating the impact of individual government interventions is difficult, but 

collectively these interventions helped to improve financial conditions by 

enhancing confidence in financial institutions and the financial system 

overall.30 Bank holding companies and their subsidiaries, in addition to 

 

28In September 2008, following the failure of Lehman Brothers Holdings Inc., many money 

market mutual funds faced severe liquidity pressures as redemption requests from their 

investors increased significantly. Treasury and Federal Reserve Board officials became 

concerned that pressures on these funds could further exacerbate turmoil in the markets, 

as these funds were significant investors in many money market instruments, such as 

commercial paper and certificates of deposit. On September 19, 2008, Treasury 

announced that it would insure the holdings of any publicly offered eligible money market 

mutual fund—both retail and institutional—that paid a fee to participate in the program. On 

the same day, the Federal Reserve Board authorized the creation of a new program—the 

AMLF—to provide liquidity support to money market mutual funds and to promote liquidity 

in the ABCP markets. AMLF provided loans to U.S. depository institutions, their holding 

companies, and affiliates that used the proceeds of these loans to purchase ABCP from 

money market mutual funds. For more information about AMLF, see GAO, Federal 

Reserve System: Opportunities Exist to Strengthen Policies and Processes for Managing 

Emergency Assistance, GAO-11-696 (Washington, D.C.: July 21, 2011).

29Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-343, Div. A, 122 Stat. 

3765 (12 U.S.C. §§ 5201-5261).

30In prior work, we found that TARP, along with other efforts by the Federal Reserve 

System and FDIC, made important contributions to helping stabilize credit markets. For 

example, the TED spread—a key indicator of credit risk that gauges the willingness of 

banks to lend to other banks—had narrowed to precrisis levels within a year of the 

October 2008 announcements of TARP, TLGP, CPFF, and other government actions. 
 

Page 19 GAO-14-18 Government Support for Bank Holding Companies

the financial sector and the economy as a whole, benefited from improved 

financial conditions. Bank holding companies and their subsidiaries also 

experienced individual benefits from participating in particular programs.

Individually and collectively, government lending, guarantee, and capital 

programs provided important liquidity and other benefits to bank holding 

companies and their subsidiaries including:

• Access to funding in quantities and/or at prices that were 

generally not available in the markets. Government entities 

generally sought to set prices for assistance through these programs 

to be less expensive than prices available during crisis conditions but 

more expensive than prices available during normal market 

conditions.

31 In some credit markets assisted by government 

programs—such as commercial paper and repurchase agreement 

markets—conditions had deteriorated such that many institutions 

faced substantially reduced access to these markets or had no access 

at all. As discussed below, we compared program pricing to relevant 

indicators of market pricing where available and found that emergency 

lending and guarantee programs generally were priced below market 

alternatives that may have been available. The availability of funding 

support at this pricing in predictable quantities was also beneficial. 

Even at times when eligible institutions did not access the available 

programs, these programs diversified the sources of funds that could 

be available to them if they faced increased funding pressures.

• Access to funding at longer maturities. By providing and standing 

ready to provide funding support for terms of 1 month or longer, 

government programs helped to reduce rollover risk—the risk that an 

institution would be unable to renew or “rollover” funding obligations 

as they came due—for individual institutions and their counterparties.

At times during the crisis, bank holding companies and their 

subsidiaries faced difficulties borrowing at terms of 1 month or longer 

in several important credit markets, including interbank, repurchase 

agreement, and commercial paper markets. Government programs 

mitigated funding pressures for borrowers in these markets by 

reducing the risk that funding sources would rapidly disappear for an 

institution or its counterparties. Because participants in these 

 

31This pricing was intended to encourage program participants to exit the programs as 

market conditions normalized. 
 

Page 20 GAO-14-18 Government Support for Bank Holding Companies

programs were also lenders of funds, these programs helped to 

encourage these institutions to continue to lend funds to support the 

economy. 

• Stabilizing deposit funding. FDIC’s TAGP, which temporarily 

insured certain previously uninsured deposits for a fee, helped to 

stabilize deposit funding by removing the risk of loss from deposit 

accounts that were commonly used to meet payroll and other 

business transaction purposes and allowing banks, particularly 

smaller ones, to retain these accounts. Deposits are the primary 

source of funding for most banks, and smaller banks tend to fund 

themselves to a greater extent with deposits.

• Funding support for a broad range of collateral types. A few 

Federal Reserve System programs provided important liquidity 

benefits to individual institutions and credit markets by allowing 

institutions to obtain liquidity against a broad range of collateral types.

TAF provided 1-month and 3-month loans to eligible banks against 

collateral types that could also be used to secure discount window 

loans. While TAF collateral requirements were based on discount 

window requirements, TAF provided emergency credit on a much 

larger scale, with TAF loans outstanding peaking at nearly $500 

billion, compared to peak primary credit outstanding during the crisis 

of just over $100 billion.32 In March 2008, the Federal Reserve 

System began providing liquidity support to certain nonbank financial 

firms—the primary dealers—for less liquid collateral types through 

PDCF and TSLF. Through PDCF, the Federal Reserve Bank of New 

York (FRBNY) allowed primary dealers to obtain overnight cash loans 

against harder-to-value collateral types, such as mortgage-backed 

securities. Through TSLF, FRBNY auctioned loans of Treasury 

securities to primary dealers in exchange for less-liquid collateral 

types to increase the amount of high-quality collateral these dealers 

had available to borrow against in repurchase agreement markets. 

When pressures in repurchase agreement markets intensified in 

September 2008, the Federal Reserve Board expanded the types of 

collateral it accepted for both PDCF and TSLF.

 

32Because of the perceived stigma associated with borrowing from the discount window, 

banks that participated in TAF might have been reluctant to turn to the discount window 

for funding support. 
 

Page 21 GAO-14-18 Government Support for Bank Holding Companies

Although imperfect, one indicator of the extent to which an institution 

directly benefited from participation in an emergency program is the 

relative price of estimated market alternatives to the program. To 

determine how pricing of the emergency assistance compared to market 

rates, we compared pricing for programs to the pricing for market 

alternatives that might have been available to program participants. First, 

we compared the interest rates and fees charged by the Federal Reserve 

System and FDIC for participation in the emergency lending and 

guarantee programs with available market alternatives. We considered a 

number of potential indicators of market interest rates available to 

financial institutions, including a survey of interbank interest rates (the 

London Interbank Offered Rate or LIBOR), commercial paper interest 

rates published by the Federal Reserve Board, spreads on bank credit 

default swaps (CDS) and interest rates on repurchase agreements. 

These interest rates provide a general indication of market alternatives 

that could have been available to participants, but for a number of 

reasons the rates are unlikely to reflect available alternatives for all 

participants at all points in time during the crisis and cannot be used to 

produce a precise quantification of the benefits that accrued to 

participating financial institutions.33 For example, participants’ access to 

market alternatives may have been limited, data on the relevant private 

market may be limited, or market alternatives could vary across 

participants in ways that we do not observe in the data. The markets 

targeted by emergency programs had experienced significant strains, 

such as a substantial drop in liquidity, a sharp increase in prices, or 

lenders restricting access only to the most credit worthy borrowers or 

accepting only the safest collateral. Also, our indicators do not capture all 

of the benefits associated with participation in the relevant programs.

Furthermore, once programs were introduced, they probably influenced 

the price of market alternatives, making it difficult to interpret differences 

 

33In our analysis, we discarded values of spreads between program pricing and market 

alternatives when they were zero or negative—negative spreads are unlikely to capture 

the benefits that accrued to participants. For example, we excluded 15 observations (or 40 

percent of auctions) in our analysis of TSLF when the schedule 1 auction rate was equal 

to or above the private cost for similar borrowing but did not exclude any observations in 

our analysis of DGP because the DGP fee never exceeded the weighted-average private 

cost for similar guarantees during the time period we analyzed. If these truly reflected 

market alternatives for the pool of potential participants then there would be no 

participation, or the participation would have been based on other considerations. 

Participation by itself suggests that program prices and/or terms were relatively attractive 

in comparison to available alternatives—benefits could arise from price, quantity available, 

or other nonprice characteristics of the assistance (loan term, eligible collateral, etc.). 
 

Page 22 GAO-14-18 Government Support for Bank Holding Companies

between emergency program and market prices while programs were 

active. Second, to determine the extent to which Treasury capital 

investment programs were priced more generously than market 

alternatives, we reviewed estimates of the expected budget cost 

associated with equity funding support programs as well as a valuation 

analysis commissioned by the Congressional Oversight Panel. For more 

details on our methodology for these analyses, see appendix III.

Based on our analysis, we found that emergency assistance provided 

through these programs was often priced below estimated market 

alternatives that might have been available to program participants. This 

result is consistent with a policy goal of these programs to stabilize 

financial markets and restore confidence in the financial sector. The 

pricing of emergency assistance below estimated market alternatives is 

also evidenced by the significant participation in these programs.

Specifically, we found that emergency lending and guarantee programs 

were generally priced below certain indicators of market alternatives that 

could have been available. In addition, based on analyses we reviewed, 

Treasury paid prices above estimated market prices for emergency equity 

support programs. For selected programs that we analyzed, we also 

found that program pricing would likely have become unattractive in 

comparison to market pricing during normal and more stable credit 

conditions.

Federal Reserve System programs. Federal Reserve System 

emergency lending programs during the crisis provided sources of both 

secured and unsecured funding at rates that were often below those of 

potential market alternatives and at terms that reduced rollover risk for 

participants. These characteristics are consistent with a policy goal to 

stabilize financial conditions by providing funding support for financial 

institutions that relied on wholesale funding markets. At the time, the 

markets targeted by the Federal Reserve emergency programs had 

experienced strains, such as a drop in volume or a significant increase in 

prices or collateral standards.

• TAF. Interest rates on TAF loans, on average, were between 22 and 

39 basis points lower than three market interest rates that could have 

represented alternatives for participants. TAF auctioned collateralized 

loans—generally at terms of either 28 or 84 days—to insured banks to 

help alleviate strains in term funding markets. We compared interest 
 

Page 23 GAO-14-18 Government Support for Bank Holding Companies

rates for 28-day TAF loans with 1-month LIBOR, 30-day asset-backed 

commercial paper (ABCP) rates, and interest rates on very large 1-

month unsecured certificates of deposit.34 We chose these interest 

rates because they are all indicators of the cost of borrowing for 

financial institutions in term funding markets. However each differs 

from TAF in important ways. For example, LIBOR is based on 

unsecured loans (TAF loans were secured by collateral) and ABCP, 

despite being secured, has other features that differ from TAF, 

including the mix of underlying collateral.

35 We found that LIBOR 

exceeded TAF interest rates by an average of 22 basis points. ABCP 

interest rates exceeded TAF interest rates by on average 39 basis 

points and interest rates on very large certificates of deposit exceeded 

TAF interest rates by on average 29 basis points while the program 

was active. Because of differences between TAF and these measures 

of market interest rates, these spreads are an imperfect measure of 

the extent to which banks derived benefits from participating in TAF.

• PDCF. Our analysis suggests that PDCF provided secured overnight 

funding on more favorable terms for some types of collateral (such as 

corporate debt) than market alternatives that some primary dealers 

might have relied upon in the absence of PDCF. Because PDCF 

operated in a similar manner to repurchase agreement markets, we 

compared PDCF terms to available data for triparty and bilateral 

repurchase agreement transactions.36 One important term for 

repurchase agreement loans is the haircut, which is the amount of 

additional collateral the lender requires over the value of the loan.37

 

34We are aware that concerns about LIBOR manipulation could affect its usefulness as an 

indicator of potential market alternatives for banks. We discussed this issue with Federal 

Reserve Bank of New York officials who indicated that it was still among the best available 

indicators despite these concerns. In addition, GAO has found in previous work that 

LIBOR reflected significant financial market stress during the 2007-2009 financial crisis.

See GAO-10-16. 

35In addition, there can be uncertainty about the assets underlying ABCP or limited 

liquidity support from sponsors. 

36Triparty repurchase agreement transactions are intermediated by a third party (a 

clearing bank) that stands between the borrower and lender. 

37Interest rates are another important term for repurchase loans. However, we were 

unable to compare PDCF interest rates to market alternatives for all eligible collateral 

types because available data for repurchase agreement market interest rates are limited 

to higher quality and more liquid collateral types (such as Treasury securities). While 

repurchase agreement lenders generally require higher interest rates for riskier and less 

liquid collateral types, PDCF offered loans at the same interest rate for all collateral types.
 

Page 24 GAO-14-18 Government Support for Bank Holding Companies

Repurchase agreement lenders generally require higher haircuts on 

riskier and less liquid collateral types. PDCF offered loans at the same 

interest rate (the discount rate charged on discount window loans) for 

all collateral types and applied a haircut schedule that assigned 

progressively higher haircuts to riskier assets. We compared PDCF 

haircuts to market haircuts for selected asset classes in the triparty 

repurchase agreement market. We found that the haircut required by 

PDCF was consistently greater than the median haircut in the triparty 

repurchase agreement market for comparable asset classes. Thus, 

borrowers who faced the median haircut on their collateral in the 

triparty market were better off borrowing in the triparty market than 

through PDCF, all else being equal. However, the PDCF haircut was 

smaller than the 75th percentile haircut in the triparty market for a 

variety of collateral types. This implies that higher-risk borrowers were 

better off borrowing through PDCF than through the triparty market, at 

least for certain types of collateral. Smaller haircuts would have 

allowed these PDCF participants to borrow more against the same 

collateral than in private repurchase agreement markets.

• TSLF. TSLF allowed primary dealers to obtain funding for the most 

commonly pledged collateral types at 32 basis points below an 

estimated market alternative. When TSLF was created in March 2008, 

repurchase agreement lenders were requiring higher interest rates 

and haircuts for loans against a range of less-liquid collateral types 

and were reluctant to lend against mortgage-related securities.38

Through TSLF, primary dealers paid an auction-determined interest 

rate to exchange harder-to-finance collateral for more liquid Treasury 

securities—which were easier to borrow against in repurchase 

agreement markets—generally for a term of 28 days. TSLF held 

separate auctions of Treasury securities against two different 

schedules of collateral to apply a higher interest rate to riskier 

collateral. Schedule 1 collateral included higher quality assets, such 

as agency debt and agency mortgage-backed securities (MBS), and 

Schedule 2 collateral included Schedule 1 collateral and a broader 

range of asset types, such as highly-rated private-label MBS. We 

compared TSLF interest rates to the difference between lower interest 

rates primary dealers might have paid on repurchase agreements 

secured by Treasury securities and the higher interest rates they 

 

38As a result, many financial institutions increasingly had to rely on higher quality 

collateral, such as Treasury securities, to obtain cash in these markets, and a shortage of 

such high-quality collateral emerged. 
 

Page 25 GAO-14-18 Government Support for Bank Holding Companies

could have paid on repurchase agreements secured by TSLF-eligible 

collateral. Due to limited availability of interest rate data for 

repurchase agreements collateralized by other lower-quality collateral 

eligible for TSLF, such as private-label MBS, we compared TSLF 

interest rates to the difference or spread between interest rates on 

repurchase agreements collateralized by agency MBS and 

repurchase agreements collateralized by Treasury securities.39 We 

found that the spread between repurchase agreement interest rates 

on agency MBS (the most commonly-pledged collateral for TSLF) and 

Treasury securities exceeded TSLF interest rates by on average 32 

basis points while the program was active.40

• CPFF. CPFF purchased 3-month commercial paper at prices that 

were lower than market rates during the crisis on instruments that 

could have represented alternative funding sources but were more 

expensive than average commercial paper rates during normal market 

conditions. CPFF controlled for changes in short-term interest rates by 

setting the price of commercial paper issuance to CPFF at a fixed 

spread above the daily 3-month overnight indexed swap rate, a rate 

that tracks investor expectations about the future federal funds rate.

Table 2 summarizes the pricing structure for CPFF. We compared allin borrowing costs (an interest rate plus a credit surcharge for 

unsecured borrowing) for CPFF borrowers with 3-month LIBOR. To 

determine how CPFF pricing compared to borrowing costs in crisis 

conditions, we compared CPFF pricing terms to 3-month LIBOR for 

the period from the failure of Lehman Brothers Holdings Inc. (Sept.

14, 2008) through the date on which CPFF became operational (Oct. 

27, 2008). We found that average CPFF pricing terms were lower 

than the average LIBOR rate by 92 basis points and 44 basis points 

for CPFF purchases of unsecured commercial paper and 

collateralized ABCP, respectively. To determine how unsecured CPFF 

rates compared to benchmarks for borrowing costs in normal market 

conditions, we applied the CPFF pricing rule for unsecured 

commercial paper to a 2-month period in 2006 and found that CPFF 

pricing would have been more expensive than AA unsecured 

 

39As a result we could only compare market repurchase agreement interest rates with 

interest rates from the Schedule 1 auctions.

40Researchers at the Federal Reserve Bank of New York also found that TSLF was priced 

below estimated market rates, although the size of the difference they estimated was 

smaller than our results. 
 

Page 26 GAO-14-18 Government Support for Bank Holding Companies

commercial paper interest rates by roughly 200 basis points and 

LIBOR by over 190 basis points. This analysis suggests that CPFF 

would have become less attractive to participants as market 

conditions improved.

Table 2: Pricing Terms for Commercial Paper Funding Facility

Rates and fees Unsecured commercial paper ABCP

Interest rate 3-month OIS + 100 basis points 3-month OIS + 300 basis points

Credit surcharge 100 basis points None

All-in-cost 3-month OIS + 200 basis points 3-month OIS + 300 basis points

Source: Federal Reserve Board.

Treasury capital investments. Analyses we reviewed suggest that the 

prices Treasury paid for equity in financial institutions participating in 

TARP exceeded estimated market prices that private investors might 

have paid for comparable investments in these institutions during the 

crisis. This pricing is consistent with a policy goal to stabilize financial 

conditions by improving the equity capitalization of banks. In late 2008, 

before CPP was announced, banks had difficulty issuing sufficient new 

equity to investors. We reviewed estimates of the expected budget cost 

associated with Treasury’s equity funding support programs under TARP, 

CPP and the Targeted Investment Program (TIP), as well as a valuation

analysis commissioned by the Congressional Oversight Panel.41 Some of 

the benefits that accrued to banks from participation in equity funding 

support programs are likely to be proportional to the expected budgetary 

cost (also known as subsidy rates) estimated for accounting purposes.

Treasury and Congressional Budget Office estimates of subsidy rates are 

based on a net present value analysis—the price and terms which are 

offered by a federal agency are compared to the lifetime expected cost 

(net present value) of the equity, and the difference is known as a 

 

41Through TIP, Treasury sought to foster market stability and strengthen the economy by 

making case-by-case investments in institutions that it deemed critical to the functioning of 

the financial system. Bank of America Corporation and Citigroup Inc. were the only two 

institutions that participated in this program. 
 

Page 27 GAO-14-18 Government Support for Bank Holding Companies

subsidy. 42 The valuation analysis commissioned by the Congressional 

Oversight Panel explicitly compared the prices received by Treasury with 

market-based valuations of securities it determined to be comparable. 

Estimates of subsidy rates by Treasury, the Congressional Budget Office, 

and the Congressional Oversight Panel were generally similar for CPP, 

while the Congressional Budget Office’s estimates for TIP were 

substantially lower than those of Treasury and the Congressional 

Oversight Panel (see fig. 1). Based on these three analyses, these 

estimated subsidy rates suggest that the prices Treasury paid for equity in 

financial institutions were 18 to 27 percent over estimated market prices 

for CPP and 26 to 50 percent over estimated market prices for TIP equity.

Estimates reflect differences in timing, methodology, and institutions 

included in the analyses, which we discussed previously and in the note 

to figure 1.43

 

42Because private market participants might have charged a price based on a comparable 

net present value analysis, banks would have benefitted to the extent that the prices 

offered by Treasury for their equity exceed what they were likely to receive based on the 

net present value. We used the earliest available estimates from the Congressional 

Budget Office and Treasury as they were closest to market conditions at the time that 

programs were initiated. Estimates of these subsidy rates depended on timing and market 

conditions and the size of these subsidy rates likely fell over time as market conditions 

improved.

43For more details on their respective methodologies, see Congressional Budget Office, 

The Troubled Asset Relief Program: Report on Transactions Through December 31, 2008

(Washington, D.C.: January 2009); GAO-10-301; and Congressional Oversight Panel, 

February Oversight Report: Valuing Treasury’s Acquisitions (Washington, D.C.: February 

2009). 
 

Page 28 GAO-14-18 Government Support for Bank Holding Companies

Figure 1. Emergency Capital Program Subsidy Estimates

Note: Analysis by the Congressional Budget Office is as of December 31, 2008, and the Targeted 

Investment Program (TIP) estimate includes only Citigroup. Treasury financial statement information 

is as of September 30, 2009. Analysis commissioned by the Congressional Oversight Panel includes 

valuations based on data from October 2008 through November 2008 and the TIP estimate includes 

only Citigroup, and the CPP estimate is based on a sample of 8 relatively large financial institutions. 

We used the earliest available estimates from the Congressional Budget Office and Treasury as they 

were closest to market conditions at the time that programs were initiated. Estimates of these subsidy 

rates depended on timing and market conditions and the size of these subsidy rates likely fell over 

time as market conditions improved.

FDIC’s DGP. For the DGP guarantees that we analyzed, the fees for 

FDIC’s DGP were on average 278 basis points below the private cost of 

similar guarantees during crisis conditions, but more expensive than 

similar guarantees that were available in the private market during normal 

credit conditions. This pricing is consistent with a policy goal to promote 

financial stability by improving access to sources of debt funding. FDIC’s 

DGP provided guarantees for certain newly issued senior unsecured debt 

for banks, bank holding companies, and other eligible institutions. When 

DGP was created in October 2008, lending to financial institutions in 

public debt markets had dropped dramatically. The fees for participation 
 

Page 29 GAO-14-18 Government Support for Bank Holding Companies

in DGP were based on the maturity of guaranteed liabilities (the longer 

the maturity the higher the fee) and the type of financial institution. We 

analyzed the 100-basis point fee that DGP charged to guarantee debt 

with a maturity of 1 year, plus the 10-basis point premium charged to 

bank holding companies.44 We compared the total DGP fee with the 

weighted average price of 1-year bank CDS for certain bank holding 

companies because the guarantee is essentially similar to a private party 

insuring against the risk of default using a CDS.45 Our analysis covered 

the period from the failure of Lehman Brothers (in September 2008) 

through the date DGP became operational (in October 2008). We found 

that the cost of insuring against bank default on the private market 

exceeded the FDIC fee terms by on average 278 basis points, with 

considerable variation across users—varying from over 1,000 basis 

points above the DGP fee terms to a few basis points below. We also 

applied the DGP pricing rule for guaranteeing bank holding company debt 

to a 2-month period in 2006, before the crisis, and found that DGP pricing 

would have exceeded the private cost of guarantees by roughly 100 basis 

points. This pricing suggests that DGP would have become less attractive 

to participants as market conditions improved. For more detail on our 

analysis of the prices and terms of all of the emergency programs, please 

see appendix III.

 

44For debt issued on or after April 1, 2009, FDIC included an additional surcharge of 

between 10 and 50 basis points for debt with a maturity of 1 year or more. Most DGPguaranteed debt with a maturity of 1 year or more was issued prior to April 1, 2009. 

45We created a weighted average of 1-year CDS prices with weights based on the largest 

bank holding company users of DGP. Our results may not reflect the relative price of 

DGP for DGP participants that were not included in the weighted average.
 

Page 30 GAO-14-18 Government Support for Bank Holding Companies

Emergency government programs to stabilize financial markets provided 

funding support to bank holding companies and insured depository 

institutions (collectively, banking organizations) of various sizes.46 This 

section also focuses on the programs that provided the most significant 

funding support directly to bank holding companies and their subsidiaries 

(listed previously in table 1). Agencies made these programs available to 

specific types of institutions regardless of their size, and institutions of 

various sizes participated in these programs. Differences in the level of 

program use by institutions of various sizes were driven in part by 

differences in how institutions funded themselves. For example, 

compared to smaller bank holding companies, larger bank holding 

companies relied to a greater extent on short-term credit markets that 

were the most severely disrupted during the crisis and participated more 

in programs intended to address disruptions in these markets. Smaller 

banking organizations relied more on deposits to fund their activities.

To compare the extent to which banking organizations of various sizes 

used emergency programs, we calculated the percentage of banking 

organization assets that were supported by emergency programs—either 

through capital injections, loans, or guarantees—at quarter-end dates for 

2008 through 2012. Capital provided by emergency programs includes 

capital investments by Treasury under CPP and TIP. Loans provided by 

emergency programs include TAF, TSLF, PDCF, and CPFF loans from 

the Federal Reserve System. Funding guaranteed by emergency 

programs includes deposits guaranteed by FDIC through TAGP and debt 

guaranteed by FDIC through DGP. We then calculated each of these 

three types of liabilities as a percentage of assets for banking 

organizations by size for quarter-end dates from mid-2008 to the end of 

2012. Finally, for each of the three types of liabilities, we decomposed 

average liabilities as a percentage of assets for banking organizations of 

different sizes into two components: (1) the rate of participation in 

emergency programs by banking organizations of different sizes and (2) 

the average liabilities as a percentage of assets for those participants.

We found that the extent to which banking organizations of different sizes 

used emergency programs varied over time and across programs. For 

 

46Our analysis focuses on use of emergency programs by banking organizations. 

However, emergency programs also provided funding for some nonbank financial 

institutions, such as broker-dealers, and for some nonfinancial companies, such as 

McDonald’s Corp. and Harley-Davidson.

Programs Provided 

Support to Banking 

Organizations of Various 

Sizes and Some Programs 

Supported Funding 

Sources Used More by 

Larger Firms
 

Page 31 GAO-14-18 Government Support for Bank Holding Companies

example, the largest bank holding companies—those with more than 

$500 billion in assets as of June 30, 2013—used the programs to varying 

degrees but had exited most of the programs by the end of 2009. 

Moreover, as of December 31, 2008, average use of emergency 

programs generally was higher for banking organizations with $50 billion 

or more in assets than it was for banking organizations with less than $50 

billion in assets. Total loans outstanding from Federal Reserve System 

programs (TAF, TSLF, PDCF, and CPFF) combined were at least 2 

percent of assets on average for banking organizations with $50 billion or 

more in assets but less than 1 percent of assets on average for smaller 

banking organizations. CPP and TIP capital investments were at least 1.5 

percent of assets on average for banking organizations with $50 billion or 

more in assets and less than 1 percent of assets on average for smaller 

organizations. Finally, DGP-guaranteed debt and TAGP-guaranteed 

deposits together were at least 6 percent of assets on average for 

banking organizations with $50 billion or more in assets and were less 

than 4 percent of assets on average for smaller banking organizations. 

However, by December 31, 2010, the Federal Reserve System’s loan 

programs had closed, and differences in use of remaining programs by 

banking organizations of different sizes had diminished. For a more 

detailed discussion of our analysis of utilization of these programs by 

banking organizations of various sizes, see appendix IV.

Several factors influenced the extent to which eligible institutions used 

emergency programs. As explained above, one factor driving an 

institution’s level of participation in a program was the extent to which it 

relied on the type of funding assisted by the program. In addition, market 

conditions and the speed with which eligible firms recovered affected the 

amount and duration of use of the programs by different firms. Agencies 

generally designed program terms and conditions to make the programs 

attractive only for institutions facing liquidity strains. Use of several of the 

programs peaked during the height of the financial crisis and fell as

market conditions recovered. Federal Reserve Board officials told us that 

even as markets recovered, funding conditions improved for certain 

borrowers but not others. As a result, in PDCF, TSLF, and CPFF, several 

participants remained in the programs while others exited. Participants in 

CPP required the approval of their primary federal regulator before exiting 

the program. In addition, several of the programs included limits on the 

amount of assistance an entity could receive. Under CPP, qualified 

financial institutions were eligible to receive an investment of between 1 

and 3 percent of their risk-weighted assets, up to a maximum of $25 

billion. To prevent excessive use of CPFF that would be inconsistent with 

its role as a backstop, the Federal Reserve Board limited the maximum 
 

Page 32 GAO-14-18 Government Support for Bank Holding Companies

amount a single issuer could have outstanding at CPFF to the greatest 

amount of U.S.-dollar-denominated commercial paper the issuer had had 

outstanding on any day between January 1 and August 31, 2008. The 

Federal Reserve Board also set limits on the maximum amount that 

institutions could bid in each TAF and TSLF auction.47 Finally, in some 

cases, institutions accepted emergency government assistance at the 

encouragement of their regulators. For example, several institutions 

accepted TARP capital investments at the encouragement of Treasury or 

their regulator.48 However, participation in other programs appears to 

have been driven by market conditions and other factors.

During the financial crisis, the Federal Reserve Board granted a number 

of exemptions to requirements under Section 23A of the Federal Reserve 

Act for a range of purposes, such as allowing banks to provide greater 

liquidity support to the nonbank sector. The number of exemptions 

granted increased significantly during the crisis, and the majority of these 

exemptions were granted to U.S. bank holding companies and other firms 

with $500 billion or more in total assets (see fig. 2). Section 23A of the 

Federal Reserve Act imposes quantitative limits on certain transactions 

between an insured depository institution and its affiliates, prohibits banks 

from purchasing low-quality assets from their nonbank affiliates, and 

imposes collateral requirements on extensions of credit to affiliates.49 In 

letters documenting its approval of exemptions to Section 23A, the 

Federal Reserve Board has indicated that the twin purposes of Section 

23A are (1) to protect against a depository institution suffering losses in 

transactions with its affiliates, and (2) to limit the ability of a depository 

institution to transfer to its affiliates the subsidy arising from the 

institution’s access to the federal safety net.50 In other words, these 

 

47In addition, TAF program terms stated that a depository institution’s TAF loans 

outstanding with terms greater than 28 days could not exceed 75 percent of the value of 

collateral it had pledged to the discount window. 

48For example, in October 2008, nine of the largest financial institutions agreed to accept 

TARP capital investments in part to signal the importance of the program to the stability of 

the financial system. 

49Pub. L. No. 63-43, § 23A, 38 Stat. 251, 272 (12 U.S.C. § 371c).

50Section 23A requirements—and the associated concerns about transfer of the subsidy 

arising from the depository institution’s access to federal safety nets—apply to depository 

institutions of all sizes. 

The Federal Reserve Board 

Granted Exemptions to 

Allow Banks to Provide 

Liquidity Support to the 

Nonbanking Sector and for 

Other Purposes
 

Page 33 GAO-14-18 Government Support for Bank Holding Companies

restrictions are intended to protect the safety and soundness of banks 

and to prevent them from subsidizing the activities of nonbank affiliates by 

passing on any benefits they may receive through access to deposit 

insurance and the discount window. The Federal Reserve Act granted the 

Federal Reserve Board authority to exempt transactions and relationships 

from Section 23A restrictions if such exemptions were in the public 

interest and consistent with statutory purposes.51 Prior to the Dodd-Frank 

Act, the Federal Reserve Board had exclusive authority to grant 

exemptions to Section 23A.

Figure 2: Section 23A Exemptions for Firms by Total Assets, 2000-2011

During the financial crisis, the Federal Reserve Board granted a number 

of exemptions from the requirements of Section 23A, for a range of 

purposes that included, but were not limited to, the following:

 

5112 U.S.C. § 371c(f)(2). 
 

Page 34 GAO-14-18 Government Support for Bank Holding Companies

• Facilitating Liquidity Support for Holders of Mortgage-Related Assets. 

In August 2007, the Federal Reserve Board issued three similar

exemption letters granting Section 23A exemptions to three of the 

largest U.S. bank holding companies (Citigroup Inc., Bank of America 

Corporation, and JP Morgan Chase & Co.) to allow their bank 

subsidiaries (Citibank, N.A.; Bank of America, N.A.; and JPMorgan 

Chase Bank, N.A.) to engage in securities financing transactions with 

their affiliated broker-dealers. The purpose of these exemptions was 

to allow each of these banks to extend up to $25 billion of credit 

(using their broker-dealer affiliates as conduits) to unaffiliated market 

participants in need of short-term liquidity to finance their holdings of 

certain mortgage loans and other assets.52 The Federal Reserve 

Board’s letters noted that these exemptions would provide significant 

public benefits by allowing banks to provide a substantial amount of 

liquidity into the market for these mortgage-related assets.

• Facilitating Liquidity Support for Holders of Auction-Rate Securities. In 

December 2008 and January 2009, the Federal Reserve Board 

granted exemptions to allow four large banks (Fifth Third Bank, BB&T 

Company, Northern Trust Company, and Wachovia Bank, N.A.) to 

purchase auction-rate securities and variable rate demand notes from 

their securities affiliates or parent company.53 The Federal Reserve 

Board’s letters noted that these exemptions were intended to facilitate 

the provision of liquidity by these banks to customers of their affiliates 

that were holding illiquid auction-rate securities or variable rate 

demand notes.54 The securities affiliates of banks had been active in 

 

52The Federal Reserve Board’s letters granting these exemptions noted that these banks 

would channel these credit transactions through their affiliated broker-dealers “for 

operational reasons.” The transactions between each bank and broker-dealer would take 

the form of either reverse repurchase agreements or securities borrowing transactions and 

would be on the same terms as each transaction between the broker-dealer and 

unaffiliated market participant. 

53As of December 31, 2008, BB&T Corp., Fifth Third Bancorp, and Northern Trust Corp 

had total consolidated assets of $147.5 billion, $69.5 billion, and $70.4 billion, 

respectively. Wachovia Corporation was the fourth largest U.S. bank holding company, 

with total consolidated assets of $635.5 billion. On January 1, 2009, Wells Fargo & 

Company completed its acquisition of Wachovia Corporation.

54Auction-rate securities are long-term bonds or preferred stocks whose interest rates or 

dividends are periodically reset through auctions. Until its collapse, the auction-rate 

securities market had been an important and growing source of funds for municipalities 

and other issuers. Variable rate demand notes are floating-rate debt instruments with a 

maturity of usually 20 or 30 years.
 

Page 35 GAO-14-18 Government Support for Bank Holding Companies

underwriting and selling auction-rate securities and when these 

securities became illiquid, the affiliates repurchased them from clients 

that sought to liquidate their positions. In this case, 23A exemptions 

allowed banks to provide financing for these purchases. The size of 

transactions permitted under these exemptions ranged from $600 

million for The Northern Trust Company to approximately $7 billion for 

Wachovia Bank, N.A. 

• Facilitating Liquidity Support to Money Market Funds and Repurchase 

Agreement Markets. In addition to exemptions granted to individual 

institutions, the Federal Reserve Board granted broad-based 

exemptions from Section 23A to enable banks to provide liquidity 

support to repurchase agreement markets and money market mutual 

funds (MMMF). First, on September 14, 2008, concurrent with the 

decision to expand eligible collateral types for PDCF and TSLF, the 

Federal Reserve Board adopted an interim final rule granting a 

temporary exemption to allow banks to provide their securities 

affiliates with short-term financing for assets that they ordinarily would 

have financed through the repurchase agreements markets. The 

purpose of this exemption was to improve the ability of broker-dealers 

to continue financing their securities and other assets despite the 

liquidity shortage in the triparty repurchase agreement market.

Several days later, on September 19, the Federal Reserve Board 

amended Regulation W to grant a temporary exemption from Section 

23A requirements for member banks’ purchases of ABCP from 

affiliated money market funds, subject to certain conditions.55 The 

purpose of this exemption was to enable banks to take full advantage 

of the Asset-Backed Commercial Paper Money Market Mutual Fund 

Liquidity Facility (AMLF), a program authorized by the Federal 

Reserve Board to provide loans to banks to fund the purchase of 

ABCP from MMMFs.

• Facilitating Acquisitions of Failing Firms. The Federal Reserve Board 

also granted Section 23A exemptions in connection with its efforts to 

facilitate private acquisitions of firms whose failure could have 

destabilized financial markets. Such acquisitions included JP Morgan 

Chase & Co.’s acquisition of Bear Stearns and Wells Fargo & 

Company’s acquisition of Wachovia Corporation. JP Morgan Chase & 

 

55Transactions Between Member Banks and Their Affiliates: Exemption for Certain 

Purchases of Asset-Backed Commercial Paper by a Member Bank from an Affiliate, 73 

Fed. Reg. 55708 (Sept. 26, 2008) (amending 12 C.F.R. § 223.42 and adding § 223.56).
 

Page 36 GAO-14-18 Government Support for Bank Holding Companies

Co. received exemptions that allowed JP Morgan Chase Bank, N.A.

to, among other things, extend credit to, and issue guarantees on 

behalf of, former Bear Stearns entities and to purchase a derivatives 

portfolio valued at approximately $44 billion from Bear Stearns. In 

November 2008, the Federal Reserve Board granted an exemption to 

allow Wells Fargo Bank, N.A., to extend up to $17 billion in credit to 

Wachovia Bank, N.A. to assist it in meeting its short-term funding 

obligations until the merger was completed.

For many of these cases, the Federal Reserve Board granted an 

exemption to help facilitate liquidity support to nonbank entities as part of 

its actions to reduce systemic risk and promote financial stability. In 

granting exemptions, the Federal Reserve Board imposed conditions that 

were intended to mitigate risks to the bank that would be providing credit, 

purchasing assets, or engaging in other transactions with affiliates.56

However, one expert has raised concerns that such conditions might not 

offer sufficient protection for an insured depository institution during crisis 

conditions and that these exemptions in aggregate resulted in a largescale transfer of safety net benefits created for banks to the nonbank, or 

“shadow banking,” system.57 As discussed in the next section of this 

report, the Dodd-Frank Act made changes to Section 23A of the Federal 

Reserve Act.

 

56Section 23B of the Federal Reserve Act generally requires that certain transactions 

between a bank and its affiliates occur on market terms—that is, on terms and under 

circumstances that are substantially the same, or at least as favorable to the bank, as 

those prevailing at the time for comparable transactions with unaffiliated companies. 12 

U.S.C. § 371c-1(a)(1)(A). Section 23B applies to any transaction by a bank with a third 

party if an affiliate has a financial interest in the third party or if an affiliate is a participant 

in the transaction. Id. at (a)(2)(E).

57See Saule T. Omarova, “From Gramm-Leach-Bliley to Dodd-Frank: The Unfulfilled 

Promise of Section 23A of the Federal Reserve Act,” North Carolina Law Review, Vol. 89, 

pgs. 1684-1769. The shadow banking system refers to a web of financial institutions that 

channel funds from savers to borrowers through a range of securitization and secured 

funding techniques. Unlike traditional banks, shadow banking institutions lack explicit 

access to the federal safety nets, such as the discount window and deposit insurance.
 

Page 37 GAO-14-18 Government Support for Bank Holding Companies

In addition to introducing emergency programs with broad-based 

eligibility, federal government agencies took special actions with respect 

to individual financial institutions on several occasions in 2008 and 2009.

While these actions were intended to benefit a range of market 

participants and the broader financial system, some large U.S. bank 

holding companies received substantial direct benefits from these actions.

Such actions included (1) assistance from multiple agencies to rescue or

facilitate the acquisition of troubled firms whose failures posed significant 

risks to the financial system, and (2) the Federal Reserve Board granting 

bank holding company status to several nonbank financial companies and 

providing liquidity support to the London broker-dealers of a few of the 

largest bank holding companies.

On several occasions in 2008 and early 2009, the federal government 

provided extraordinary support to or facilitated the acquisition of large 

financial institutions, which benefitted recipients of this assistance and 

other market participants, such as firms that had large risk exposures to 

these institutions.

• Assistance to Facilitate JP Morgan’s Acquisition of Bear Stearns. In 

2008, the Federal Reserve Board authorized emergency assistance to 

avert the failure of Bear Stearns Companies, Inc. (Bear Stearns) and 

facilitate the acquisition of the firm by JP Morgan Chase & Co.58 On 

Friday, March 14, 2008, the Federal Reserve Board voted to authorize 

FRBNY to provide a $12.9 billion loan to Bear Stearns to enable the 

firm to avoid bankruptcy and to provide time for potential acquirers, 

including JP Morgan Chase & Co, to assess its financial condition. On 

Sunday, March 16, 2008, the Federal Reserve Board announced that 

FRBNY would lend up to $30 billion against certain Bear Stearns 

assets to facilitate JP Morgan Chase & Co’s acquisition of Bear 

Stearns. During the following week, the terms of this assistance were 

renegotiated, resulting in the creation of a new lending structure under 

which a $28.82 billion FRBNY senior loan and a $1.15 billion JP 

Morgan Chase & Co subordinated loan funded the purchase of certain 

Bear Stearns’s assets. FRBNY also provided certain regulatory 

exemptions to JP Morgan Chase & Co. in connection with its 

agreement to acquire Bear Stearns. For example, the Federal 

 

58Bear Stearns was one of the largest primary dealers and engaged in a broad range of 

activities, including investment banking, securities and derivatives trading, brokerage 

services, and origination and securitization of mortgage loans.

Some Large Bank Holding 

Companies Benefited from 

Individual Institution 

Assistance or Regulatory 

Relief

Individual Institution 

Assistance
 

Page 38 GAO-14-18 Government Support for Bank Holding Companies

Reserve Board granted an 18-month exemption to allow JP Morgan 

Chase & Co to exclude certain Bear Stearns assets from its riskweighted assets for purposes of applying risk-based capital 

requirements.

• Assistance to Government-Sponsored Enterprises. Extraordinary 

government support to Fannie Mae and Freddie Mac helped to 

stabilize mortgage markets and the broader financial markets and 

provided specific benefits to bank holding companies and other firms 

that likely would have incurred losses if the federal government had 

allowed these government-sponsored enterprises to fail. On 

September 6, 2008, the Federal Housing Finance Agency placed 

Fannie Mae and Freddie Mac into conservatorship out of concern that 

their deteriorating financial condition threatened their safety and 

soundness and their ability to fulfill their public mission.

59 Treasury’s 

investments in Fannie Mae and Freddie Mac under the Senior 

Preferred Stock Purchase Agreements program represent the federal 

government’s single largest risk exposure remaining from its 

emergency actions to assist the financial sector.60 As of June 30, 

2013, cumulative cash draws by the GSEs under this program totaled 

$187.4 billion and cumulative dividends paid by the GSEs to Treasury 

totaled $131.6 billion.

• Assistance to AIG. Federal government actions to prevent the failure 

of AIG benefitted AIG and its counterparties—which included some of 

the largest U.S. and foreign financial institutions—and were intended 

to benefit the broader financial system.61 In September 2008, the 

Federal Reserve Board and Treasury determined that market events 

could have caused AIG to fail, which would have posed systemic risk 

to financial markets. The Federal Reserve Board and Treasury 

collaborated to make available up to $182.3 billion in assistance to 

 

59The Housing and Economic Recovery Act of 2008, Pub. L. No. 110-289, 122 Stat. 2654, 

established the Federal Housing Finance Agency, which was authorized to be appointed 

conservator for the government-sponsored enterprises. §§ 1101, 1145, 122 Stat. at 2661, 

2734.

60Under the Senior Preferred Stock Purchase Agreements program, Treasury has made 

funding advances to Fannie Mae and Freddie Mac to ensure that they have sufficient 

assets to support their liabilities. 

61AIG is a multinational insurer that was also a significant participant in the financial 

derivatives market. 
 

Page 39 GAO-14-18 Government Support for Bank Holding Companies

AIG. This assistance, which began with a revolving credit facility of up 

to $85 billion from FRBNY, was provided in several stages and was 

restructured over time.62 In November 2008, the Federal Reserve 

Board authorized the creation of two special-purpose vehicles—

Maiden Lane II LLC and Maiden Lane III LLC—to purchase certain 

AIG-related assets. Maiden Lane II was created to alleviate capital 

and liquidity pressures arising from a securities lending portfolio 

operated by certain AIG subsidiaries by purchasing residential MBS 

held in this portfolio. Maiden Lane III helped to fund the purchase of 

collateralized debt obligations from AIG counterparties that had 

purchased CDS from AIG to protect the value of those assets. AIG

repaid all loans and capital investments it received from government 

entities during the crisis. In December 2012, Treasury sold its 

remaining investments in AIG, resulting in a total positive return of 

$22.7 billion for Treasury and FRBNY.

• Extraordinary Assistance to Citigroup. On November 23, 2008, 

Treasury, the Federal Reserve Board, and FDIC announced a 

package of additional assistance to Citigroup Inc. (Citigroup) that 

included $20 billion of capital from TIP and a loss-sharing agreement 

with the government entities that was intended to assure market 

participants that Citigroup would not fail in the event of larger-thanexpected losses on certain of its assets. As discussed in our April 

2010 report on Treasury’s use of the systemic risk determination,

Treasury, FDIC, and the Federal Reserve Board said they provided 

emergency assistance to Citigroup because they were concerned that 

a failure of a firm of Citigroup’s size and interconnectedness would 

have systemic implications.63 As of September 30, 2008, Citigroup 

was the second largest banking organization in the United States, with 

total consolidated assets of approximately $2 trillion. In June 2009, 

Treasury entered into an agreement to exchange the $25 billion in 

Citigroup preferred shares purchased in its initial CPP investment for 

Citigroup common shares to help improve Citigroup’s capital 

position.64 In December 2009, Citigroup repaid the $20 billion TIP 

 

62For more information about the federal government’s actions to assist AIG and the 

restructuring and repayment of this assistance over time, see GAO, Troubled Asset Relief 

Program: Government’s Exposure to AIG Lessens as Equity Investments are Sold, 

GAO-12-574 (Washington, D.C.: May 7, 2012).

63See GAO-10-100. 

64In December 2010, Treasury sold its remaining shares of Citigroup common stock.
 

Page 40 GAO-14-18 Government Support for Bank Holding Companies

investment. On December 23, 2009, Citigroup announced that it had 

entered into an agreement with FDIC, FRBNY, and Treasury to 

terminate the loss- sharing agreement. As part of the termination 

agreement, Citigroup agreed to pay a $50 million termination fee to 

FRBNY.

• Extraordinary Assistance to Bank of America. On January 16, 2009, 

Treasury, the Federal Reserve Board, and FDIC announced a similar 

package of assistance to Bank of America Corporation (Bank of 

America). The additional assistance included capital through TIP and 

a loss-sharing agreement that was similar to the one executed for 

Citigroup. While Bank of America received $20 billion in capital 

through TIP, the government entities never finalized the announced 

loss-sharing agreement with Bank of America. In September 2009, 

the agencies agreed to terminate the loss-sharing agreement with 

Bank of America. As part of the agreement to terminate the 

agreement-in-principle, Bank of America paid fees of $276 million to 

Treasury, $57 million to the Federal Reserve Board, and $92 million to 

FDIC. Bank of America repaid its $20 billion TIP investment in 

December 2009.

In late 2008, at the height of the financial crisis, the Federal Reserve 

Board approved applications by several large nonbank financial firms to 

convert to bank holding company status. Becoming bank holding 

companies provided these firms with greater access to emergency 

government funding support, while subjecting them to oversight by the 

Federal Reserve System and other requirements under the Bank Holding 

Company Act.65 Eligibility for TARP capital investments under CPP and 

debt guarantees through TLGP were generally restricted to depository 

institutions and their holding companies, and several large firms that 

became bank holding companies in late 2008 subsequently participated 

in one or both of these programs. Among the largest firms converting to 

bank holding companies during the crisis were two investment banks 

(Goldman Sachs Group, Inc. and Morgan Stanley), two companies that 

were large providers of credit card products and other services (American 

Express Company and Discover Financial Services), and two other 

financial firms (CIT Group Inc. and GMAC LLC). In many cases, obtaining 

bank holding company status involved firms converting an industrial loan 

 

65Pub. L. No. 84-511, 70 Stat. 133 (codified at 12 U.S.C. §§ 1841-1852). 

Bank Holding Company Status 

and Liquidity Support for 

London Subsidiaries
 

Page 41 GAO-14-18 Government Support for Bank Holding Companies

corporation (ILC) into a bank.66 Federal Reserve Board officials noted that 

these firms already had access to the discount window through their ILCs 

and converting these ILCs to banks did not change their access to the 

discount window, but their access to discount window liquidity was limited 

by the amount of assets these subsidiaries—first as ILCs and later as 

banks—could pledge to the discount window as collateral. According to 

Federal Reserve Board documents, deposits held by these firms were a 

small fraction of their total consolidated assets at the time they became 

bank holding companies. While bank holding companies are subject to 

restrictions on nonbanking activities under the Bank Holding Company 

Act, Federal Reserve Board orders approving bank holding company 

applications described nonbanking activities of the companies that were 

permissible under the act and noted that the act provides each newly 

formed bank holding company 2 years to conform its existing nonbanking 

investments and activities to the act’s requirements.

On September 21, 2008, the Federal Reserve Board announced that 

FRBNY would extend credit—on terms similar to those applicable for 

PDCF loans—to the U.S. and London broker-dealer subsidiaries of 

Goldman Sachs Group, Inc., Morgan Stanley, and Merrill Lynch & Co. to 

provide support to these subsidiaries as they became part of bank holding 

companies that would be regulated by the Federal Reserve System.67 On 

November 23, 2008, in connection with other actions taken by Treasury, 

FDIC, and the Federal Reserve Board to assist Citigroup, the Federal 

Reserve Board authorized FRBNY to extend credit to the London-based 

 

66For various reasons, the Bank Holding Company Act exempts from regulation certain 

companies that own depository institutions; these subsidiaries are not defined as banks 

for purposes of the act and thus the companies that own them are not considered bank 

holding companies and are not required to comply with the act’s restrictions. 12 U.S.C. § 

1841(c)(2). One type of these companies is the ILC. Id. at § 1841(c)(2)(H). ILCs are 

limited-service financial institutions that make loans and raise funds by selling certificates 

called “investment shares” and by accepting deposits. ILCs are distinguished from finance 

companies because ILCs accept deposits in addition to making consumer loans. ILCs also 

differ from commercial banks because most ILCs do not offer demand deposit (checking) 

accounts. For more information about ILCs and other exempt companies, see GAO, Bank 

Holding Company Act: Characteristics and Regulation of Exempt Institutions and the 

Implications of Removing the Exemptions, GAO-12-160 (Washington, D.C.: Jan. 19, 

2012). 

67On that same day, Bank of America had agreed to acquire Merrill Lynch & Co., which 

would become part of a bank holding company pending completion of its merger with 

Bank of America, a bank holding company supervised by the Federal Reserve System 

upon completion of the acquisition. 
 

Page 42 GAO-14-18 Government Support for Bank Holding Companies

broker-dealer of Citigroup on terms similar to those applicable to PDCF 

loans.

Enacted in July 2010, the Dodd-Frank Act contains provisions intended to 

modify the scope of federal safety nets for financial firms, place limits on 

agency authorities to provide emergency assistance, and strengthen 

regulatory oversight of the largest firms, among other things.68 FDIC and 

the Federal Reserve Board have finalized certain changes to traditional 

safety nets for insured banks, but impacts of the act’s provisions to limit 

the scope of financial transactions that benefit from these safety nets will 

depend on how they are implemented. The act also prohibits regulators’ 

use of emergency authorities to rescue an individual institution and places 

other restrictions on these authorities. For example, the act effectively 

removes FDIC’s authority to provide assistance to a single, specific failing 

bank outside of receivership and grants FDIC new authority to resolve a 

large failing institution outside of bankruptcy.69 FDIC has made progress 

toward implementing its new resolution authority and continues to work to 

address potential obstacles to the viability of its resolution process as an 

alternative to bankruptcy, such as challenges that could arise when 

resolving more than one large institution concurrently. The act also places 

new restrictions and requirements on the Federal Reserve Board’s 

emergency lending authority. However, the Federal Reserve Board has 

not yet completed its process for drafting policies and procedures 

required by the act to implement these changes or set timeframes for 

doing so. Finalizing such procedures would help ensure that any future 

use of this authority complies with Dodd-Frank Act requirements. Finally, 

the Federal Reserve Board has made progress towards implementing 

certain enhanced regulatory standards that are intended to reduce the 

risks that the largest financial institutions pose to the financial system. 

 

68See generally Pub. L. No. 111-203, 124 Stat. 1376 (2010).

69§§ 204, 210, 124 Stat. at 1454-56, 1460.

Dodd-Frank Aims to 

Restrict Future 

Government Support, 

but Implementation Is 

Incomplete and 

Effectiveness 

Remains Uncertain
 

Page 43 GAO-14-18 Government Support for Bank Holding Companies

The Dodd-Frank Act instituted a series of reforms related to the traditional 

safety nets for insured banks, including changes to deposit insurance and 

discount window reporting requirements. In addition, the act contains 

provisions intended to limit the scope of financial transactions that benefit 

from access to these traditional safety nets. These provisions include 

revisions to the Federal Reserve Board’s authority to permit certain 

transactions between banks and their affiliates under Section 23A of the 

Federal Reserve Act, restrictions on the ability of bank holding companies 

to engage in proprietary trading; and restrictions on the ability of insured 

banks to engage in certain derivatives transactions.

FDIC has implemented Dodd-Frank Act provisions that increased the 

deposit insurance limit and required FDIC to change the calculation for 

premiums paid by insured depository institutions. Section 335 of the 

Dodd-Frank Act permanently raised the standard maximum deposit 

insurance amount from $100,000 to $250,000 for individual deposit 

accounts, as previously discussed.70 FDIC issued and made effective a 

final rule instituting the increase in August 2010 and required insured 

depository institutions to comply by January 2011.71 Section 343 of the 

act provided temporary unlimited deposit insurance coverage for certain 

uninsured deposits from December 2010 through December 2012.72 This 

coverage expired on December 31, 2012, and transaction accounts can 

now only be insured to the $250,000 ceiling.73 Section 331 of the DoddFrank Act required FDIC to amend its regulation and modify the definition 

of an insured depository institution’s assessment base, which can affect 

the amount of deposit insurance assessment the institution pays into the 

deposit insurance fund. Under the Dodd-Frank Act, the assessment base 

changed from total domestic deposits to average consolidated total 

assets minus average tangible equity (with some possible exceptions).74

FDIC issued a final rule changing the assessment base in February 2011, 

and the rule became effective in April 2011.75 According to FDIC, the 

 

70§335, 124 Stat. at 1540.

71Deposit Insurance Regulations; Permanent Increase in Standard Coverage Amount, 75 

Fed. Reg. 49363 (Aug. 13, 2010).

72 §343(a), 124 Stat. at 1544.

73Id.

74§331(b), 124 Stat. at 1538.

75Assessments, Large Bank Pricing, 76 Fed. Reg. 10672 (Feb. 25, 2011). 

Agencies Have Finalized 

Changes to Traditional 

Safety Nets, but Have Not 

Fully Implemented 

Provisions to Limit the 

Scope of Transactions That 

Have Access

Deposit Insurance
 

Page 44 GAO-14-18 Government Support for Bank Holding Companies

change in the assessment base calculation shifted some of the overall 

assessment burden from community banks to larger institutions that rely 

less on domestic deposits for their funding than smaller institutions, but 

without affecting the overall amount of assessment revenue collected.76 In 

the quarter after the rule became effective, those banks with less than 

$10 billion in assets saw a 33 percent drop in their assessments (from

about $1 billion to about $700 million), while those banks with over $10 

billion in assets saw a 17 percent rise in their assessments (from about 

$2.4 billion to about $2.8 billion).

The Dodd-Frank Act made changes to the Federal Reserve Board’s 

reporting requirements to increase the transparency for discount window 

transactions. During and after the crisis, some members of Congress and 

others expressed concern that certain details of the Federal Reserve 

System’s discount window and emergency lending activities, including the 

names of borrowers receiving loans, were kept confidential. Section 1103 

of the Dodd-Frank Act requires the Federal Reserve Board to disclose 

transaction-level details for discount window loans and open market 

transactions on a quarterly basis after a 2-year delay.77 The Dodd-Frank 

Act established similar reporting requirements for the Federal Reserve 

Board’s Section 13(3) authority, as discussed later. No rulemaking was 

required, and the Federal Reserve Board began to post the data publicly 

on its website in September 2012. The first set of releases covered loans 

made between July and September 2010, and data for subsequent 

periods are being published quarterly with a 2-year lag. The Dodd-Frank 

Act also grants GAO authority to audit certain aspects of discount window 

transactions occurring after July 21, 2010.

The Dodd-Frank Act made numerous changes to Section 23A of the 

Federal Reserve Act that both significantly expanded the scope of 

activities covered by Section 23A’s restrictions and created new 

requirements for participation by FDIC and the OCC in granting 

 

76For more information on this rule, see GAO, Dodd-Frank Act Regulations: 

Implementation Could Benefit from Additional Analyses and Coordination, GAO-12-151

(Washington, D.C.: Nov. 10, 2011). 

77§ 1103(b), 124 Stat. at 2118.

Discount Window Reporting 

Requirements 

Section 23A 
 

Page 45 GAO-14-18 Government Support for Bank Holding Companies

exceptions.78 As previously discussed, the Federal Reserve Board 

granted a number of exemptions to Section 23A during the crisis. Some 

observers have raised concerns that these exemptions in aggregate 

resulted in a large scale transfer of federal safety net benefits to the 

nonbank, or “shadow banking,” system. The changes listed below, with 

the exception of changes related to investments in private funds, did not 

require rulemakings and became effective on July 21, 2012.

• The Dodd-Frank Act gave FDIC and OCC, jointly with the Federal 

Reserve Board, the authority to grant Section 23A exemptions by 

order for institutions they supervise. The Dodd-Frank Act requires the 

regulators to notify FDIC of any proposed exemption and give FDIC 

60 days to object in writing, should FDIC determine the proposed 

exemption constitutes an unacceptable risk to the deposit insurance 

fund.79 The Federal Reserve retains the authority to grant exemptions 

by regulation.

• The Dodd-Frank Act expanded the scope of activities that are covered 

by Section 23A by amending the definition of covered transactions to 

include derivatives transactions with affiliates and transactions with 

affiliates that involve securities lending and borrowing that may cause 

a bank to face credit exposure to an affiliate.80 The Dodd-Frank Act 

also removed the exception from the 10 percent quantitative limit for 

certain covered transactions between a bank and its financial 

subsidiary and extended section 23A and 23B to cover permitted 

investments in certain private funds. 

• The Dodd-Frank Act changed the collateral requirements for 23A 

transactions by requiring banks to maintain the correct level of 

 

78Section 23A of the Federal Reserve Act restricts the ability of banks to provide funding 

to their nonbank affiliates above a certain limit, and imposes collateral and other 

requirements for those transactions. The goals of Section 23A are to protect federally 

insured banks from too much exposure to riskier nonbank affiliates and to prevent the 

transfer of the federal subsidy to nondepository institutions.

79§ 608(a), 124 Stat. at 1609-10.

80§ 608(a)(1)(A), 124 Stat. at 1608. Section 23B generally requires that certain 

transactions between a bank and its affiliates occur on market terms; that is, on terms and 

under circumstances that are substantially the same, or at least as favorable to the bank, 

as those prevailing at the time for comparable transactions with unaffiliated companies. 

Section 23B applies to any transaction by a bank with a third party if an affiliate has a 

financial interest in the third party or if an affiliate is a participant in the transaction. 
 

Page 46 GAO-14-18 Government Support for Bank Holding Companies

collateral at all times for covered transactions subject to 

collateralization.81 Previously, banks only had to post collateral at the 

time of entrance into the covered transaction. This change was 

designed to strengthen the protection granted to banks extending 

credit to their affiliates by ensuring that the collateral remains correctly 

valued and simultaneously shields the bank’s interest from 

fluctuations in market prices of collateralized assets.

As of October 2013, the Federal Reserve Board has granted only two 

exemptions since the enactment of the Dodd-Frank Act, according to 

available information on its website. How the Federal Reserve Board, 

FDIC, and OCC might respond to requests for exemptions in the future is 

uncertain. Representatives from one large bank told us that their primary 

regulator advised them that that because of FDIC’s required approval, 

they should not expect exemptions to be available going forward. 

However, one academic has expressed concern about how exemptions

might be applied under different circumstances, such as in periods of 

economic stress.

Agencies have not yet issued final rules to implement the Dodd-Frank 

Act’s restrictions on proprietary trading—trading activities conducted by 

banking entities for their own account as opposed to those of their clients.

A number of market participants and researchers with whom we spoke 

maintain that the ability of banking entities to use federally insured 

deposits to seek profits for their own account provides incentives for them 

to take on excessive risk. To address these concerns, Section 619 of the 

Dodd-Frank Act (also known as the Volcker Rule) generally prohibits 

proprietary trading by insured depository institutions and their affiliates 

and places restrictions on sponsorship or investment in hedge and private 

equity funds. An FSOC study noted that implementing the act’s 

restrictions on proprietary trading will be challenging because certain 

trading activities exempted from the act’s restrictions may appear very 

similar to proprietary trading activities that the act seeks to restrict. While 

 

81§ 608(a)(2), 124 Stat. at 1608.

Proprietary Trading (Volcker 

Rule) 
 

Page 47 GAO-14-18 Government Support for Bank Holding Companies

regulators issued proposed rules in November 2011 and February 2012, 

no final or interim final rules have been issued.82

Section 716 of the Dodd-Frank Act requires banks that are registered 

dealers of derivatives known as swaps to transfer certain swap activities 

to nonbank affiliates, or lose access to deposit insurance and the Federal 

Reserve System liquidity provided through the discount window for 

certain activities taken in connection with the swap entity’s swap 

business.83 Section 716’s prohibition on federal assistance to swaps 

entities became effective in July 2013, but the law allowed for an initial 2-

year extension as well as an additional 1-year extension. Several banks 

applied for and were granted 2-year extensions by the Federal Reserve 

Board and OCC, and those financial institutions now have until July 2015 

to comply, with the additional option of applying for another 1-year 

exemption.

The Dodd-Frank Act restricts emergency authorities used by financial 

regulators during the most recent financial crisis, such as FDIC’s open 

bank assistance authority; provides FDIC with new resolution authority to 

resolve a large, complex failing firm in a manner that limits the disruption 

to the financial system; and establishes a requirement for certain firms to 

develop and submit to regulators resolution plans (known as living wills) 

for their resolution under bankruptcy.

The Dodd-Frank Act restricts FDIC’s authority to provide open bank 

assistance to an individual failing bank outside of receivership and 

replaces it with a new authority, subject to certain restrictions and a joint 

 

82Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and 

Relationships With, Hedge Funds and Covered Funds; Proposed Rule, 77 Fed. Reg. 8332 

(Feb. 14, 2012); Prohibitions and Restrictions on Proprietary Trading and Certain Interests 

in, and Relationships With, Hedge Funds and Private Equity Funds; Proposed Rule, 76 

Fed. Reg. 68846 (Nov. 7, 2011).

83§ 716(a), 124 Stat. at 1648. A swap is a type of derivative that involves an ongoing 

exchange of one or more assets, liabilities, or payments for a specified period. Financial 

and nonfinancial firms use swaps and other derivatives to hedge risk, or speculate, or for 

other purposes. Swaps include interest rate swaps, commodity-based swaps, and broadbased credit default swaps. Security-based swaps include single-name and narrow-based 

credit default swaps and equity-based swaps. Certain insured depository institutions are 

excluded from the definition of “swaps entity” and are therefore exempt from Section 716 

restrictions. § 716(b)(2)(B). 

Restrictions on Some 

Derivatives Transactions 

Dodd-Frank Restricts 

Certain FDIC Authorities 

but Provides New 

Resolution Authority

Open Bank Assistance 
 

Page 48 GAO-14-18 Government Support for Bank Holding Companies

resolution of congressional approval, to create a debt-guarantee program 

with broad-based eligibility.84 Previously, FDIC could provide open bank 

assistance upon a joint determination by FDIC, the Federal Reserve 

Board, and the Secretary of the Treasury that compliance with certain 

cost limitations would result in serious adverse effects on economic 

conditions or financial stability and that such assistance could mitigate 

these systemic effects.85 Sections 1104 through 1106 of the Dodd-Frank 

Act provide permanent authority for FDIC to establish a widely available 

program to guarantee certain debt obligations of solvent insured 

depository institutions or solvent bank holding companies during times of 

severe economic distress, upon a liquidity event finding. In addition, 

institutions would have to pay fees for these guarantees as they did under 

TLGP during the crisis.86 In order for FDIC to exercise the authority, the 

Dodd-Frank Act requires the Secretary of the Treasury (in consultation 

with the President) to determine the maximum amount of debt 

outstanding that FDIC can guarantee, and the guarantee authority 

requires congressional approval.87 Furthermore, the Dodd-Frank Act 

amendments to the Federal Deposit Insurance Act that provided for 

temporary unlimited deposit insurance for noninterest-bearing transaction 

accounts were repealed as of January 1, 2013. The FDIC may not rely on 

this authority or its former systemic risk exception authority to provide 

unlimited deposit insurance for transaction accounts in a future crisis.

The Dodd-Frank Act includes two key reforms intended to facilitate the 

orderly resolution of a large failing firm without a taxpayer-funded rescue:

(1) the Orderly Liquidation Authority (OLA), through which FDIC can 

liquidate large financial firms outside of the bankruptcy process; and (2) 

requirements for bank holding companies with $50 billion or more in 

assets and nonbank financial companies designated by FSOC to 

 

84§§ 1105(a), 1106(b), 124 Stat. at 2121, 2125.

85For more information about the systemic risk exception, see GAO, Federal Deposit 

Insurance Act: Regulators’ Use of Systemic Risk Exception Raises Moral Hazard 

Concerns and Opportunities Exist to Clarify the Provision, GAO-10-100 (Washington, 

D.C.: Apr. 15, 2010). A systemic risk determination exempts FDIC from the Federal 

Deposit Insurance Act’s least-cost rule, which requires FDIC to use the least costly 

method when assisting an insured institution and prohibits FDIC from increasing losses to 

the Deposit Insurance Fund by protecting creditors and uninsured depositors of an insured 

institution.

86§ 1105(e), 124 Stat. at 2124.

87§ 1105(c)-(d), 124 Stat. at 2121-2122.

Resolution Authority
 

Page 49 GAO-14-18 Government Support for Bank Holding Companies

formulate and submit to regulators resolution plans (or “living wills”) that 

detail how the companies could be resolved in bankruptcy in the event of 

a material financial distress or failure.88

OLA gives FDIC the authority, subject to certain constraints, to liquidate 

large financial firms, including nonbanks, outside of the bankruptcy 

process.89 This authority allows for FDIC to be appointed receiver for a 

financial firm if the Secretary of the Treasury determines that the firm’s 

failure and its resolution under applicable federal or state law, including 

bankruptcy, would have serious adverse effects on U.S. financial stability 

and no viable private sector alternative is available to prevent the default 

of the financial company.90 While the Dodd-Frank Act does not specify 

how FDIC must exercise its OLA resolution authority and while a number 

of approaches have been considered, FDIC’s preferred approach to 

resolving a firm under OLA is referred to as Single Point-of-Entry (SPOE). 

Under the SPOE approach, FDIC would be appointed receiver of a toptier U.S. parent holding company of the financial group determined to be 

in default or in danger of default following the completion of the 

appointment process set forth under the Dodd-Frank Act. Immediately 

after placing the parent holding company into receivership, FDIC would 

 

88During the financial crisis, several large financial institutions became insolvent and filed 

for bankruptcy when no private-sector solution was found. For example, Lehman Brothers 

filed for Chapter 11 bankruptcy on the morning of September 15, 2008. Lehman had $639 

billion in total assets and $613 billion in total liabilities as of May 31, 2008. The bankruptcy 

proceedings highlighted inconsistencies in laws and regulations across countries and 

limitations on the ability of countries to coordinate effectively during the reorganization or 

liquidation of international financial institutions. Bankruptcy is a federal court procedure 

conducted under rules and requirements of the U.S. Bankruptcy Code. The goal of 

bankruptcy is to give individuals and businesses a “fresh start” from burdensome debts by 

eliminating or restructuring debts they cannot repay and help creditors receive some 

payment in an equitable manner through liquidation or reorganization of the debtor. 

89§ 204, 124 Stat. at 1454-1456.

90§ 204(b), 124 Stat. at 1455. The factors to be addressed are set forth in Section 203(b) 

of the Dodd-Frank Act. § 203(b), 124 Stat. at 1451. Before the Secretary of the Treasury, 

in consultation with the President, makes a decision to appoint FDIC as receiver of a 

covered financial company, at least two-thirds of those serving on the Board of Governors 

of the Federal Reserve System and at least two-thirds of those serving on the Board of 

Directors of FDIC must vote to make a written recommendation to the Secretary of the 

Treasury to appoint FDIC as receiver. § 203(a), 124 Stat. at 1450. In the case of a brokerdealer, the recommendation must come from the Federal Reserve Board and the 

Securities and Exchange Commission, in consultation with FDIC, and in the case of an 

insurance company from the Federal Reserve Board and the Director of the Federal 

Insurance Office, in consultation with FDIC.
 

Page 50 GAO-14-18 Government Support for Bank Holding Companies

transfer some assets (primarily the equity and investments in 

subsidiaries) from the receivership estate to a bridge financial holding 

company. By taking control of the firm at the holding company level, this 

approach is intended to allow subsidiaries (domestic and foreign) carrying 

out critical services to remain open and operating. One key factor for the 

success of the SPOE approach is ensuring that the holding company 

builds up sufficient loss-absorbing capacity to enable it to recapitalize its 

subsidiaries, if necessary. 

In a SPOE resolution, at the parent holding company level, shareholders 

would be wiped out, and unsecured debt holders would have their claims 

written down to reflect any losses that shareholders cannot cover. Under 

the Dodd-Frank Act, officers and directors responsible for the failure 

cannot be retained.91 FDIC expects the well-capitalized bridge financial 

company and its subsidiaries to borrow in the private markets and from 

customary sources of liquidity. The new resolution authority under the 

Dodd- Frank Act provides a back-up source for liquidity support, the 

Orderly Liquidation Fund, which could provide liquidity support to the 

bridge financial company if customary sources of liquidity are 

unavailable.92 The law requires FDIC to recover any losses arising from a 

resolution by assessing bank holding companies with $50 billion or more

in consolidated assets, nonbank financial holding companies designated 

for supervision by the Federal Reserve System, and other financial 

companies with $50 billion or more in consolidated assets.

93

Progress has been made to implement the reforms related to resolving 

large, complex financial institutions. FDIC has largely completed the core 

rulemakings necessary to carry out its systemic resolution responsibilities. 

For example, FDIC approved a final rule implementing OLA that 

addressed the priority of claims and the treatment of similarly situated 

creditors.94 The FDIC plans to seek public comment on its resolution 

strategy by the end of 2013. In addition, FDIC has worked with other 

financial regulatory agencies, both domestic and foreign, to make 

 

91§ 204(a)(2), 124 Stat. at 1454. 

92§ 210(n), 124 Stat. at 1506. 

93§ 210(o)(1), 124 Stat. at 1509.

94Certain Orderly Liquidation Authority Provisions under Title II of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act, 76 Fed. Reg. 41626 (July 15, 2011).
 

Page 51 GAO-14-18 Government Support for Bank Holding Companies

extensive preparations and to conduct planning exercises in order to be 

as prepared as possible to successfully resolve a firm whose failure could 

threaten the stability of the financial system.

Although progress has been made, FDIC and others have acknowledged 

that OLA is new and untested, and several challenges to its effectiveness 

remain. For example, FDIC could face difficulties in effectively managing 

the failure of one or more large bank holding companies or credibly 

imposing losses on the creditors of those holding companies. These 

challenges include the following:

• Financial stability concerns. FDIC may find it difficult to impose losses 

on all creditors of failing financial institutions because of concerns 

about financial stability. FDIC could in principle transfer certain bank 

holding company liabilities to a bridge holding company in order to 

protect those creditors. This concern has been subject to debate. For 

example, a report by the Bipartisan Policy Center, a think-tank, 

emphasized the importance of protecting short-term creditors of 

systemically important firms, while an industry association report 

emphasized the importance of imposing losses on short-term 

creditors in order to maintain market discipline.95 While the DoddFrank Act allows FDIC to treat similarly situated creditors differently, it 

places restrictions on FDIC’s ability to do so. Any transfer of liabilities 

from the receivership to the bridge financial company that has a 

disparate impact upon similarly situated creditors will only be made if 

such a transfer will maximize the return to those creditors left in the 

receivership and if such action is necessary to initiate and continue 

operations essential to the bridge financial company.96

• Global cooperation. Some experts have questioned how FDIC would 

handle issues related to the non-U.S. subsidiaries of a failed firm. For 

example, if a global U.S. firm were at risk of being placed in 

receivership under OLA, foreign regulators might act to ring-fence 

assets of a non-U.S. subsidiary to prevent these assets from being 

transferred abroad where they would not be available to protect 

 

95Bipartisan Policy Center, Too Big to Fail: The Path to a Solution (Washington, D.C.: May 

2013), The Clearing House, Report on the Orderly Liquidation Authority Resolution 

Symposium and Simulation (New York, N.Y.: January 2013).

96See Pub. L. No. 111-203, § 210(h)(5)(E), 124 Stat. 1376, 1499 (2010); 12 U.S.C. § 

5390(b)(4)(A)(ii); 12 CFR 380.27.
 

Page 52 GAO-14-18 Government Support for Bank Holding Companies

counterparties in their jurisdiction. Such a development could increase 

financial instability by reducing the assets available to a U.S. firm to 

satisfy creditors’ claims. Because SPOE involves losses borne only by 

holding company creditors, some observers have suggested this 

approach would avoid potential challenges associated with the failure 

of foreign subsidiaries or actions of foreign regulators to ring-fence the 

assets of a subsidiary. For example, if subsidiary liabilities were 

guaranteed under SPOE, foreign regulators would not need to ringfence foreign subsidiaries in order to protect foreign customers or 

creditors.

• Multiple, simultaneous insolvencies. Experts have questioned whether 

FDIC has sufficient capacity to use OLA to handle multiple failures of 

systemically important firms and thus prevent further systemic 

disruption. In addition, FDIC may find it more difficult to impose losses 

on creditors when multiple large institutions are failing at once, which 

could reduce the credibility of OLA. According to a survey of investors, 

few respondents believed that FDIC could effectively use OLA to 

handle the resolution of multiple firms simultaneously.97

Title I of the Dodd-Frank Act requires bank holding companies with $50 

billion or more in consolidated assets and nonbank financial companies 

designated by FSOC to formulate and submit to FDIC, the Federal 

Reserve Board, and FSOC resolution plans (or “living wills”) that detail 

how the companies could be resolved in the event of material financial 

distress or failure.98 The Federal Reserve Board and FDIC finalized rules 

relating to resolution plans, and the large financial institutions that were 

the first firms required to prepare such plans submitted these to 

regulators as expected in July 2012.99 Regulators reviewed these initial 

plans and developed guidance on what information should be included in 

2013 resolution plan submissions.100

 

97Barclays, TBTF: The $83bn Question (New York, N.Y.: July 1, 2013).

98§ 165(d)(1), 124 Stat. at 1426.

99Living Wills Required, 76 Fed. Reg. 67323 (Nov. 1, 2011).

100In October 2013, the Federal Reserve Board and FDIC released the public sections of 

filed annual resolution plans for 11 firms. Federal Reserve Board and FDIC, Agencies 

Release Public Sections of the Second Submission of Resolution Plans for 11 Institutions, 

accessed on November 7, 2013, 

http://www.federalreserve.gov/newsevents/press/bcreg/20131003a.htm

Living Wills
 

Page 53 GAO-14-18 Government Support for Bank Holding Companies

Experts have expressed mixed views on the usefulness of the living wills. 

Some experts have noted that resolution plans may provide regulators 

with critical information about a firm’s organizational structure that could 

aid the resolution process or motivate complex firms to simplify their 

structures, and this simplification could help facilitate resolution. However, 

other experts have told us that resolution plans may provide limited 

benefits in simplifying firm structures, in part because tax, jurisdictional, 

and other considerations may outweigh the benefits of simplification. 

Furthermore, some experts commented that although resolution plans 

may assist regulators in gaining a better understanding of the structures 

and activities of complex financial firms, the plans may not be useful 

guides during an actual liquidation—in part because the plans could 

become outdated or because the plans may not be helpful during a crisis.

The Dodd-Frank Act creates new restrictions and requirements 

associated with the Federal Reserve Board’s Section 13(3) authority.101

Generally, the act prohibits use of Section 13(3) authority to assist an 

individual institution (as the Federal Reserve Board did with Bear Stearns 

and AIG). While the act continues to allow the Federal Reserve Board to 

use 13(3) authority to authorize programs with broad-based eligibility, it 

sets forth new restrictions and requirements for such programs. For 

example, the act prohibits a Reserve Bank from lending to an insolvent 

firm through a broad-based program or creating a program designed to 

remove assets from a single and specific institution’s balance sheet.102

According to Federal Reserve Board staff, under its current Section 13(3) 

authority, the Federal Reserve Board could re-launch emergency 

programs to assist the repurchase agreement, commercial paper, and

other credit markets, if these markets became severely strained and if the 

program is broad-based and meets the other requirements imposed by 

the Dodd-Frank Act. The Dodd-Frank Act also includes additional 

 

101§ 1101(a), 124 Stat. at 2113.

102§ 1101(a)(6), 124 Stat. at 2114 (codified at 12 U.S.C. § 343(B)(ii)-(iii)). 

Dodd-Frank Restricts 

Emergency Lending 

Authority, but the Federal 

Reserve Board Has Not 

Completed its Process for 

Drafting Required 

Procedures
 

Page 54 GAO-14-18 Government Support for Bank Holding Companies

transparency and reporting requirements should the Federal Reserve 

Board exercise its Section 13(3) authority.103

Although the Dodd-Frank Act requires the Federal Reserve Board to 

promulgate regulations that establish policies and procedures governing 

any future lending under Section 13(3) authority, Federal Reserve Board 

officials told us that they have not yet completed the process for drafting

these policies and procedures.

104 Federal Reserve Board staff have made 

progress in drafting these policies and procedures by regulation, but have 

not set time frames for completing and publicly proposing a draft 

regulation. While there is no mandated deadline for completion of the 

procedures, the Dodd-Frank Act does require the Federal Reserve Board 

to establish the policies and procedures “as soon as is practicable.”105

According to a Federal Reserve Board official, in implementing its 

regulatory responsibilities under the Dodd-Frank Act, the Federal Reserve 

Board has focused first on the required regulations that have statutory 

deadlines and the regulations which are specifically directed at enhancing 

the safety and soundness of the financial system. Although the act did not 

set a specific deadline, the Federal Reserve Board can better ensure 

accountability for implementing rulemaking and more timely completion of 

these procedures by setting internal timelines for completing the 

rulemaking process. Furthermore, finalizing these policies and 

procedures could help the Federal Reserve Board to ensure that any 

future emergency lending does not assist an insolvent firm and complies 

with other Dodd-Frank Act requirements. 

Completing these policies and procedures could also address prior 

recommendations we made with respect to the Federal Reserve System’s 

emergency assistance programs.106 For example, in our July 2011 report, 

we recommended that the Chairman of the Federal Reserve Board direct 

Federal Reserve Board and Reserve Bank staff to set forth the Federal 

 

103§§ 1101-1103, 124 Stat. at 2113-20. These requirements include a requirement for the 

Federal Reserve Board to report to Congress on any loan or financial assistance 

authorized under Section 13(3), including the justification for the exercise of authority; the 

identity of the recipient; the date, amount, and form of the assistance; and the material 

terms of the assistance. § 1101(a)(6) (codified at 12 U.S.C. § 343(C)(i)).

104§ 1101(a)(6)(B)(i), 124 Stat. at 2113-14. (codified at 12 U.S.C. § 343(B)).

105§ 1101(a)(6)(B)(i), 124 Stat. at 2113. (codified at 12 U.S.C. § 343(B)(i)).

106GAO-11-696. 
 

Page 55 GAO-14-18 Government Support for Bank Holding Companies

Reserve Board’s process for documenting its justification for each use of 

section 13(3) authority. We noted that more complete documentation 

could help the Federal Reserve Board ensure that it is complying with the 

Dodd-Frank Act’s requirement on its use of this authority.107 The Federal 

Reserve Board agreed that this prior report’s recommendations would 

benefit its response to future crises and agreed to strongly consider how 

best to respond.

The Dodd-Frank Act also introduced a number of regulatory changes 

designed to reduce the risks that the largest financial institutions pose to 

the financial system. A notable change is a set of new prudential 

requirements and capital standards designed to strengthen the regulatory 

oversight and capital base of large financial institutions.108 The Federal 

Reserve Board has made progress towards implementing these 

enhanced regulatory standards.

The Dodd-Frank Act requires the Federal Reserve Board to create 

enhanced capital and prudential standards for bank holding companies 

with $50 billion or more in consolidated assets and nonbank financial 

holding companies designated by FSOC.109 The act’s provisions related 

to enhanced prudential standards for these covered firms include the 

following:

• Risk-based capital requirements and leverage limits. The Federal 

Reserve Board must establish capital and leverage standards, which 

as proposed would include a requirement for covered firms to develop 

capital plans to help ensure that they maintain capital ratios above 

specified standards, under both normal and adverse conditions.110 In 

addition, the Federal Reserve Board has announced its intention to 

apply capital surcharges to some or all firms based on the risks firms 

pose to the financial system.

 

107See GAO-11-696. 

108§§ 165-166, 124 Stat. at 1423-32.

109§165(a)(1), 124 Stat. at 1423.

110§165(b)(1)(A)(i), 124 Stat. at 1424; Enhanced Prudential Standards and Early 

Remediation Requirements for Covered Companies; Proposed Rule, 77 Fed. Reg. 594 

(Jan. 5, 2012).

Enhanced Prudential 

Standards for Large 

Financial Firms Have Not 

Been Fully Implemented
 

Page 56 GAO-14-18 Government Support for Bank Holding Companies

• Liquidity requirements. The Federal Reserve Board must establish 

liquidity standards, which as proposed would include requirements for 

covered firms to hold liquid assets that can be used to cover their 

cash outflows over short periods.111

• Single-counterparty credit limits. The Federal Reserve Board must 

issue rules that, in general, limit the total net credit exposure of a 

covered firm to any single unaffiliated company to 25 percent of its 

total capital stock and surplus.112

• Risk management requirements. Publicly traded covered firms must 

establish a risk committee and be subject to enhanced risk 

management standards.113

• Stress testing requirements. The Federal Reserve Board is required 

to conduct an annual evaluation of whether covered firms have 

sufficient capital to absorb losses that could arise from adverse 

economic conditions.114

• Debt-to-equity limits. Certain covered firms may be required to 

maintain a debt-to-equity ratio of no more than 15-to-1.115

• Early remediation. The Federal Reserve Board is required to 

establish a regulatory framework for the early remediation of financial 

weaknesses of covered firms in order to minimize the probability that 

such companies will become insolvent and the potential harm of such 

insolvencies to the financial stability of the United States.116

 

111§165(b)(1)(A)(ii), 124 Stat. at 1424: Enhanced Prudential Standards and Early 

Remediation Requirements for Covered Companies; Proposed Rule, 77 Fed. Reg. 594 

(Jan. 5, 2012).

112§165(e)(2), 124 Stat. at 1427.

113§165(h), 124 Stat. at 1429.

114§165(i)(1), 124 Stat. at 1430. Companies subject to enhanced prudential standards 

also must conduct annual or semiannual stress tests of their own, depending on their size.

§ 165(i)(2), 124 Stat. at 1430-31.

115§165(j), 124 Stat. at 1431.

116§166, 124 Stat. at 1432.
 

Page 57 GAO-14-18 Government Support for Bank Holding Companies

Some of these rules have been finalized, while others have not. For 

example, in October 2012, the Federal Reserve Board issued a final rule 

implementing the supervisory and company-run stress test 

requirements.117 In December 2012, the Federal Reserve Board issued 

proposed regulations designed to implement enhanced prudential 

standards and early remediation requirements for foreign banking 

organizations and foreign nonbank financial companies.118

The Federal Reserve Board intends to satisfy some aspects of the DoddFrank Act’s heightened prudential standards rules for bank holding 

companies with total consolidated assets of $50 billion or more through 

implementation of the new Basel Committee on Banking Supervision 

standards, known as Basel III. The new standards seek to improve the 

quality of regulatory capital and introduce a new minimum common equity 

requirement. Basel III also raises the quantity and quality of capital 

required and introduces capital conservation and countercyclical buffers 

designed to better ensure that banks have sufficient capital to absorb 

losses in a future crisis. In addition, Basel III establishes for the first time 

an international leverage standard for internationally active banks.

Consistent with that intention, in July 2013 FDIC, the Federal Reserve 

Board, and OCC finalized a rule that revised risk-based and leverage 

capital requirements for banking organizations.119 The interim final rule 

implements a revised definition of regulatory capital, a new common 

equity Tier 1 minimum capital requirement, a higher minimum Tier 1 

 

117Supervisory and Company-Run Stress Test Requirements for Covered Companies, 77 

Fed. Reg. 62378 (Oct. 12, 2012); 12 C.F.R. §§ 252.131-136, 252.141-138. 

118Enhanced Prudential Standards and Early Remediation Requirements for Foreign 

Banking Organizations and Foreign Nonbank Financial Companies, 77 Fed. Reg. 76628 

(Dec. 28, 2012). Additionally, rules regarding single-counterparty credit limits and risk 

management have been proposed but not finalized. Enhanced Prudential Standards and 

Early Remediation Requirements for Covered Companies; Proposed Rule, 77 Fed. Reg. 

594 (Jan. 5, 2012). 

119Regulatory Capital Rules: Regulatory Capital, Implementation of Basel III, Capital 

Adequacy, Transition Provisions, Prompt Corrective Action, Standardized Approach for 

Risk-Weighted Assets, Market Discipline and Disclosure Requirements, Advanced 

Approaches Risk-Based Capital Rule, and Market Risk Capital Rule, 78 Fed. Reg. 62018 

(Oct. 11, 2013); 78 Fed. Reg. 55340 (Sept. 10, 2013).
 

Page 58 GAO-14-18 Government Support for Bank Holding Companies

capital requirement, and a supplementary leverage ratio that incorporates 

a broader set of exposures in the denominator.120

In addition, in July 2013 FDIC, the Federal Reserve Board, and OCC 

proposed a rule to establish a new leverage buffer.121 Specifically, the 

proposed rule requires bank holding companies with more than $700 

billion in consolidated total assets or $10 trillion in assets under custody 

to maintain a Tier 1 capital leverage buffer of at least 2 percent above the 

minimum supplementary leverage ratio requirement of 3 percent, for a 

total of 5 percent. In addition to the leverage buffer for covered bank 

holding companies, the proposed rule would require insured depository 

institutions of covered bank holding companies to meet a 6 percent 

supplementary leverage ratio to be considered “well capitalized” for 

prompt corrective action purposes.122 The proposed rule would take effect 

beginning on January 1, 2018.

During the 2007-2009 financial crisis, federal agencies determined that 

expanding support to insured banks through traditional safety nets—the 

discount window and deposit insurance—would not be sufficient to stem 

disruptions to important credit markets. The Federal Reserve System, 

Treasury, and FDIC introduced new programs to provide general funding 

 

120Id. National banking regulators classify capital as either Tier 1—currently the highestquality form of capital and includes common equity—or Tier 2, which is weaker in 

absorbing losses. Tier 1, or core, capital consists primarily of common equity. Tier 2 is 

supplementary capital and includes limited amounts of subordinated debt, loan loss 

reserves, and certain other instruments. 

121Regulatory Capital Rules: Regulatory Capital, Enhanced Supplementary Leverage 

Ratio Standards for Certain Bank Holding Companies and Their Subsidiary Insured 

Depository Institutions, 78 Fed. Reg. 51101 (Aug. 20, 2013).

122Id. The Federal Deposit Insurance Corporation Improvement Act of 1991, Pub. L. No. 

102-242, 105 Stat. 2236, created Sections 38 and 39 of the Federal Deposit Insurance Act 

to improve the ability of regulators to identify and promptly address deficiencies at 

depository institutions—banks and thrifts—and better safeguard and minimize losses to 

the deposit insurance fund. Section 38 requires regulators to classify banks into one of 

five capital categories and take increasingly severe actions, known as prompt corrective 

action, as a bank’s capital deteriorates. Section 38 primarily focuses on capital as an 

indicator of bank health; therefore, supervisory actions under it are designed to address a 

bank’s deteriorating capital level. Section 39 requires the banking regulators to prescribe 

safety and soundness standards related to noncapital criteria, including operations and 

management; compensation; and asset quality, earnings, and stock valuation. Section 39 

allows the regulators to take action if a bank fails to meet one or more of these standards.

Conclusions 
 

Page 59 GAO-14-18 Government Support for Bank Holding Companies

support to the financial sector, and some of these programs provided 

support at the bank holding company level or directly to nonbank financial 

institutions. These programs helped to improve financial conditions, and 

bank holding companies and their subsidiaries also experienced 

individual benefits from participating in particular programs, including 

liquidity benefits from programs that allowed them to borrow at lower 

interest rates and at longer maturities than might have been available in 

the markets. In addition, the Federal Reserve Board granted exemptions 

to allow banks to channel additional funding support to nonbank financial 

firms that lacked direct access to the federal safety nets for insured 

depository institutions. Government assistance to prevent the failures of 

large financial institutions—such as Fannie Mae, Freddie Mac, and AIG—

also benefited bank holding companies, their subsidiaries, and other firms 

that had large risk exposures to these institutions. While these actions 

collectively helped to avert a more severe crisis, they raised concerns 

about moral hazard and the appropriate scope of federal safety nets for 

the financial sector.

The Dodd-Frank Act contains provisions that aim to restrict future 

government support for financial institutions, but the effectiveness of 

these provisions will depend in large part on how agencies implement 

them. Among other things, the act places new restrictions on the Federal 

Reserve Board and FDIC’s emergency authorities and grants FDIC new 

resolution authority to resolve a large failing institution outside of the 

bankruptcy process. While the act continues to allow the Federal Reserve 

Board to use its authority under Section 13(3) of the Federal Reserve Act 

to authorize programs with broad-based eligibility, it sets forth new 

restrictions and requirements for such programs, including a requirement 

that lending not assist insolvent firms. The act also requires the Federal 

Reserve Board to establish policies and procedures governing future 

actions under this authority. As of the date of this report, the Federal 

Reserve Board has not yet completed its process for drafting these 

policies and procedures and has not set time frames for doing so. A 

Federal Reserve Board official indicated that the Board of Governors has 

focused first on completion of other required regulations that have 

statutory deadlines and the regulations that are specifically directed at 

enhancing the safety and soundness of the U.S. financial system. While 

the act did not set a specific deadline, setting time frames could help 

ensure more timely completion of these policies and procedures. 

Moreover, finalizing these procedures could help the Federal Reserve 

Board to ensure that any future emergency lending does not assist a 

failing firm and complies with other new requirements. Consistent with the 

changes to Federal Reserve Board authorities, the act removes FDIC’s 
 

Page 60 GAO-14-18 Government Support for Bank Holding Companies

authority to provide open bank assistance under the systemic risk 

exception while allowing FDIC (subject to congressional approval) to 

provide certain assistance through a broadly available program. FDIC 

continues to work to implement its new resolution authority. The viability 

and credibility of its resolution process as an alternative to placing a 

systemically important firm into bankruptcy is a critical part of removing 

market expectations of future extraordinary government assistance. The 

act also contains provisions to limit the scope of financial transactions that 

benefit from access to federal safety nets, although it remains to be seen 

how these provisions will be implemented. For example, the act could 

result in fewer regulatory exemptions allowing banks to provide additional 

funding to their nonbank affiliates. Finally, certain provisions of the act 

that require the Federal Reserve Board to subject the largest financial

firms to heightened prudential standards have not been fully implemented 

but could reduce the risks that those institutions pose to the financial 

system. 

To better ensure that the design and implementation of any future 

emergency lending programs comply with Dodd-Frank Act requirements 

in a timely manner, we recommend that the Chairman of the Board of 

Governors of the Federal Reserve System set timeframes for completing 

the process for drafting policies and procedures governing the use of 

emergency lending authority under Section 13(3) of the Federal Reserve 

Act.

We provided copies of this draft report to the FDIC, the Federal Reserve 

Board, FSOC, OCC, and Treasury for their review and comment. We also 

provided excerpts of the draft report for technical comment to the Federal 

Housing Finance Agency. All of the agencies provided technical 

comments, which we have incorporated, as appropriate.

In its written comments, which are reprinted in appendix V, the Federal 

Reserve Board accepted our recommendation and noted that it has made 

progress toward completing draft policies and procedures governing the 

use of its emergency lending authority under Section 13(3) of the Federal 

Reserve Act. The Federal Reserve Board’s letter referred to its 

Chairman’s July 2013 remarks on the status of these efforts. The 

Chairman said that he was hopeful that a final product would be 

completed relatively soon, perhaps by the end of this year. He further 

noted that in the meantime, the law is clear about what the Federal 

Reserve Board can and cannot do. Based on these remarks, we 

Recommendation for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 61 GAO-14-18 Government Support for Bank Holding Companies

conducted further audit work at the Federal Reserve Board and revised 

our draft to include additional information about the Federal Reserve 

Board’s progress towards drafting the required policies and procedures. 

While the Federal Reserve Board has made progress on a draft 

regulation, it has not set timeframes for completing the drafting process 

and issuing a final regulation. Setting timeframes for completing draft and 

final policies and procedures would help to ensure more timely 

completion of the rulemaking process. Furthermore, while certain 

restrictions outlined in the act may not require clarification by rulemaking, 

the Dodd-Frank Act explicitly directs the Federal Reserve Board to draft 

policies and procedures to help ensure that it complies with the full set of 

new restrictions and requirements the act imposes on its emergency 

lending authority.

In its response, the Federal Reserve Board also noted that Federal 

Reserve System and FDIC assistance was repaid with interest and 

suggested that it would be helpful for GAO, perhaps in a future report, to 

analyze the offsetting costs paid by financial institutions assisted through 

the emergency programs. We note that our draft report contained some 

information and analyses related to such offsetting costs. In table 1 on 

pages 14 through 16, we describe the key terms of selected broad-based 

programs, including interest, fees, and dividends that participating 

institutions were required to pay for this assistance. Furthermore, our 

draft report noted that one indicator of the extent to which an institution 

benefitted from participation in an emergency government program is the 

relative price of estimated market alternatives to the program. On pages 

21 through 29, we report the results of our analyses of the pricing terms 

of some of the largest programs that provided funding support to bank 

holding companies and other eligible financial institutions. While past 

GAO reports have reported on the income earned by the Federal Reserve 

System, FDIC, and Treasury on their crisis interventions, this information 

is not relevant to this report’s discussion of the support that bank holding 

companies received during the government’s attempt to stabilize the 

financial system. As we discussed, these government interventions 

helped to avert a more severe crisis, but raised questions about moral 

hazard as market participants may expect similar emergency actions in 

future crises.

Treasury also provided written comments, which are reprinted in 

appendix VI. Treasury noted that the emergency programs discussed in 

the report were necessary to prevent a collapse of the financial system 

and that they created economic benefits not only for individual firms, large 

and small, but also for the financial system and the broader economy. 
 

Page 62 GAO-14-18 Government Support for Bank Holding Companies

Treasury also observed that the Dodd-Frank Act reforms discussed in our 

draft report were consistent with its commitment to ending “too big to fail.” 

In separate comments provided via email, Treasury and FSOC provided 

suggestions related to the report’s analyses of the pricing and utilization 

of selected emergency programs. In response to these suggestions, we 

added additional information about the exclusion of observations from our 

pricing analyses, and added data on average assets per institution to 

Table 3 in appendix IV, among other changes. Treasury and FSOC also 

suggested that GAO consider using different benchmarks for analyzing 

the pricing for the Federal Reserve System’s CPFF and FDIC’s DGP. 

While analyses of these suggested benchmarks (short-dated bond prices 

for CPFF and 2-3 year bond prices for DGP borrowers) could provide 

useful insights into the robustness of our results, these analyses also 

have limitations and would not necessarily improve on the analyses of the 

benchmarks that we conducted. We concluded that the analyses included 

in our report are appropriate. As noted in the report, while these analyses 

have limitations, we determined that they are sufficient for our purposes. 

We note that Federal Reserve System and FDIC staff with whom we 

discussed our selected benchmarks for these programs agreed that the 

benchmarks we used in our pricing analysis are appropriate. 

We are sending copies of this report to FDIC, the Federal Reserve Board, 

FSOC, OCC, Treasury, interested congressional committees, members, 

and others. In addition, the report is available at no charge on the GAO 

website at http://www.gao.gov.

If you or your staffs have any questions regarding this report, please 

contact me at (202) 512-8678 or EvansL@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix VII.

Lawrance L. Evans, Jr.

Director, Financial Markets

 and Community Investment
Appendix I: Objectives, Scope and 

Methodology

Page 63 GAO-14-18 Government Support for Bank Holding Companies

The objectives of our report were to examine: (1) support banks and bank 

holding companies received as a result of government efforts to stabilize 

financial markets during the financial crisis of 2007-2009; and (2) recent 

statutory and regulatory changes related to government support for banks 

and bank holding companies and factors that could impact the 

effectiveness of these changes. In terms of scope, the first section of this 

report addresses benefits that bank holding companies and their 

subsidiaries received during the crisis from actual government support 

provided through emergency actions. It does not address benefits that 

some financial institutions may have received and may continue to 

receive from perceived government support. In a second report to be 

issued in 2014, we will report the results of our examination into whether 

the largest bank holding companies have received funding cost or other 

economic advantages as a result of expectations that the government 

would not allow them to fail.

To address our first objective, we reviewed documents from financial 

regulatory agencies—the Board of Governors of the Federal Reserve 

System (Federal Reserve Board), the Federal Deposit Insurance 

Corporation (FDIC), and the Department of the Treasury (Treasury) and 

analyzed agency data on emergency government actions to stabilize 

financial markets. Our review focused on (1) emergency government 

programs that provided funding support to bank holding companies or 

their subsidiaries as well as other eligible financial institutions, (2) 

government actions that provided extraordinary assistance to individual 

financial institutions, and (3) regulatory exemptions that allowed banks to 

engage in certain transactions with their nonbank affiliates. To identify the 

programs that provided the most significant funding support directly to 

bank holding companies or their subsidiaries, we reviewed program 

eligibility rules and data on program participation for programs created 

during the 2007-2009 financial crisis by Treasury, FDIC, and the Federal 

Reserve System.1

 Specifically, we identified a set of emergency 

programs created during the crisis that provided at least $10 billion in 

direct funding support to bank holding companies or their subsidiaries. 

 

1

The Federal Reserve System consists of the Board of Governors of the Federal Reserve 

System—a federal agency—and 12 regional Reserve Banks. The Federal Reserve Board 

has delegated some of its responsibilities for supervision and regulation to the Reserve 

Banks. The Federal Reserve Act authorizes the Reserve Banks to make discount window 

loans to the extent authorized by the Federal Reserve Board. Pub. L. No. 63-43, §§ 10B, 

13, 38 Stat. 251 (codified at 12 U.S.C. §§ 347b(a), 343). 

Appendix I: Objectives, Scope and 

Methodology 
Appendix I: Objectives, Scope and 

Methodology

Page 64 GAO-14-18 Government Support for Bank Holding Companies

We determined that these programs included Treasury’s Capital 

Purchase Program (CPP); FDIC’s Temporary Liquidity Guarantee 

Program (TLGP); and the Federal Reserve System’s Term Auction 

Facility (TAF), Primary Dealer Credit Facility (PDCF), Term Securities 

Lending Facility (TSLF), and Commercial Paper Funding Facility (CPFF).2

To describe the purpose, terms, and conditions of these programs and 

other emergency government actions discussed in our first objective, we 

reviewed agency documents and included information and analyses from 

prior GAO work on the Troubled Asset Relief Program (TARP), the 

Federal Reserve System’s emergency programs, and other emergency 

assistance provided to the financial sector. To obtain perspectives on the 

benefits that bank holding companies received from emergency 

government actions, we reviewed papers by staff of regulators and other 

subject-matter experts and interviewed federal financial regulators, 

representatives of bank holding companies that received emergency 

government assistance, and academics. For the Federal Reserve System 

and FDIC programs that were among the programs that provided the 

most significant funding support, we compared the pricing and terms of 

this assistance (such as interest rates and fees) to indicators of funding 

market conditions during normal and crisis conditions. While this analysis 

provides a measure of program pricing versus potential market 

alternatives, it does not produce a precise quantification of the benefits 

that accrued to participating financial institutions. To determine the extent 

to which emergency equity support programs, CPP and the Targeted 

Investment Program (TIP), were priced more generously than estimated 

market alternatives, we reviewed estimates of the expected budget cost 

associated with equity funding support programs as well as a valuation 

 

2

We reviewed prior GAO work on other emergency government programs that may have 

provided benefits to bank holding companies or their subsidiaries. For example, 

Treasury’s Money Market Mutual Fund Guarantee Program and the Federal Reserve 

System’s AMLF provided support to money market mutual funds. In the absence of these 

programs, money market mutual funds might have reduced their purchases of money 

market instruments issued by bank holding companies, their subsidiaries, and other firms, 

thereby exacerbating funding pressures on these firms. Other significant government 

programs included the Term Asset-Backed Securities Loan Facility (TALF), which was 

created by the Federal Reserve System and Treasury to support certain securitization 

markets, and other programs created by Treasury under TARP authority. For more 

information about TALF, see GAO, Troubled Asset Relief Program: Treasury Needs to 

Strengthen Its Decision-Making Process on the Term Asset-Backed Securities Loan 

Facility, GAO-10-25 (Washington, D.C.: Feb. 5, 2010). For more information about CPP 

and other TARP programs, see GAO, Troubled Asset Relief Program: One Year Later, 

Actions Are Needed to Address Remaining Transparency and Accountability Challenges, 

GAO-10-16 (Washington, D.C.: Oct. 8, 2009).
Appendix I: Objectives, Scope and 

Methodology

Page 65 GAO-14-18 Government Support for Bank Holding Companies

analysis commissioned by the Congressional Oversight Panel (COP). 

For more information about the methodology for our analysis of the 

pricing and terms of these programs and associated limitations, see 

appendix III. For programs that provided the most significant direct 

funding support, to compare the extent to which banking organizations of 

various sizes used these emergency programs, we calculated the 

percentage of banking organization assets that were supported by 

emergency programs—either through capital injections, loans, or 

guarantees—at quarter-end dates for 2008 through 2012. For more 

information about our methodology for analyzing program utilization, see 

appendix IV. Finally, we obtained and analyzed Federal Reserve Board 

documentation of Federal Reserve Board decisions to grant exemptions 

to Section 23A of the Federal Reserve Act and approve applications from 

financial companies to convert to bank holding company status.3

To address our second objective, we identified and reviewed relevant 

statutory provisions, regulations, and agency documents. To identify 

recent statutory and regulatory changes related to government support for 

banks and bank holding companies, we reviewed sections of the DoddFrank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) 

that change rules or create new requirements for safety net programs for 

insured depository institutions; further restrict the types of financial 

activities that can be conducted by insured depository institutions or their 

holding companies; make changes to agencies’ emergency authorities to 

assist or resolve financial institutions; and subject the largest bank 

holding companies to enhanced regulatory oversight and standards.4 To 

corroborate our selection of Dodd-Frank Act provisions, we obtained the 

views of regulatory officials and financial markets experts on the 

provisions that are related to government support for banks and bank 

holding companies. To update the status of agencies’ efforts to implement 

these provisions, we reviewed agencies’ proposed and final rules, and 

interviewed staff from FDIC, the Federal Reserve Board, the Office of the 

Comptroller of the Currency, and Treasury. We also reviewed relevant 

congressional testimonies and other public statements by agency 

officials. We identified statutory provisions or requirements that agencies 

had not fully implemented and interviewed agency staff about planned 

steps to complete implementation. To describe factors that could impact 

 

3

Pub. L. No. 63-43, § 23A, 38 Stat. 251, 272 (1913) (12 U.S.C. § 371c). 

4

See generally Pub. L. No. 111-203, 124 Stat. 1376 (2010).
Appendix I: Objectives, Scope and 

Methodology

Page 66 GAO-14-18 Government Support for Bank Holding Companies

the effectiveness of relevant provisions, we reviewed prior GAO work on 

the potential impacts of Dodd-Frank Act provisions. To obtain additional 

perspectives on factors that could impact the effectiveness of these 

provisions, we interviewed and reviewed the public statements and 

analyses of agency officials, academics, and market experts.

For parts of our work that involved the analysis of computer-processed 

data, we assessed the reliability of these data and determined that they 

were sufficiently reliable for our purposes. Data sets for which we 

conducted data reliability assessments include Federal Reserve Board 

transaction data for TAF, PDCF, TSLF, and CPFF; Treasury transaction 

data for CPP and TIP; and FDIC transaction data for TLGP programs (the 

Debt Guarantee Program and the Transaction Account Guarantee 

Program). We have relied on Federal Reserve Board and Treasury 

transaction data for their respective emergency programs for past reports, 

and we determined that these data were sufficiently reliable for the 

purpose of presenting and analyzing the pricing and utilization of these 

programs. To assess the reliability of FDIC’s TLGP data, we interviewed 

FDIC staff about steps they took to maintain the integrity and reliability of 

program data. We also assessed the reliability of data sources used to 

provide indicators of the pricing and terms for market alternatives that 

could have been available to institutions that participated in these 

programs. These data sources were interbank interest rates (the London 

Interbank Offered Rate), additional interest rates from the Federal 

Reserve, credit default swap spreads from Bloomberg, repurchase 

agreement interest rates from IHS Global Insight, and repurchase 

agreement haircuts from the Federal Reserve Bank of New York. To 

assess the reliability of these data we took a number of steps including 

inspecting data for missing observations, corroborating interest rate data 

with other sources, and discussing data with agency officials. We 

determined these data were sufficiently reliable for measuring market 

alternatives that might have been available to participants in emergency 

programs. To calculate the average percentage of assets supported by 

emergency programs for banking organizations of different sizes, in 

addition to the program transaction data discussed above, we used Y-9 

data for bank holding companies from the Federal Reserve Bank of 

Chicago, demographic data for bank holding companies and other 

emergency program participants from the Federal Reserve System’s 

National Information Center and SNL Financial, balance sheet and 

demographic data for depository institutions from FDIC, and gross 

domestic product price index data from the Bureau of Economic Analysis.

To assess the reliability of these data, we reviewed relevant 

documentation. In addition, for the Y-9 data for bank holding companies 
Appendix I: Objectives, Scope and 

Methodology

Page 67 GAO-14-18 Government Support for Bank Holding Companies

from the Federal Reserve Bank of Chicago and the balance sheet data 

for depository institutions from FDIC, we conducted electronic testing of 

key variables.

We conducted this performance audit from January 2013 through 

November 2013 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.
Appendix II: Overview of Selected Federal 

Government Programs That Provided 

Emergency Funding Support to Banking 

Entities during the 2007-2009 Financial Crisis

Page 68 GAO-14-18 Government Support for Bank Holding Companies

During the financial crisis, the Federal Reserve System, Treasury, and 

FDIC introduced new programs with broad-based eligibility to provide 

general funding support to the banking sector and stabilize the financial 

system. Federal government interventions that provided the most 

significant direct funding support to U.S. bank holding companies or their 

subsidiaries were:

• the Federal Reserve System’s credit and liquidity programs;1

• Treasury’s capital investments through the Troubled Asset Relief 

Program; and

• FDIC’s guarantees of certain newly issued debt and previously 

uninsured deposits through the Temporary Liquidity Guarantee 

Program (TLGP).

The first of these interventions occurred in late 2007 when the Federal 

Reserve System modified discount window terms and launched a new 

program to auction discount window loans to banks to address strains in 

interbank credit markets.

• Discount window. In August 2007, the cost of term funding (loans 

provided at terms of 1 month or longer) spiked suddenly—primarily 

due to investor concerns about banks’ actual exposures to various 

mortgage-related securities—and commercial banks increasingly had 

to borrow overnight to meet their funding needs.2 The Federal 

Reserve Board feared that the disorderly functioning of interbank 

lending markets would impair the ability of commercial banks to 

provide credit to households and businesses. To ease stresses in 

these markets, on August 17, 2007, the Federal Reserve Board 

approved two temporary changes to discount window terms: (1) a 

reduction of the discount rate—the interest rate at which the Reserve 

 

1

This report focuses on the Federal Reserve System’s programs that provided the most 

significant direct funding support to bank holding companies and their subsidiaries. For a 

broader discussion of the Federal Reserve System’s emergency actions during the crisis, 

see GAO, Federal Reserve System: Opportunities Exist to Strengthen Policies and 

Processes for Managing Emergency Assistance, GAO-11-696 (Washington, D.C.: July 21, 

2011).

2

The sudden spike in the cost of term funding followed the August 9, 2007, announcement 

by BNP Paribas, a large banking organization based in France, that it could not value 

certain mortgage-related assets in three of its investment funds because of a lack of 

liquidity in U.S. securitization markets. Greater reliance on overnight borrowing increased 

the volatility of banks’ funding costs and increased “rollover” risk, or the risk that banks 

would not be able to renew their funding as loans matured.

Appendix II: Overview of Selected Federal 

Government Programs That Provided Emergency 

Funding Support to Banking Entities during the 

2007-2009 Financial Crisis 
Appendix II: Overview of Selected Federal 

Government Programs That Provided 

Emergency Funding Support to Banking 

Entities during the 2007-2009 Financial Crisis

Page 69 GAO-14-18 Government Support for Bank Holding Companies

Banks extended collateralized loans at the discount window—by 50 

basis points; and (2) an extension of the discount window lending 

term from overnight to up to 30 days, with the possibility of renewal.3

This change initially resulted in little additional borrowing from the 

discount window. After subsiding in October 2007, tensions in term 

funding markets reappeared in late November, possibly driven by a 

seasonal contraction in the supply of year-end funding.

• Term Auction Facility (TAF). On December 12, 2007, the Federal 

Reserve Board announced the creation of TAF to address continuing 

disruptions in U.S. term interbank lending markets.4

 TAF provided 

term funding to depository institutions eligible to borrow from the 

discount window.5 In contrast to the traditional discount window 

program, which loaned funds to individual institutions at the discount 

rate, TAF auctioned loans to many eligible institutions at once at a 

market-determined interest rate. Federal Reserve Board officials 

noted that one important advantage of this auction approach was that 

it could address concerns among eligible borrowers about the 

perceived stigma of discount window borrowing. TAF was the largest 

Federal Reserve System emergency program in terms of the dollar 

amount of funding support provided, with TAF loans outstanding 

peaking at $493 billion in March 2009.

In March 2008, the Federal Reserve Board invoked its emergency 

authority under Section 13(3) of the Federal Reserve Act to authorize two 

new programs to support repurchase agreement markets—large, shortterm collateralized funding markets—that many financial institutions rely 

 

3

One basis point is equivalent to 0.01 percent or 1/100th of a percent. The Federal 

Reserve Board later approved further reductions in the discount rate and increased the 

maximum maturity of discount window loans to 90 days. In addition to the discount 

window changes, starting in September 2007, the Federal Open Market Committee 

(FOMC) announced a series of reductions in the target federal funds rate—the FOMCestablished target interest rate that banks charge each other for loans. 

4

The Federal Reserve Board authorized Reserve Banks to extend credit through TAF by 

revising the regulations governing Reserve Bank discount window lending. 

5

Section 10B of the Federal Reserve Act provides the Reserve Banks broad authority to 

extend credit to depository institutions. 12 U.S.C. § 347b.
Appendix II: Overview of Selected Federal 

Government Programs That Provided 

Emergency Funding Support to Banking 

Entities during the 2007-2009 Financial Crisis

Page 70 GAO-14-18 Government Support for Bank Holding Companies

on to finance a wide range of securities.6 The Federal Reserve Board 

limited eligibility for these programs to the primary dealers, a designated 

group of broker-dealers and banks that transact with the Federal Reserve 

Bank of New York (FRBNY) in its conduct of open market operations.7

Many of the primary dealers are subsidiaries of U.S. bank holding 

companies or large foreign banking organizations.

• Term Securities Lending Facility (TSLF). On March 11, 2008, the 

Federal Reserve Board announced the creation of TSLF to auction 

28-day loans of U.S. Treasury securities to primary dealers to 

increase the amount of high-quality collateral available for these 

dealers to borrow against in the repurchase agreement markets. In 

early March, the Federal Reserve Board found that repurchase 

agreement lenders were requiring higher haircuts for loans against a 

range of securities and were becoming reluctant to lend against 

mortgage-related securities. As a result, many financial institutions 

increasingly had to rely on higher-quality collateral, such as U.S. 

Treasury securities, to obtain cash in these markets, and a shortage 

of such high quality collateral emerged. Through competitive auctions 

that allowed dealers to bid a fee to exchange harder-to-finance 

collateral for easier-to-finance Treasury securities, TSLF was intended 

to promote confidence among lenders and to reduce the need for 

dealers to sell illiquid assets into the markets, which could have 

further depressed the prices of these assets. The market value of 

 

6

Under a repurchase agreement, a borrowing institution generally acquires funds by 

selling securities to a lending institution and agreeing to repurchase the securities after a 

specified time at a given price. The securities, in effect, are collateral provided by the 

borrower to the lender. In the event of a borrower’s default on the repurchase transaction, 

the lender would be able to take (and sell) the collateral provided by the borrower. 

Lenders typically will not provide a loan for the full market value of the posted securities, 

and the difference between the values of the securities and the loan is called a margin or 

haircut. This deduction is intended to protect the lenders against a decline in the price of 

the securities provided as collateral. When the market value of assets used to secure or 

collateralize repurchase transactions declines, borrowers are usually required to post 

additional collateral.

7

The Federal Reserve System conducts open market operations to influence the amount 

of money and credit available in the economy. FRBNY carries out directives from the 

Federal Open Market Committee—which consists of members of the Board of Governors 

and the FRBNY president, and four other Reserve Bank presidents who serve on a 

rotating basis—by engaging in purchase or sales of certain securities, typically U.S. 

government securities, in the secondary market. FRBNY conducts these transactions 

through the primary dealers.
Appendix II: Overview of Selected Federal 

Government Programs That Provided 

Emergency Funding Support to Banking 

Entities during the 2007-2009 Financial Crisis

Page 71 GAO-14-18 Government Support for Bank Holding Companies

TSLF securities loans outstanding peaked at $236 billion in October 

2008.

• Primary Dealer Credit Facility (PDCF). On March 16, 2008, the 

Federal Reserve Board announced the creation of PDCF to provide 

overnight collateralized cash loans to the primary dealers. In the days 

following the March 11 announcement of TSLF, one of the primary 

dealers, Bear Stearns, experienced a run on its liquidity.8 Because the 

first TSLF auction would not be held until later that month, Federal 

Reserve Board and FRBNY staff worked to ready PDCF for launch by 

Monday, March 17, 2008, when Federal Reserve Board officials 

feared a Bear Stearns bankruptcy announcement might trigger runs 

on the liquidity of other primary dealers. Although the Bear Stearns 

bankruptcy was averted, PDCF commenced operation on March 17, 

2008.9 Eligible PDCF collateral initially included collateral eligible for 

open-market operations as well as investment-grade corporate 

securities, municipal securities, and asset-backed securities, including 

private label mortgage-backed securities. The Federal Reserve Board 

later expanded eligible collateral types for both TSLF and PDCF.

In late 2008, the bankruptcy of Lehman Brothers triggered an 

intensification of the crisis and the Federal Reserve System, Treasury 

and FDIC took a range of new actions to provide additional support to 

financial institutions and key credit markets.

• Federal Reserve System actions. In September and October 2008, 

the Federal Reserve Board modified its existing programs, launched 

new programs, and took other actions to address worsening market 

conditions.

• Modifications to TSLF, PDCF, and TAF. On September 14, 2008, 

shortly before Lehman Brothers announced it would file for 

bankruptcy, the Federal Reserve Board announced changes to 

TSLF and PDCF to provide expanded liquidity support to primary 

 

8

Federal Reserve Board officials noted that although TSLF was announced to address 

market tensions impacting many firms, some market participants concluded that its 

establishment was driven by specific concerns about Bear Stearns.

9

As discussed later in this section, the Federal Reserve Board used its emergency 

authority to authorize an emergency overnight loan and other assistance to avoid a 

disorderly failure of Bear Stearns. 
Appendix II: Overview of Selected Federal 

Government Programs That Provided 

Emergency Funding Support to Banking 

Entities during the 2007-2009 Financial Crisis

Page 72 GAO-14-18 Government Support for Bank Holding Companies

dealers. Specifically, the Federal Reserve Board announced that 

TSLF-eligible collateral would be expanded to include all 

investment-grade debt securities and PDCF-eligible collateral 

would be expanded to include all securities eligible to be pledged 

in the tri-party repurchase agreements system, including 

noninvestment grade securities and equities.10 On September 29, 

2008, the Federal Reserve Board also announced expanded 

support through TAF by doubling the amount of funds that would 

be available in each TAF auction cycle from $150 billion to $300 

billion.

• Commercial Paper Funding Facility (CPFF). On October 7, 2008, 

the Federal Reserve Board announced the creation of CPFF 

under its Section 13(3) authority to provide a liquidity backstop to 

U.S. issuers of commercial paper. Commercial paper is an 

important source of short-term funding for U.S. financial and 

nonfinancial businesses.11 CPFF became operational on October 

27, 2008, and was operated by FRBNY. In the weeks leading up 

to CPFF’s announcement, the commercial paper markets showed 

signs of strain: the volume of commercial paper outstanding 

declined, interest rates on longer-term commercial paper 

increased significantly, and increasing amounts of commercial 

paper were issued on an overnight basis as money-market funds 

and other investors became reluctant to purchase commercial 

paper at longer-dated maturities. By standing ready to purchase 

eligible commercial paper, CPFF was intended to eliminate much 

of the risk that commercial paper issuers would be unable to issue 

new commercial paper to replace their maturing commercial paper 

obligations.

 

10For TSLF, previously, only Treasury securities, agency securities, and AAA-rated 

mortgage-backed and asset-backed securities could be pledged. For PDCF, previously, 

eligible collateral had to have at least an investment-grade rating. Tri-party repurchase 

agreements include three parties: the borrower, the lender, and a tri-party agent that 

facilitates the repurchase agreement transaction by providing custody of the securities 

posted as collateral and valuing the collateral, among other services.

11There are two main types of commercial paper: unsecured and asset-backed. 

Unsecured paper is not backed by collateral and the credit rating of the issuing institution 

is a key variable in determining the cost of its issuance. In contrast, Asset Backed 

Commercial Paper is collateralized by assets and therefore is a secured form of 

borrowing.
Appendix II: Overview of Selected Federal 

Government Programs That Provided 

Emergency Funding Support to Banking 

Entities during the 2007-2009 Financial Crisis

Page 73 GAO-14-18 Government Support for Bank Holding Companies

• Other actions. The Federal Reserve System launched other new 

programs that provided liquidity support for other market 

participants, but did not serve a major source of direct support for 

U.S. bank holding companies or their subsidiaries.12

• Troubled Asset Relief Program. On October 3, 2008, the Emergency 

Economic Stabilization Act of 2008 (EESA) was signed into law to 

help stem the financial crisis.13 EESA provided Treasury with the 

authority to create the Troubled Asset Relief Program (TARP), under 

which it could buy or guarantee up to almost $700 billion of the 

“troubled assets” that it deemed to be at the heart of the crisis, 

including mortgages, mortgage-backed securities, and any other 

financial instruments, such as equity investments. Treasury created 

the Capital Purchase Program (CPP) in October 2008 to provide 

capital to viable financial institutions by using its authority to purchase 

preferred shares and subordinated debt. In return for its investments, 

Treasury received dividend or interest payments and warrants.14 On 

October 14, 2008, Treasury allocated $250 billion of the original $700 

billion in overall TARP funds for CPP. The allocation was 

subsequently reduced in March 2009 to reflect lower estimated 

funding needs, as evidenced by actual participation rates. The 

program was closed to new investments on December 31, 2009.

Smaller capital infusion programs included the Targeted Investment 

Program (TIP) and the Community Development Capital Initiative 

(CDCI).

• Temporary Liquidity Guarantee Program. In October 2008, FDIC 

created TLGP to complement the Federal Reserve and Treasury 

programs in restoring confidence in financial institutions and repairing 

their capacity to meet the credit needs of American households and 

 

12These programs included the AMLF and the Term Asset-Backed Securities Loan 

Facility. For more information about these programs, see GAO-11-696. 

13Pub. L. No. 110-343, Div. A, 122 Stat. 3765 (codified at 12 U.S.C. §§ 5201-5261). 

EESA established the Office of Financial Stability within Treasury and provided it with 

broad, flexible authorities to buy or guarantee troubled mortgage-related assets or any 

other financial instruments necessary to stabilize the financial markets. Id. at § 101 (12 

U.S.C. § 5211).

14A warrant is an option to buy shares of common stock or preferred stock at a 

predetermined price on or before a specified date. 
Appendix II: Overview of Selected Federal 

Government Programs That Provided 

Emergency Funding Support to Banking 

Entities during the 2007-2009 Financial Crisis

Page 74 GAO-14-18 Government Support for Bank Holding Companies

businesses.15 TLGP’s Debt Guarantee Program (DGP) was designed 

to improve liquidity in term-funding markets by guaranteeing certain 

newly issued senior unsecured debt of financial institutions and their 

holding companies. By guaranteeing payment of these debt 

obligations, DGP was intended to address the difficulty that 

creditworthy institutions were facing in replacing maturing debt 

because of risk aversion in the markets. TLGP’s Transaction Account 

Guarantee Program (TAGP) also was created to stabilize an 

important source of liquidity for many financial institutions. TAGP 

temporarily extended an unlimited deposit guarantee to certain 

noninterest-bearing transaction accounts to assure holders of the 

safety of these deposits and limit further outflows. By facilitating 

access to borrowed funds at lower rates, Treasury, FDIC, and the 

Federal Reserve expected TLGP to free up funding for banks to make 

loans to creditworthy businesses and consumers. Furthermore, by 

promoting stable funding sources for financial institutions, they 

intended TLGP to help avert bank and thrift failures that would impose 

costs on the insurance fund and taxpayers and potentially contribute 

to a worsening of the crisis.

 

15TLGP’s authorization required a systemic risk determination by the Secretary of the 

Treasury. For more information about this determination, see GAO, Federal Deposit 

Insurance Act: Regulators’ Use of Systemic Risk Exception Raises Moral Hazard 

Concerns and Opportunities Exist to Clarify the Provision, GAO-10-100 (Washington, 

D.C.: April 15, 2010).
Appendix III: Methodology for Analysis of 

Pricing and Terms for Financial Stability 

Programs

Page 75 GAO-14-18 Government Support for Bank Holding Companies

Although imperfect, one indicator of the extent to which an institution 

benefited from participation in an emergency program is the relative price 

of estimated market alternatives to the program. To determine how 

pricing of the emergency assistance compared to market rates, we 

compared the interest rates and fees charged by the Federal Reserve 

and FDIC for participation in the emergency lending and guarantee 

programs with market alternatives that might have been available to 

program participants. We considered a number of potential indicators of 

market interest rates available to financial institutions, including a survey 

of interbank interest rates (the London Interbank Offered Rate or LIBOR), 

commercial paper interest rates published by the Federal Reserve Board, 

spreads on bank credit default swaps (CDS), and interest rates on 

repurchase agreements. These interest rates and spreads provide a 

general indication of market alternatives available to participants but are 

imperfect and hence unlikely to reflect available alternatives for all

participants at all points in time. For example, participants’ access to 

market alternatives may have been limited, there may be only limited data 

on the relevant private market, or market alternatives could vary across 

participants in ways that we do not observe in the data. Furthermore, 

once programs were introduced, they probably influenced the price of 

market alternatives, making it difficult to interpret differences between 

program pricing to contemporary market pricing while programs were 

active. Where possible—when programs had pricing rules (PDCF, CPFF, 

and DGP)—we applied program pricing rules during time periods that 

were not influenced by the program itself to compare program pricing with 

counterfactual market prices. By choosing high and low financial stress 

time periods, we can estimate the extent to which participants may have 

benefitted from program pricing during the financial crisis as well as the 

extent to which program pricing became less attractive as financial 

conditions returned to normal.

Programs with auction-based pricing (TAF and TSLF) raise particular 

challenges in interpreting differences between program pricing and 

market pricing. Under certain assumptions, bidders would bid program 

pricing up to their market alternatives, which could limit potential benefits 

from the program as well as eliminate any difference between program 

and market pricing.1 In addition, without a pricing rule we cannot apply 

 

1

However, the quantity of funds made available in the auction could also reduce prices in 

the alternative market, which would provide benefits to participants and nonparticipants 

alike. The size of the benefit in this instance would also be difficult to measure. 

Appendix III: Methodology for Analysis of 

Pricing and Terms for Financial Stability 

Programs
Appendix III: Methodology for Analysis of 

Pricing and Terms for Financial Stability 

Programs

Page 76 GAO-14-18 Government Support for Bank Holding Companies

pricing for auction-based programs to high or low financial stress time 

periods not influenced by the program itself—in other words, 

contemporaneous pricing is contaminated by the program itself, making it 

difficult to determine the true market alternative. As a result, deviations 

between program and market pricing could indicate differences in terms 

rather than a benefit to participating financial institutions. These 

challenges suggest that our estimates of the difference between program 

and market pricing for auction-based programs should be interpreted with 

caution. TAF and TSLF also had minimum pricing determined by the 

Federal Reserve that was prescribed when auctions were 

undersubscribed. In these instances prices were no longer auctiondetermined in the traditional sense although the outcome of the auction 

(undersubscription) determined when the minimum pricing would apply.

It is important to note that, among other limitations, our indicators do not 

capture all the benefits associated with program participation. Because 

our proxies for market alternatives are imperfect, market prices appear on 

occasion to be lower than emergency program pricing despite significant 

participation by financial institutions at these times. Participation by itself 

suggests that program prices and/or terms were relatively attractive in 

comparison to available alternatives—benefits could arise from price, 

quantity available, or other nonprice characteristics of the assistance 

(loan term, eligible collateral, etc.). Therefore, we discarded values of 

spreads between program pricing and market alternatives when they 

were zero or negative since negative spreads are unlikely to capture the 

benefits that accrued to participants. If these truly reflected market 

alternatives for the pool of potential participants, then there would be no 

participation or the participation would have been based on other 

nonprice considerations. We assume that the true (unobserved) market 

alternatives overlap at times with our observed proxies. At other times the 

market alternatives we are able to observe and measure may not overlap 

with the true market alternatives for participants (including when observed 

market alternatives indicate programs are more expensive than market 

rates).

Because PDCF operated similarly to repurchase agreement markets, we 

compared collateral haircuts in PDCF with select asset classes in the 

triparty (intermediated by a clearing bank) repurchase agreement 

markets. We selected those asset classes where we were able to draw 

clear parallels between categories of collateral allowed under PDCF and 

categories identified in data based on private repurchase agreement 

market we received from the Federal Reserve Bank of New York. The 

haircut is an important loan term in repurchase agreement contracts and 
Appendix III: Methodology for Analysis of 

Pricing and Terms for Financial Stability 

Programs

Page 77 GAO-14-18 Government Support for Bank Holding Companies

collateralized lending, the amount of additional collateral required over the 

value of the loan that is required to secure the loan. Securities with 

greater risk or less liquidity generally have larger haircuts (i.e., more 

collateral is required). PDCF borrowers might have utilized triparty 

repurchase agreement markets for alternative sources of secured 

borrowing during the 2007-2009 financial crisis.

To determine the extent to which emergency equity support programs, 

CPP and TIP, were priced more generously than estimated market 

alternatives, we reviewed estimates of the expected budget cost 

associated with equity funding support programs as well as a valuation 

analysis commissioned by the Congressional Oversight Panel (COP).

The benefits that accrued to banks from participation in equity funding 

support programs are likely to be proportional to the subsidy rates 

estimated for accounting purposes. Estimates of subsidy rates are based 

on a net present value analysis—the price and terms which are offered by 

a federal agency are compared to the lifetime expected cost (net present 

value) of the equity and the difference is known as a subsidy. Because 

private market participants might have charged a price based on a 

comparable net present value analysis, banks would have benefitted to 

the extent that the prices offered by Treasury for their equity exceed what 

they were likely to receive based on the net present value. The valuation 

analysis commissioned by COP explicitly compared the prices received 

by Treasury with market-based valuations of similar securities. We 

assume that the net present values estimated for accounting purposes by 

Treasury and CBO are reasonable proxies for the market valuations that 

are more directly estimated in the COP analysis. We used the earliest 

available estimates from the Congressional Budget Office (CBO) and 

Treasury as they were closest to market conditions at the time that 

programs were initiated. Estimates of these subsidy rates depended on 

timing and market conditions and the size of these subsidy rates likely fell 

over time as market conditions improved.
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 78 GAO-14-18 Government Support for Bank Holding Companies

Emergency government programs to stabilize financial markets resulted 

in funding support to bank holding companies and insured depository 

institutions (collectively, banking organizations) of various sizes.1 To 

compare use of emergency funding programs by banking organizations of 

different sizes, we analyzed quarterly data on bank holding companies 

and depository institutions for the period from 2008 to 2012 along with 

data on emergency program transactions that occurred during that period. 

We used quarterly balance sheet and demographic data on bank holding 

companies for the period from the first quarter of 2008 through the fourth 

quarter of 2012 from the Federal Reserve Bank of Chicago and the 

Federal Reserve System’s National Information Center (NIC), quarterly 

balance sheet and demographic data on depository institutions from FDIC 

for the period from the first quarter of 2008 through the fourth quarter of 

2012, and quarterly data on the GDP price index from the Bureau of 

Economic Analysis (BEA) for the period from the first quarter of 2008 

through the fourth quarter of 2012. We also used data on Debt Guarantee 

Program (DGP) and TAGP transactions from FDIC, data on Commercial 

Paper Funding Facility, Primary Dealer Credit Facility, TAF, and TSLF 

transactions from the Board of Governors of the Federal Reserve System, 

and data on CPP and TIP transactions from the U.S. Department of the 

Treasury. Finally, we used demographic data on emergency funding 

program participants obtained from NIC and from SNL Financial.

We organized depository institutions and bank holding companies into 

groups—hereafter banking organizations—based on their regulatory high 

holder (the highest holding company in a tiered organization), where 

depository institutions or bank holding companies that did not indicate a 

high holder are assumed to be their own high holder. We calculated 

consolidated assets for each banking organization, excluding banking 

organizations for which we cannot reliably calculate consolidated assets. 

We excluded banking organizations with a high holder that was not in our 

data, e.g., banking organizations with foreign high holders. For banking 

organizations with a high holder that was in our data and that included at 

least one bank holding company, we excluded those for which the high 

holder did not report consolidated assets, those for which the high holder 

 

1

Our analysis focuses on the use of emergency programs by banking organizations. 

However, emergency programs also provided funding for some nonbank financial 

institutions, such as standalone broker-dealers, and for some nonfinancial companies, 

such as McDonald’s Corp. and Harley-Davidson.

Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Data

Methodology 
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 79 GAO-14-18 Government Support for Bank Holding Companies

reported consolidated assets but they were less than its parent-only 

assets, those for which the high holder’s consolidated assets were less 

than consolidated assets reported by some other bank holding company 

in the organization, those for which none of the bank holding companies 

reported consolidated assets, and those that did not contain any 

depository institutions. For all remaining banking organizations that 

contained at least one bank holding company, we set consolidated assets 

for the group equal to consolidated assets reported by the high holder. 

Note that consolidated assets for a bank holding company include the 

assets of all consolidated subsidiaries, which generally include all 

companies for which the bank holding company owns more than 50 

percent of the outstanding voting stock. For banking organizations with a 

high holder in our data that did not include a bank holding company, such 

as standalone depository institutions, we set consolidated assets for the 

banking organization equal to the depository institution’s consolidated 

assets.

Banking organizations for which we could reliably calculate consolidated 

assets constitute our analysis sample. Small bank holding companies 

(those with assets less than $500 million) generally report their 

consolidated assets in the second and fourth quarters of each year, but 

they generally do not do so in the first and third quarters of each year. To 

maintain consistency in the composition of the analysis sample over time, 

we ultimately used results for only the second and fourth quarters of each 

year from 2008 to 2012. Companies that converted to bank holding 

companies during the crisis are included in our analysis only for the 

quarters for which they filed financial statements for bank holding 

companies with the Federal Reserve. For example, both Goldman Sachs 

Group, Inc. and Morgan Stanley became bank holding companies in 

September 2008 but neither filed form FR Y-9C, the source of our data on 

consolidated assets for large bank holding companies, until the first 

quarter of 2009. As a result, these two companies are not part of our 

analysis sample until 2009. We assigned banking organizations in our 

analysis sample to one of six size groups based on their consolidated 

assets, adjusted for inflation and expressed in fourth quarter 2012 dollars: 

less than $500 million; at least $500 million and less than $1 billion; at 

least $1 billion and less than $10 billion; at least $10 billion and less than 

$50 billion; at least $50 billion and less than $250 billion; and $250 billion 

or more. Table 3 shows the numbers of banking organizations in our 

analysis sample by size group and the numbers of banking organizations

excluded from our analysis sample for the second and fourth quarters of 

each year from 2008 to 2012.
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 80 GAO-14-18 Government Support for Bank Holding Companies

Table 3. Numbers and average assets of banking organizations in analysis sample by size and quarter, June 30, 2008 to 

December 31, 2012.

Quarter

Banking organization in analysis sample Banking 

organizations 

excluded 

from analysis 

sample

Assets

less than

$500 million

Assets

$500 million

to 1 billion

Assets $1

to 10 billion

Assets $10

to 50 billion

Assets $50

to 250 billion

Assets

$250 billion

or more

2008q2 Number 5,824 686 536 59 20 8 256

Average 

assets $0.15 $0.69 $2.59 $19.91 $114.48 $1,089.51 —- 

2008q4 Number 5,746 674 546 61 15 8 269

Average 

assets $0.15 $0.69 $2.52 $19.29 $111.59 $1,134.68 —- 

2009q2 Number 5,687 676 554 60 18 9 264

Average 

assets $0.16 $0.69 $2.48 $18.12 $119.98 $1,184.69 —- 

2009q4 Number 5,595 681 540 57 19 9 264

Average 

assets $0.16 $0.69 $2.48 $18.05 $117.11 $1,183.91 —- 

2010q2 Number 5,520 671 528 53 20 9 261

Average 

assets $0.16 $0.69 $2.49 $18.25 $114.96 $1,207.20 —- 

2010q4 Number 5,448 648 520 53 20 10 262

Average 

assets $0.16 $0.69 $2.51 $18.42 $104.81 $1,123.85 —- 

2011q2 Number 5,377 644 512 54 19 10 255

Average 

assets $0.16 $0.69 $2.47 $19.31 $109.30 $1,144.96 —- 

2011q4 Number 5,287 628 514 54 18 10 256

Average 

assets $0.16 $0.69 $2.50 $19.81 $117.06 $1,119.79 —- 

2012q2 Number 5,215 632 506 55 17 11 251

Average 

assets $0.16 $0.69 $2.50 $19.86 $108.07 $1,055.56 —- 

2012q4 Number 5,076 634 505 55 16 10 248

Average 

assets $0.17 $0.69 $2.59 $20.92 $113.98 $1,091.00 —- 

Source: GAO analysis of BEA, FDIC, and Federal Reserve data.

Note: Assets are adjusted for inflation and expressed in fourth quarter 2012 dollars. We do not report 

average assets for banking organizations we excluded from the analysis sample because the banking 

organizations we excluded from the analysis sample are the ones for which we could not reliably 

calculate consolidated assets
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 81 GAO-14-18 Government Support for Bank Holding Companies

For each banking organization in our analysis sample, we calculated the 

percentage of assets funded by capital provided, loans provided, and 

liabilities guaranteed by emergency programs at quarter-end for the 

second and fourth quarters of 2008 through 2012. Capital provided by 

emergency programs includes capital investments by Treasury under 

CPP and TIP. Loans provided by emergency programs include TAF, 

TSLF, PDCF, and CPFF loans from the Federal Reserve System. 

Funding guaranteed by emergency programs includes deposits 

guaranteed by FDIC through TAGP and debt guaranteed by FDIC 

through DGP. To compare the extent to which banking organizations of 

various sizes used emergency programs, we calculated the percentage of 

banking organization assets that were supported by emergency 

programs—either through capital injections, loans, or guarantees—at 

quarter-end dates from mid-2008 through the end of 2012. In addition, for 

each of the three types of support, we decomposed average support as a 

percentage of assets for banking organizations of different sizes into its 

two components: (1) the rate of participation in emergency programs by 

banking organizations of different sizes as measured by the percentage 

of banking organizations using funds provided or guaranteed by the 

emergency programs and (2) average support as a percentage of assets 

for those participants.

Federal Reserve System programs. TAF was established in December 

2007, PDCF and TSLF were established in March 2008, and CPFF 

began purchasing commercial paper in October 2008. As of the end of 

2008, combined CPFF, PDCF, TAF, and TSLF loans outstanding ranged 

from about 0.01 percent of assets on average for all banking 

organizations with less than $500 million in assets to about 2.5 percent of 

assets on average for all banking organizations with at least $50 billion 

but less than $250 billion in assets (see fig. 3). For banking organizations 

with $250 billion or more in assets, combined CPFF, PDCF, TAF, and 

TSLF loans outstanding were about 2.0 percent of assets on average. As 

of mid-2009, loans outstanding for these four programs combined had 

declined to less than 1 percent of assets on average for banking 

organizations of all sizes, and as of the end of 2009, they had declined to 

less than half a percent of assets on average.

Results 
Appendix IV: Use of Financial Stability

Programs by Banking Organizations of 

Different Sizes

Page 82 GAO-14-18 Government Support for Bank Holding Companies

Figure 3: Average CPFF, PDCF, TAF, and TSLF Loan Amounts Outstanding as a Percentage of Assets at Quarter-End for 

Banking Organizations by Size, June 30, 2008, through December 31, 2012.

Note: Banking organizations include consolidated top-tier U.S. bank holding companies and 

standalone depository institutions. Assets for bank holding companies are consolidated assets for the 

top-tier bank holding company, which include the assets of consolidated subsidiaries. Assets for 

standalone depository institutions are consolidated assets for the institution. We exclude banking 

organizations for which we could not reliably calculate consolidated assets. Banking organizations are 

divided into groups each quarter using consolidated assets that were first adjusted for inflation and 

measured in fourth quarter 2012 dollars. Size groups include banking organizations with assets equal 

to the lower bound but do not include banking organizations with assets equal to the upper bound. 

For example, banking organizations with $50 billion in assets would be in the “$50-250 billion” group, 

not the “$10-50 billion” group.

Through mid-2009, the larger banking organizations participated in the 

four Federal Reserve System programs we analyzed at higher rates than 

smaller banking organizations (see Panel A of table 4). However, by the 

end of 2009, banking organizations with $250 billion or more in assets 

had completely exited all of these programs, but of the remaining 

institutions, larger banking organizations continued to participate at higher 
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 83 GAO-14-18 Government Support for Bank Holding Companies

rates than smaller banking organizations. These programs all closed in 

the first quarter of 2010.2

Table 4: Participation Rates and Average Loan Amounts Outstanding as a Percent of Assets at Quarter-End for Participating 

Banking Organizations for CPFF, PDCF, TAF, and TSLF, June 30, 2008 through December 31, 2009

A. Percent of banking organizations participating in CPFF, PDCF, TAF, or TSLF (%)

Quarter Assets <$500M Assets ≥$500M, 

<$1B

Assets ≥$1B, 

<$10B

Assets ≥$10B, 

<$50B

Assets ≥$50B, 

<$250B

Assets ≥$250B

2008q2 0.03 0.58 2.24 11.86 30.00 75.00

2008q4 0.19 1.78 6.04 26.23 60.00 75.00

2009q2 0.83 3.25 8.48 25.00 38.89 44.44

2009q4 0.66 1.91 5.56 7.02 10.53 0 

B. Average CPFF, PDCF, TAF, and TSLF loans outstanding as a percent of assets for participating banking organizations (%)

Quarter Assets <$500M Assets ≥$500M, 

<$1B

Assets ≥$1B, 

<$10B

Assets ≥$10B, 

<$50B

Assets ≥$50B, 

<$250B

Assets ≥$250B

2008q2 8.46 4.30 2.41 2.39 2.11 0.87

2008q4 5.99 4.76 4.27 3.08 4.09 2.61

2009q2 7.56 4.60 3.69 3.70 1.83 0.76

2009q4 7.94 3.31 3.91 2.86 2.09 N/A

Source: GAO analysis of data from BEA, FDIC, the Federal Reserve Board, the Federal Reserve Bank of Chicago, SNL Financial, and 

Treasury. 

Note: Banking organizations include consolidated top-tier U.S. bank holding companies and 

standalone depository institutions. Assets for bank holding companies are consolidated assets for the 

top-tier bank holding company, which include the assets of consolidated subsidiaries. Assets for 

standalone depository institutions are consolidated assets for the institution. We exclude banking 

organizations for which we could not reliably calculate consolidated assets. Banking organizations are 

divided into groups each quarter using consolidated assets that were first adjusted for inflation and 

measured in fourth quarter 2012 dollars. The participation rate is the percentage of banking 

organizations with CPFF, PDCF, TAF, or TSLF loans outstanding at quarter-end.

Among banking organizations that participated in at least one of the four 

Federal Reserve programs, average combined CPFF, PDCF, TAF, and 

TSLF loans outstanding as a percentage of assets were generally larger 

for smaller participants (see Panel B of table 4). As of the end of 2008, 

among participating banking organizations, combined CPFF, PDCF, TAF, 

and TSLF loans outstanding ranged from about 2.6 percent of assets on 

average for participants with $250 billion or more in assets to about 6.0 

percent of assets on average for participants with less than $500 million 

 

2

The final TAF auction was held in March 2010. However, credit extended under that 

auction did not mature until April 2010.
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 84 GAO-14-18 Government Support for Bank Holding Companies

in assets. As of the end of 2009, combined CPFF, PDCF, TAF, and TSLF 

loans outstanding ranged from about 2.1 percent of assets for participants 

with at least $50 billion but less than $250 billion in assets to about 7.9 

percent of assets for banking organizations with less than $500 million in 

assets, while banking organizations with $250 billion or more in assets 

were no longer participating in these programs.

Treasury capital investments. Treasury began making equity 

investments in banking organizations through CPP in October 2008 and it 

established TIP in December 2008. As of the end of 2008, CPP 

investment amounts outstanding ranged from about 0.01 percent of 

assets on average for banking organizations with less than $500 million in 

assets to about 1.9 percent of assets on average for banking 

organizations with at least $50 billion but less than $250 billion in assets 

(see fig. 4). CPP and TIP investment amounts outstanding for banking 

organizations with $250 billion or more were about 1.6 percent of assets 

on average.3 As of mid-2010, banking organizations with $250 billion or 

more in assets had repaid Treasury and exited CPP and TIP. At the same 

time, CPP investment amounts had fallen to less than 1 percent of assets 

on average for banking organizations in all smaller size groups. As of the 

end of 2012, banking organizations with at least $50 billion but less than 

$250 billion in assets had repaid Treasury and exited CPP, and CPP 

investment amounts had fallen to less than 0.25 percent of assets on 

average for banking organizations in all smaller size groups.4

 

3

Treasury made TIP investments in two banking organizations, Bank of America 

Corporation and Citigroup, Inc., both of which are in the group of banking organizations 

with $250 billion or more in assets in every quarter.

4

Some small banks repaid their CPP investments with funds from Treasury’s Small 

Business Lending Fund (SBLF). As a result, their liability to Treasury remained following 

their repayment of CPP funds. SBLF is a capital support program that encourages small 

and midsize banks and community development loan funds to lend to small businesses.
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 85 GAO-14-18 Government Support for Bank Holding Companies

Figure 4: Average CPP and TIP Investment Amounts Outstanding as a Percentage of Assets at Quarter-End for All Banking 

Organizations by Size, December 31, 2008 through December 31, 2012.

Note: Banking organizations include consolidated top-tier U.S. bank holding companies and 

standalone depository institutions. Assets for bank holding companies are consolidated assets for the 

top-tier bank holding company, which include the assets of consolidated subsidiaries. Assets for 

standalone depository institutions are consolidated assets for the institution. We exclude banking 

organizations for which we could not reliably calculate consolidated assets. Banking organizations are 

divided into groups each quarter using consolidated assets that were first adjusted for inflation and 

measured in fourth quarter 2012 dollars. Size groups include banking organizations with assets equal 

to the lower bound but do not include banking organizations with assets equal to the upper bound. 

For example, banking organizations with $50 billion in assets would be in the “$50-250 billion” group, 

not the “$10-50 billion” group.

At the end of 2008, participation rates in CPP and TIP were higher for 

larger banking organizations and ranged from about 0.5 percent for 

banking organizations with less than $500 million in assets to about 87.5 

percent for banking organizations with $250 billion or more in assets (see 

Panel A of Table 5). As of the end of 2010, all banking organizations with 
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 86 GAO-14-18 Government Support for Bank Holding Companies

$250 billion or more in assets had repaid Treasury and were no longer 

participating in CPP or TIP. For banking organizations that continued to 

participate in CPP, participation rates ranged from about 4.8 percent for 

banking organizations with less than $500 million in assets to 35 percent 

for banking organizations with at least $50 billion but less than $250 

billion in assets. As of the end of 2012, all banking organizations with $50 

billion or more had exited CPP and TIP. For banking organizations that 

continued to participate in CPP, participation rates ranged from about 2.4 

percent for banking organizations with less than $500 million in assets to 

about 6.5 percent for banking organizations with $1-10 billion in assets 

(see Panel A of table 5). For participating banking organizations of all 

sizes, average CPP and TIP amounts outstanding were 2 to 3 percent of 

assets in most quarters (see Panel B of table 5).

Table 5: Participation Rates and Average Investment Amounts Outstanding as a Percentage of Assets at Quarter-End for 

Participating Banking Organizations for CPP and TIP, December 31, 2008 to December 31, 2012

A. Percent of banking organizations participating in CPP or TIP at quarter-end (%)

Quarter Assets <$500M Assets ≥$500M, 

<$1B

Assets ≥$1B, 

<$10B

Assets ≥$10B, 

<$50B

Assets ≥$50B, 

<$250B

Assets ≥$250B

2008q4 0.49 4.30 14.65 37.70 80.00 87.50

2009q2 4.57 17.46 25.81 41.67 50.00 44.44

2009q4 5.20 16.89 25.93 36.84 52.63 11.11

2010q2 5.22 17.14 25.38 33.96 35.00 0.00

2010q4 4.75 16.98 23.46 18.87 35.00 0.00

2011q2 4.72 17.24 21.68 16.67 15.79 0.00

2011q4 3.42 10.03 14.59 12.96 16.67 0.00

2012q2 3.32 9.18 10.47 10.91 11.76 0.00

2012q4 2.36 5.68 6.53 5.45 0.00 0.00

B. Average CPP and TIP investment amounts outstanding as a percent of assets at quarter-end for participating banking organizations 

(%) 

Quarter Assets <$500M Assets ≥$500M, 

<$1B

Assets ≥$1B, 

<$10B

Assets ≥$10B, 

<$50B

Assets ≥$50B, 

<$250B

Assets ≥$250B

2008q4 2.25 2.08 2.22 2.33 2.38 1.79

2009q2 2.14 2.12 2.10 2.31 2.86 2.27

2009q4 2.32 2.11 2.09 2.25 2.88 2.81

2010q2 2.28 2.10 2.10 2.24 2.81 N/A

2010q4 2.32 2.10 2.16 2.39 2.71 N/A

2011q2 2.30 2.14 2.16 2.36 1.96 N/A
Appendix IV: Use of Financial Stability 

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Different Sizes

Page 87 GAO-14-18 Government Support for Bank Holding Companies

2011q4 2.42 2.35 2.28 2.34 1.96 N/A

2012q2 2.47 2.38 2.38 2.44 0.89 N/A

2012q4 2.65 2.56 2.66 2.86 N/A N/A

Source: GAO analysis of data from BEA, FDIC, the Federal Reserve Board, the Federal Reserve Bank of Chicago, and Treasury.

Note: Banking organizations include consolidated top-tier U.S. bank holding companies and 

standalone depository institutions. Assets for bank holding companies are consolidated assets for the 

top-tier bank holding company, which include the assets of consolidated subsidiaries. Assets for 

standalone depository institutions are consolidated assets for the institution. We exclude banking 

organizations for which we could not reliably calculate consolidated assets. Banking organizations are 

divided into groups each quarter using consolidated assets that were first adjusted for inflation and 

measured in fourth quarter 2012 dollars. The participation rate is the percentage of banking 

organizations with CPP or TIP amounts outstanding at quarter-end.

FDIC’s TLGP. FDIC implemented DGP and TAGP, the two components 

of TLGP, in October 2008. As of the end of 2008, average DGPguaranteed debt and TAGP-guaranteed deposit amounts outstanding 

altogether as a percentage of assets were higher for larger banking 

organizations than smaller banking organizations and ranged from about 

1.5 percent of assets on average for banking organizations with less than 

$500 million in assets to 7.7 percent of assets on average for banking 

organizations with $250 billion or more in assets (see fig. 5). By the end 

of 2010, differences in utilization of DGP and TAGP across banking 

organizations of different sizes had diminished somewhat, with DGPguaranteed debt and TAGP-guaranteed deposit amounts outstanding 

altogether ranging from 1.4 percent for banking organizations with $250 

billion or more in assets to about 3.2 percent for banking organizations 

with at least $1 billion but less than $10 billion in assets. TAGP expired on 

December 31, 2010, and by the end of 2011, DGP-guaranteed debt 

amounts outstanding were less than 1 percent of assets on average for 

banking organizations of all sizes. DGP expired on December 31, 2012, 

so none of the assets of any banking organization were funded using 

DGP-guaranteed debt after that date.
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 88 GAO-14-18 Government Support for Bank Holding Companies

Figure 5: Average DGP-Guaranteed Debt and TAGP-Guaranteed Deposits Outstanding as a Percentage of Assets at QuarterEnd for All Banking Organizations by Size, December 31, 2008, through December 31, 2012

Note: Banking organizations include consolidated top-tier U.S. bank holding companies and 

standalone depository institutions. Assets for bank holding companies are consolidated assets for the 

top-tier bank holding company, which include the assets of consolidated subsidiaries. Assets for 

standalone depository institutions are consolidated assets for the institution. We exclude banking 

organizations for which we could not reliably calculate consolidated assets. Banking organizations are 

divided into groups each quarter using consolidated assets that were first adjusted for inflation and 

measured in fourth quarter 2012 dollars. Size groups include banking organizations with assets equal 

to the lower bound but do not include banking organizations with assets equal to the upper bound. 

For example, banking organizations with $50 billion in assets would be in the “$50-250 billion” group, 

not the “$10-50 billion” group.

In general, 50 percent or more of the banking organizations in every size 

group were using either DGP-guaranteed debt or TAGP-guaranteed 

deposits (or both) as funding through the end of 2010 (see Panel A of 

table 6). At the end of 2008, participation rates ranged from about 66.3 

percent for banking organizations with less than $500 million in assets to 

about 92.9 percent for banking organizations with at least $1 billion but 

less than $10 billion in assets. At the end of 2010, participation rates 

ranged from about 50 percent for banking organizations with at least $50 
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 89 GAO-14-18 Government Support for Bank Holding Companies

billion but less than $250 billion in assets to 100 percent for banking 

organizations with $250 billion or more in assets. Participation rates for 

banking organizations with less than $50 billion in assets fell after TAGP 

expired on December 31, 2010, and in mid-2011 ranged from about 0.04 

percent for banking organizations with less than $500 million in assets to 

about 3.1 percent for banking organizations with at least $1 billion but 

less than $10 billion in assets. Participation rates were about 42.1 percent 

and 100 percent for banking organizations with at least $50 billion but 

less than $250 billion in assets and with $250 billion or more in assets, 

respectively, at that time. By mid-2012, only banking organizations with 

$50 billion or more were participating in DGP, which then expired at the 

end of 2012. 

Table 6: Participation Rates in DGP and TAGP and Average DGP-Guaranteed Debt and TAGP-Guaranteed Deposits 

Outstanding as a Percentage of Assets at Quarter-End for Participating Banking Organizations, December 31, 2008, through 

December 31, 2012

A. Percent of banking organizations participating in DGP, TAGP, or both at quarter-end (%).

Quarter Assets <$500M Assets ≥$500M, 

<$1B

Assets ≥$1B, 

<$10B

Assets ≥$10B, 

<$50B

Assets ≥$50B, 

<$250B

Assets ≥$250B

2008q4 66.27 84.87 92.86 86.89 86.67 87.50

2009q2 66.98 89.79 93.14 88.33 88.89 100.00

2009q4 70.46 90.60 93.89 87.72 89.47 100.00

2010q2 66.56 86.74 87.12 77.36 85.00 100.00

2010q4 65.33 81.48 80.77 45.28 50.00 100.00

2011q2 0.04 0.78 3.13 1.85 42.11 100.00

2011q4 0.04 0.64 2.92 1.85 33.33 100.00

2012q2 0.00 0.00 0.00 0.00 5.88 27.27

2012q4 0.00 0.00 0.00 0.00 0.00 20.00

B. Average DGP-guaranteed debt and TAGP-guaranteed deposit amounts outstanding as a percent of assets for participating banking 

organizations at quarter end (%).

Quarter Assets <$500M Assets ≥$500M, 

<$1B

Assets ≥$1B, 

<$10B

Assets ≥$10B, 

<$50B

Assets ≥$50B, 

<$250B

Assets ≥$250B

2008q4 2.30 2.42 2.66 4.22 6.82 8.81

2009q2 2.34 2.62 3.27 4.94 7.51 6.34

2009q4 2.67 3.01 3.71 5.96 8.25 6.37

2010q2 2.55 3.29 3.73 6.67 6.16 1.81

2010q4 2.75 3.51 3.93 5.56 2.88 1.41

2011q2 1.75 2.12 1.61 1.48 1.99 1.23
Appendix IV: Use of Financial Stability 

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Page 90 GAO-14-18 Government Support for Bank Holding Companies

2011q4 1.72 1.72 1.58 0.21 1.37 0.91

2012q2 N/A N/A N/A N/A 4.14 0.38

2012q4 N/A N/A N/A N/A N/A <0.01

Source: GAO analysis of data from BEA, FDIC, the Federal Reserve Board, the Federal Reserve Bank of Chicago, and Treasury.

Note: Banking organizations include consolidated top-tier U.S. bank holding companies and 

standalone depository institutions. Assets for bank holding companies are consolidated assets for the 

top-tier bank holding company, which include the assets of consolidated subsidiaries. Assets for 

standalone depository institutions are consolidated assets for the institution. We exclude banking 

organizations for which we could not reliably calculate consolidated assets. Banking organizations are 

divided into groups each quarter using consolidated assets that were first adjusted for inflation and 

measured in fourth quarter 2012 dollars. The participation rate is the percentage of banking 

organizations with positive amounts of TAGP-guaranteed deposits or DGP-guaranteed debt 

outstanding at quarter-end.

At the end of 2008, average DGP-guaranteed debt and TAGPguaranteed deposit amounts outstanding were higher as a percentage of 

assets for larger participants than for smaller participants and ranged 

from about 2.3 percent for participants with less than $500 million in 

assets to about 8.8 percent for participants with $250 billion or more in 

assets (see Panel B of table 6). At the end of 2010, average DGPguaranteed debt and TAGP-guaranteed deposit amounts outstanding as 

a percentage of assets had fallen for banking organizations with $50 

billion or more in assets but not for smaller banking organizations. At that 

time, DGP-guaranteed debt and TAGP-guaranteed deposit amounts 

outstanding ranged from about 1.4 percent of assets on average for 

participants with $250 billion or more in assets to about 5.6 percent of 

assets on average for participants with $10-50 billion in assets. TAGP 

expired on December 31, 2010, and as of the end of 2011, DGPguaranteed debt amounts outstanding were less than 2 percent of assets 

on average for banking organizations of all sizes. DGP expired on 

December 31, 2012.

Lastly, our analysis found that the six largest bank holding companies as 

of December 31, 2012—all with consolidated assets greater than $500 

billion—used the emergency programs to varying degrees but had exited 

most by the end of 2009. Table 7 shows the percentage of consolidated 

assets funded by DGP-guaranteed debt, TAGP-guaranteed deposits, 

TAF loans, CPFF loans, PDCF loans, TSLF loans, and CPP and TIP 

equity investments for the largest bank holding companies at year-end 

from 2008 to 2012. For comparison purposes we also show the average 

percent of assets funded by the same programs for the six banking 

organization size groups over the same period.
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 91 GAO-14-18 Government Support for Bank Holding Companies

Table 7. Average outstanding amounts of equity provided, loans provided, and liabilities guaranteed by emergency programs 

for select bank holding companies and for banking organizations by size at year end, 2008-2012.

DGPguaranteed 

debt 

outstanding

TAGPguaranteed 

deposits 

outstanding

TAF loans 

outstanding

CPFF loans 

outstanding

PDCF loans 

outstanding

Market value 

of TSLF 

loans 

outstanding

CPP and 

TIP 

investment 

amounts 

outstanding

Select banking organizations as of December 31, 2008:

Bank of America Corporation

% of assets 2.44 5.53 2.47 0.82 0 0 0.82

$ billions 44.55 100.69 45.00 14.93 0 0 15.00

Citigroup, Inc.

% of assets 1.64 2.50 0.77 0.64 0.71 1.87 2.32

$ billions 31.87 48.41 15.00 12.39 13.80 36.19 45.00

Goldman Sachs Group, Inc.a

% of assets —- —- —- —- —- —- —- 

$ billions —- —- —- —- —- —- —- 

JPMorgan Chase & Co.

% of assets 0.96 6.24 1.38 0 0 0.11 1.15

$ billions 20.93 135.73 30.00 0 0 2.46 25.00

Morgan Stanleya

% of assets —- —- —- —- —- —- —- 

$ billions —- —- —- —- —- —- —- 

Wells Fargo & Company

% of assets 0.46 4.85 5.54 0 0 0 1.91

$ billions 6.08 63.48 72.50 0 0 0 25.00

Average for banking organizations by size as of December 31, 2008:

Assets ≥ $250 billion

% of assets 0.86 6.85 1.38 0.24 0.09 0.25 1.57

$ billions 13.42 54.84 20.68 3.68 1.72 4.83 15.90

Assets $50-250 billion

% of assets 0.40 5.52 2.21 0.24 0 0 1.91

$ billions 0.59 6.63 2.55 0.40 0 0 2.09

Assets $10-50 billion

% of assets 0.05 3.61 0.81 0 0 0 0.88

$ billions 0.01 0.59 0.18 0 0 0 0.15

Assets $1-10 billion

% of assets <0.01 2.47 0.26 0 0 0 0.32

$ billions <0.01 0.06 0.01 0 0 0 0.01
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 92 GAO-14-18 Government Support for Bank Holding Companies

DGPguaranteed 

debt 

outstanding

TAGPguaranteed 

deposits 

outstanding

TAF loans 

outstanding

CPFF loans 

outstanding

PDCF loans 

outstanding

Market value 

of TSLF 

loans 

outstanding

CPP and 

TIP 

investment 

amounts 

outstanding

Assets $500 million to $1 billion

% of assets 0.01 2.04 0.08 0 0 0 0.09

$ billions <0.01 0.01 <0.01 0 0 0 <0.01

Assets < $500 million

% of assets <0.01 1.52 0.01 0 0 0 0.01

$ billions <0.01 <0.01 <0.01 0 0 0 <0.01

Select banking organizations as of December 31, 2009:

Bank of America Corporation

% of assets 1.99 7.22 0 0 0 0 0 

$ billions 44.31 161.02 0 0 0 0 0 

Citigroup, Inc.

% of assets 3.52 2.71 0 0 0 0 0 

$ billions 65.59 50.56 0 0 0 0 0 

Goldman Sachs Group, Inc.

% of assets 2.42 0.26 0 0 0 0 0 

$ billions 20.57 2.19 0 0 0 0 0 

JPMorgan Chase & Co.

% of assets 1.99 5.53 0 0 0 0 0 

$ billions 40.48 112.29 0 0 0 0 0 

Morgan Stanley

% of assets 3.08 1.01 0 0 0 0 0 

$ billions 23.77 7.76 0 0 0 0 0 

Wells Fargo & Company

% of assets 0.77 7.38 0 0 0 0 0 

$ billions 9.52 91.82 0 0 0 0 0 

Average for banking organizations by size as of December 31, 2009:

Assets ≥ $250 billion 

% of assets 1.81 4.56 0 0 0 0 0.31

$ billions 23.48 52.49 0 0 0 0 0.84

Assets $50-250 billion

% of assets 1.07 6.32 0.22 0 0 0 1.52

$ billions 1.47 7.12 0.37 0 0 0 1.29

Assets $10-50 billion

% of assets 0.03 5.20 0.20 0 0 0 0.83
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 93 GAO-14-18 Government Support for Bank Holding Companies

DGPguaranteed 

debt 

outstanding

TAGPguaranteed 

deposits 

outstanding

TAF loans 

outstanding

CPFF loans 

outstanding

PDCF loans 

outstanding

Market value 

of TSLF 

loans 

outstanding

CPP and 

TIP 

investment 

amounts 

outstanding

$ billions 0.01 0.80 0.04 0 0 0 0.14

Assets $1-10 billion

% of assets 0.05 3.43 0.22 0 0 0 0.54

$ billions <0.01 0.08 0.01 0 0 0 0.01

Assets $500 million-1 billion

% of assets 0.02 2.71 0.06 0 0 0 0.36

$ billions <0.01 0.02 <0.01 0 0 0 <0.01

Assets <$500 million

% of assets <0.01 1.88 0.05 0 0 0 0.12

$ billions <0.01 <0.01 <0.01 0 0 0 <0.01

Select banking organizations as of December 31, 2010:

Bank of America Corporation

% of assets 1.21 0 0 0 0 0 0 

$ billions 27.45 0 0 0 0 0 0 

Citigroup, Inc.

% of assets 3.04 0 0 0 0 0 0 

$ billions 58.25 0 0 0 0 0 0 

Goldman Sachs Group, Inc.

% of assets 2.07 0 0 0 0 0 0 

$ billions 18.84 0 0 0 0 0 0 

JPMorgan Chase & Co.

% of assets 1.71 0 0 0 0 0 0 

$ billions 36.13 0 0 0 0 0 0 

Morgan Stanley

% of assets 2.63 0 0 0 0 0 0 

$ billions 21.27 0 0 0 0 0 0 

Wells Fargo & Company

% of assets 0.76 0 0 0 0 0 0 

$ billions 9.50 0 0 0 0 0 0 

Average for banking organizations by size as of December 31, 2010:

Assets ≥ $250 billion 

% of assets 1.41 0 0 0 0 0 0 

$ billions 17.90 0 0 0 0 0 0 
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 94 GAO-14-18 Government Support for Bank Holding Companies

DGPguaranteed 

debt 

outstanding

TAGPguaranteed 

deposits 

outstanding

TAF loans 

outstanding

CPFF loans 

outstanding

PDCF loans 

outstanding

Market value 

of TSLF 

loans 

outstanding

CPP and 

TIP 

investment 

amounts 

outstanding

Assets $50-250 billion

% of assets 0.85 0.59 0 0 0 0 0.95

$ billions 1.19 0.30 0 0 0 0 0.92

Assets $10-50 billion

% of assets 0.03 2.49 0 0 0 0 0.45

$ billions 0.01 0.42 0 0 0 0 0.08

Assets $1-10 billion

% of assets 0.05 3.12 0 0 0 0 0.51

$ billions <0.01 0.08 0 0 0 0 0.01

Assets $500 million-1 billion

% of assets 0.02 2.84 0 0 0 0 0.36

$ billions <0.01 0.02 0 0 0 0 <0.01

Assets <$500 million

% of assets <0.01 1.80 0 0 0 0 0.11

$ billions <0.01 <0.01 0 0 0 0 <0.01

Select banking organizations as of December 31, 2011:

Bank of America Corporation

% of assets 1.12 0 0 0 0 0 0 

$ billions 23.85 0 0 0 0 0 0 

Citigroup, Inc.

% of assets 2.03 0 0 0 0 0 0 

$ billions 38.00 0 0 0 0 0 0 

Goldman Sachs Group, Inc.

% of assets 0.92 0 0 0 0 0 0 

$ billions 8.50 0 0 0 0 0 0 

JPMorgan Chase & Co.

% of assets 0.89 0 0 0 0 0 0 

$ billions 20.18 0 0 0 0 0 0 

Morgan Stanley

% of assets 1.75 0 0 0 0 0 0 

$ billions 13.09 0 0 0 0 0 0 

Wells Fargo & Company

% of assets 0.27 0 0 0 0 0 0 

$ billions 3.50 0 0 0 0 0 0 
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 95 GAO-14-18 Government Support for Bank Holding Companies

DGPguaranteed 

debt 

outstanding

TAGPguaranteed 

deposits 

outstanding

TAF loans 

outstanding

CPFF loans 

outstanding

PDCF loans 

outstanding

Market value 

of TSLF 

loans 

outstanding

CPP and 

TIP 

investment 

amounts 

outstanding

Average for banking organizations by size as of December 31, 2011:

Assets ≥ $250 billion 

% of assets 0.91 0 0 0 0 0 0 

$ billions 11.38 0 0 0 0 0 0 

Assets $50-250 billion

% of assets 0.46 0 0 0 0 0 0.33

$ billions 0.65 0 0 0 0 0 0.29

Assets $10-50 billion

% of assets <0.01 0 0 0 0 0 0.30

$ billions <0.01 0 0 0 0 0 0.06

Assets $1-10 billion

% of assets 0.05 0 0 0 0 0 0.33

$ billions <0.01 0 0 0 0 0 0.01

Assets $500 million-1 billion

% of assets 0.01 0 0 0 0 0 0.24

$ billions <0.01 0 0 0 0 0 <0.01

Assets <$500 million

% of assets <0.01 0 0 0 0 0 0.08

$ billions <0.01 0 0 0 0 0 <0.01

Select banking organizations as of December 31, 2012:

Bank of America Corporation

% of assets 0 0 0 0 0 0 0 

$ billions 0 0 0 0 0 0 0 

Citigroup, Inc.

% of assets <0.01 0 0 0 0 0 0 

$ billions <0.01 0 0 0 0 0 0 

Goldman Sachs Group, Inc.

% of assets 0 0 0 0 0 0 0 

$ billions 0 0 0 0 0 0 0 

JPMorgan Chase & Co.

% of assets 0 0 0 0 0 0 0 

$ billions 0 0 0 0 0 0 0 

Morgan Stanley

% of assets 0 0 0 0 0 0 0 
Appendix IV: Use of Financial Stability 

Programs by Banking Organizations of 

Different Sizes

Page 96 GAO-14-18 Government Support for Bank Holding Companies

DGPguaranteed 

debt 

outstanding

TAGPguaranteed 

deposits 

outstanding

TAF loans 

outstanding

CPFF loans 

outstanding

PDCF loans 

outstanding

Market value 

of TSLF 

loans 

outstanding

CPP and 

TIP 

investment 

amounts 

outstanding

$ billions 0 0 0 0 0 0 0 

Wells Fargo & Company

% of assets <0.01 0 0 0 0 0 0 

$ billions <0.01 0 0 0 0 0 0 

Average for banking organizations by size as of December 31, 2012:

Assets ≥ $250 billion 

% of assets <0.01 0 0 0 0 0 0 

$ billions <0.01 0 0 0 0 0 0 

Assets $50-250 billion

% of assets 0 0 0 0 0 0 0 

$ billions 0 0 0 0 0 0 0 

Assets $10-50 billion

% of assets 0 0 0 0 0 0 0.16

$ billions 0 0 0 0 0 0 0.04

Assets $1-10 billion

% of assets 0 0 0 0 0 0 0.17

$ billions 0 0 0 0 0 0 <0.01

Assets $500 million-1 billion

% of assets 0 0 0 0 0 0 0.15

$ billions 0 0 0 0 0 0 <0.01

Assets <$500 million

% of assets 0 0 0 0 0 0 0.06

$ billions 0 0 0 0 0 0 <0.01

Source: GAO analysis of data from BEA, FDIC, the Federal Reserve Board, the Federal Reserve Bank of Chicago, SNL Financial, and 

Treasury. 

Note: Banking organizations include consolidated top-tier U.S. bank holding companies and 

standalone depository institutions. Assets for bank holding companies are consolidated assets for the 

top-tier bank holding company, which include the assets of consolidated subsidiaries. Assets for 

standalone depository institutions are consolidated assets for the institution. We exclude banking 

organizations for which we could not reliably calculate consolidated assets. Select bank holding 

companies are those with $500 billion or more in assets as of December 31, 2012. Banking 

organizations are divided into groups each quarter using consolidated assets that were first adjusted 

for inflation and measured in fourth quarter 2012 dollars.

a

Goldman Sachs Group, Inc. and Morgan Stanley became bank holding companies in September 

2008 but did not file form FR Y-9C, the source of our data on consolidated assets, for the fourth 

quarter of 2008.
Appendix V: Comments from the Board of 

Governors of the Federal Reserve System

Page 97 GAO-14-18 Government Support for Bank Holding Companies

Appendix V: Comments from the Board of 

Governors of the Federal Reserve System
Appendix V: Comments from the Board of 

Governors of the Federal Reserve System

Page 98 GAO-14-18 Government Support for Bank Holding Companies
Appendix VI: Comments from the Department 

of the Treasury

Page 99 GAO-14-18 Government Support for Bank Holding Companies

Appendix VI: Comments from the 

Department of the Treasury
Appendix VII: GAO Contact and Staff 

Acknowledgments

Page 100 GAO-14-18 Government Support for Bank Holding Companies

Lawrance L. Evans, Jr., (202) 512-4802, or EvansL@gao.gov

In addition to the contact named above, Karen Tremba (Assistant 

Director), Jordan Anderson, Bethany M. Benitez, Stephanie Cheng, John 

Fisher, Michael Hoffman, Risto Laboski, Courtney LaFountain, Jon 

Menaster, Marc Molino, Robert Rieke, and Jennifer Schwartz made key 

contributions to this report.

Appendix VII: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(250718)
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