Troubled Asset Relief Program: Treasury's Use of Auctions to Exit the Capital Purchase Program
Published: 2013-07-08T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: CPP was established as the primary means of restoring stability to the financial system under the Troubled Asset Relief Program (TARP). Under CPP, Treasury invested almost $205 billion in 707 eligible financial institutions between October 2008 and December 2009. As of May 31, 2013, 151 institutions remained in the program with under $6 billion in outstanding investments. TARP's authorizing legislation requires GAO to report every 60 days on TARP activities. This report examines (1) the extent to which Treasury has sold CPP investments through auctions and the returns on those investments and (2) the CPP auction process and institutions' views on the process.
To conduct its work, GAO reviewed Treasury documents and financial data on auction participants. GAO also interviewed officials from Treasury and the Securities and Exchange Commission, representatives from auction participants, and others.
section_title: What GAO Found
paragraphs: The U.S. Department of the Treasury (Treasury) has increasingly used auctions to sell its Capital Purchase Program (CPP) investments. Initially, Treasury relied primarily on financial institutions redeeming their shares to wind down the program. However, in March 2012 Treasury began using auctions to exit CPP, and more institutions have exited the program through auctions than through any other method since then. As of May 2013, Treasury has held 16 auctions, selling 128 investments for total proceeds of about $2.4 billion. Each auction has involved the sale of an institution's outstanding investment, also known as the par amount. In most cases, the final sales price was below the par amount, and in total Treasury received 84 percent of par in the first 16 auctions. Through these auctions, repurchases, and other mechanisms, 556 institutions had exited CPP as of May 31, 2013, accounting for almost $223 billion in repayments and income and exceeding the original investment amount by about $18 billion.
Treasury has structured the auctions to maximize taxpayer returns, but representatives from some of the 13 financial institutions that participated in the auctions told GAO that they had concerns about the process. Treasury selected institutions for auctions based on, among other things, the size of the institution's CPP investment and its dividend payment record. Treasury then notified the institutions that their securities were going to be auctioned, and the institutions were required to submit certain documentation to Treasury. Representatives of some institutions, mostly from earlier auctions, told GAO that the process was rushed and left them with limited notice to prepare the required documentation and insufficient time to obtain regulatory approval to bid on their own shares. Treasury officials said they would have been willing to move an institution to a later auction if it needed more time to prepare, and while representatives of a few institutions that participated in later auctions felt the process was rushed, other institutions said they had more time to prepare. Representatives of some institutions expressed frustration that they did not have the option to match the winning bid to retain ownership of their shares. Treasury officials said that any changes to the process that benefitted the financial institution would make the process less competitive for other bidders at the expense of taxpayers and would contradict Treasury's goal of structuring the process to increase competition and maximize returns for taxpayers.

section_title: Letter
paragraphs: The Capital Purchase Program (CPP), the first and largest initiative under  the Troubled Asset Relief Program (TARP), provided almost $205 billion  in capital to eligible financial institutions by purchasing preferred shares  and subordinated debt. In return for its investments, the U.S. Department  of the Treasury (Treasury) received dividend or interest payments and  warrants. The program was closed to new investments on December 31,  2009, and since then Treasury has continued to oversee and divest its  CPP investments, collect dividend and interest payments, and sell  warrants. Recently Treasury has taken steps to wind down this bank  investment program with a focus on auctioning the participating financial  institutions’ preferred shares.
Under our statutorily mandated responsibilities for providing timely  oversight of TARP, we have been monitoring and providing updates on  TARP programs, including CPP.  This report examines (1) the extent to which Treasury had sold CPP investments through auctions and the  returns on those investments and (2) the CPP auction process and  institutions’ views on the process.
To examine the extent to which Treasury has sold CPP investments  through auctions and the returns on those investments, we collected data  from Treasury and SNL Financial on the results of recent auctions,  including the names of participating institutions, sale prices for the shares  auctioned by Treasury, and the dollar amount of the shares sold below  par value. We assessed the reliability of the Treasury and SNL Financial  data and determined that they were sufficiently reliable to describe the  results of CPP auctions. To review the CPP auction process, we reviewed  relevant Treasury documents and interviewed Treasury officials,  individuals knowledgeable about auctions of CPP investments,  representatives of institutions that participated in the auction process.  trade associations representing financial institutions, and officials from the  Securities and Exchange Commission (SEC). We selected participating  institutions to interview based on when the institutions went to auction,  geographic diversity, and a sample of both private and public institutions.  Appendix I contains additional information on our scope and  methodology.
We conducted this performance audit from January 2013 to July 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.
subsections: section_title: Background
paragraphs: Created in 2008, CPP was the primary initiative under TARP to help  stabilize the financial markets and banking system by providing capital to  qualifying regulated financial institutions through the purchase of senior  preferred shares and subordinated debt. Instead of purchasing troubled  mortgage-backed securities and whole loans, as initially envisioned under  TARP, Treasury used CPP investments to strengthen financial  institutions’ capital levels. Treasury determined that strengthening capital  levels was the more effective mechanism to help stabilize financial  markets, encourage interbank lending, and increase confidence in  lenders and investors. Treasury anticipated that strengthening the capital  positions of the financial institutions would enhance confidence in the  institutions themselves and the financial system overall and increase the  institutions’ capacity to undertake new lending and support the economy.  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. The Office of Financial Stability was  established within Treasury to implement TARP in consultation with  federal banking regulators.
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. In exchange for the investment, Treasury  generally received senior preferred shares that would pay dividends at a  rate of 5 percent annually for the first 5 years and 9 percent annually  thereafter. Treasury was also required to receive warrants to purchase  shares of common or preferred stock or a senior debt instrument to  further protect taxpayers and help ensure returns on the investments.  Institutions are allowed to repay CPP investments with the approval of  their primary federal bank regulator and afterward to redeem warrants.
Nine major financial institutions were initially included in CPP because  Treasury and the federal banking regulators considered them essential to  the operation of the financial system.held about 55 percent of U.S. banking assets and provided a variety of  services, including retail, wholesale, and investment banking and  custodial and processing services. According to Treasury officials, the  nine financial institutions agreed to participate in CPP in part to signal the  program’s importance to the stability of the financial system. Initially,  Treasury approved $125 billion in total capital purchases for these  institutions and completed the transactions with eight of them on October  28, 2008, for a total of $115 billion. The remaining $10 billion was  disbursed after the merger of Bank of America Corporation and Merrill  Lynch & Co., Inc. was completed in January 2009. Treasury ultimately  disbursed about $205 billion to 707 financial institutions through  December 2009. Participating institutions began repaying their  investments and exiting CPP in early 2009.
At the time, these nine institutions  In May 2012, Treasury announced a strategy to wind down its remaining  investments. Treasury’s strategy includes three options that, according to  Treasury officials, aim to protect taxpayer interests, promote financial  stability, and preserve the strength of the nation’s community banks.  Treasury’s options include (1) repayments, (2) restructurings, and (3)  auctions. According to Treasury officials, Treasury conducts analyses to  determine which option is most appropriate for a particular institution.
Repayments allow financial institutions, with the approval of their  regulators, to redeem their preferred shares in full. Treasury noted  that institutions have the legal right to do this at any time. A majority of  institutions have exited the program in this manner since 2009, and  Treasury expected some financial institutions to continue to use it  through late 2013. Under this option, Treasury’s ability to exit the  program largely depends on the ability of institutions to repay their  investments. In particular, institutions must demonstrate that they are  financially strong enough to repay the CPP investments in order to  receive regulatory approval to exit the program. Dividend rates will  increase from 5 percent to 9 percent for remaining institutions  beginning in late 2013, a development that may prompt institutions to  repay their investments. If broader interest rates are low, especially  approaching the dividend reset, the financial institutions could have  further incentive to redeem their preferred shares. Treasury intends to  continue using the repayment option for institutions that it believes are  capable of redeeming all shares in full in the near future, but Treasury  officials said that the number of such institutions was declining.
Restructurings allow troubled financial institutions to restructure their  investments, and all restructurings require new capital —for example,  from a merger. With this option, Treasury receives cash or other  securities that generally can be sold more easily than preferred stock,  but Treasury’s investments are sometimes sold at a discount. As  such, Treasury has used restructurings as a means of winding down  CPP investments only on a limited basis. Although Treasury officials  expect a limited number of restructurings to continue, they told us that  they would approve the sales only if the terms represented the best  deal for taxpayers.
Auctions allow Treasury to sell its preferred stock. Treasury  conducted the first auction of CPP investments in March 2012 and  reported that it generated strong investor interest. Treasury also  reported that this option could be beneficial for community banks that  did not have easy access to the capital markets, because it could  attract new, private capital to replace the temporary TARP support.  Treasury expects this option to continue to be part of its effort to wind  down CPP. Thus far, Treasury has sold investments individually but  noted that it might combine other investments, particularly smaller  investments, into pooled auctions. Unlike Treasury’s recent auctions  of individual CPP preferred stock investments, in which multiple  bidders were allocated portions of the preferred stock at a single  clearing price, Treasury anticipates that the pooled auctions will result  in a single highest bidder purchasing all of the securities included in  the pool. Whether Treasury sells stock individually or in pools, the  outcome of this option will depend largely on investor demand for  these securities.
In considering these options, we have previously noted that Treasury will  need to balance the goals of protecting taxpayer-supported investments  while expeditiously unwinding the program. Treasury officials said that  they would continue to evaluate the CPP exit strategy but added that they  expected to continue using these options for the foreseeable future.
As of May 31, 2013, Treasury had received $222.6 billion in repayments  and income, exceeding the $204.9 billion originally disbursed by almost  $18 billion (see fig. 1). Further, 556 institutions had exited CPP as of  May 31, 2013, including 212 institutions that exited by fully repaying their  CPP investments, 128 that participated in auctions, and 165 that  refinanced their investments through other federal programs. The  $222.6 billion in total proceeds includes $193.5 billion in repayments; $2.4  billion in auction sales of original CPP investments; $18.9 billion in  dividends, interest, and other income; and $7.9 billion in warrants sold.  After accounting for write-offs and realized losses totaling $3.4 billion,  CPP had $5.6 billion in outstanding investments as of May 31, 2013.
section_title: Treasury Has Increasingly Used Auctions to Wind Down CPP
paragraphs: Treasury has increasingly used the auction option after the first sale of  CPP securities in March 2012 received investor interest. Through  February 2012, 148 institutions had exited CPP by redeeming their  preferred shares in full. As figure 2 shows, from March 2012—the month  of Treasury’s first auction—through May 2013, 64 institutions exited by  redeeming their investments while 128 institutions exited through 16  auctions.
Each auction involved the sale of an institution’s outstanding CPP  investment, also known as the par amount. In most cases, the final sales  price for an institution’s shares was below the par amount. In particular,  the $2.4 billion in total proceeds from the 16 auctions to date—from  March 2012 through April 2013— represents 84 percent of the $2.9 billion  principal investment in the institutions. For each round of auctions, the  percentage of par amount that Treasury received ranged from 65 percent  in the 12th auction to 93 percent in the 5th auction (see fig. 3). Out of all  institutions that participated in these 16 auctions, final sales prices for  individual institutions ranged from 17 percent to 131 percent of par.  Treasury officials said that the auction results reflected the potential risk  associated with the liquidity of the investment and the credit quality of the  financial institutions, including their ability to make future dividend or  interest payments, as well as the prospect of receiving previous missed  payments that had accrued. For example, later auctions tended to include  smaller institutions with more cumulative missed payments. In a few  cases, the prospect of recouping these missed payments made them  particularly attractive to investors and helped a number of institutions to  sell shares at above their par value. Although Treasury has not generally  recouped its full investment in individual institutions through the auctions,  Treasury officials told us that accepting a discount and transferring  ownership of these institutions to the private sector was in the best  interest of the taxpayer. Because of the inherent risk factors of these  institutions, Treasury officials did not believe that these institutions would  be able to make full repayments in the near future. The officials added  that had they chosen not to auction these positions, their values could  have decreased later. Treasury officials also said that while auctions were  generally priced at a discount to par, the prices were generally equal to or  above Treasury’s internal valuations.
According to representatives from some financial institutions that  participated in the auctions, there are many reasons for seeking to exit  CPP, including through the auction process. In particular, representatives  from several institutions told us that compensation restrictions provided a  strong incentive to exit. That is, as a condition of receiving TARP  assistance, the financial institutions must meet a number of requirements  related to incentive and bonus compensation arrangements for senior  executive officers. Representatives from other institutions told us that  there was a stigma associated with remaining in the program. As we have  reported, Treasury officials said that the public’s negative opinion of  TARP curtailed overall interest and participation in the program.  Representatives from some institutions also said that the impending  increase in the dividend rate from 5 percent to 9 percent provided a  strong incentive to redeem the shares if the institution was able to do so.
Treasury has stated that the auction process could be beneficial for  financial institutions that do not have easy access to the capital markets,  because the auctions could attract new private capital to replace the  temporary TARP support. Further, representatives from some financial  institutions told us that they agreed that the auction had helped them exit  CPP sooner than they could have otherwise. Representatives from other  institutions told us that access to capital markets was not a major factor in  their plans for exiting CPP, as they could have independently raised the  capital.
section_title: Treasury Structured Auctions to Maximize Taxpayer Return, but Some Auction Participants Have Raised Concerns about the Process
paragraphs: Treasury began planning its auctions in November 2011 by hiring a  contractor to help assess its exit strategy for CPP. Among other things,  the company assisted Treasury in reaching out to institutions to determine  if they had the intent and ability to redeem their preferred shares in the  near future. For those institutions that would not be redeeming in the near  future, Treasury, with the company’s assistance, later contacted them to  discuss the auction process. Treasury held the first “pilot” auction in  March 2012 to determine investor interest in CPP securities. Of the  remaining institutions, Treasury said that it selected for this auction the  preferred stocks of six financial institutions that had existing effective shelf  registration statements and whose assets could thus be auctioned most  quickly. Treasury officials said that they focused on the shares of those  institutions in order to test the efficacy of the auction process.
In May 2012, Treasury outlined its strategy for winding down CPP, citing  the auction option as one that would help a number of institutions exit the  program. Treasury, with assistance from its contractor, began by  assessing the financial institutions that remained in CPP to determine  their suitability for individual auctions. Treasury officials said that it used a  number of criteria to make this determination including the size of the  institution’s CPP investment, the existence of an effective shelf  registration, and the institution’s record of paying its dividends. For the  initial auctions, Treasury selected larger, publicly traded institutions that  were up to date on their dividend payments. For example, 17 of the 20  institutions participating in the first three auctions had over $1 billion in  assets. Furthermore, four of the first five auctions included only publicly  held institutions.
After selecting the institutions, Treasury notified them that they would be  part of an upcoming auction, and the institutions then had to assemble  and submit documentation to Treasury. Documentation requirements  were based on the nature of the offering. For example, publicly traded  institutions selected for auctions had to submit a prospectus supplement  and an underwriting agreement. Further, privately held institutions had to  submit a placement agency agreement that included a number of  disclosures relating to capital levels and dividend payment history. If an  institution wanted to bid on its own shares in the auction it also needed to  get approval from its primary federal regulator. In the days before the  auction, Treasury notified potential investors by issuing a press release of  the institutions that were to be auctioned. Treasury used a modified Dutch  auction process, which established a market price by allowing investors to  submit bids at specified increments above a minimum price that was  specified for each auction. the results in press releases.
A Dutch auction is a method for pricing shares whereby the price of the shares offered is  lowered until there are enough bids to sell all the shares. All shares are sold at that price.  Modified Dutch auctions usually have a certain lower limit that the auctioneer cannot go  below and are used mainly when a quick sale is required. Treasury had previously used  Dutch auctions to sell its CPP warrants. considering pooled auctions for the positions—which were smaller than  the previously auctioned positions—out of concern that Treasury might  not be able to generate sufficient interest in these positions individually to  conduct a competitive auction. Treasury anticipates that pooled auctions  will result in a single highest bidder purchasing all of the securities of all  institutions included in the pool. Treasury offered these financial  institutions the opportunity to opt out of the pooled auction by submitting  an “opt-out” bid to repurchase all of their outstanding CPP securities.  Treasury also provided these institutions with the option of arranging for a  designated bidder to repurchase their shares at auction, giving the  institutions an additional opportunity to avoid the possibility of gaining new  unfamiliar shareholders.
If the institution’s or its designated bidder’s bid met a minimum price level  set by Treasury, Treasury would remove the institution from the potential  pooled auction and schedule it for an individual auction or other sale later.  However, Treasury advised the institutions that a decision to remove  them from a pooled auction did not mean that the institutions, or their  designated bidders, were entitled to purchase the investment at the  submitted bid price. Further, Treasury told institutions that it would  determine at a later date whether to conduct an individual auction or use  another mechanism to recoup its investments. Treasury originally set the  deadline for submitting the opt-out bid in August 2012. However, after  receiving feedback that some institutions needed more time to obtain  approval from their regulators, it extended the deadline to October 2012  and later extended it again to April 2013. Treasury began including  institutions that had opted out of a potential pooled auction in the seventh  auction, which occurred in October 2012. As of June 2013, Treasury had  not scheduled any pooled auctions.
Representatives from financial institutions with whom we spoke had  varied experiences with the auction process and some cited a number of  concerns with the process, including the following.
Timing and organization of the process. Representatives from  many of the 13 financial institutions with whom we spoke—particularly  those that had participated in some of the earlier auctions—thought  that the process of preparing for the auction was rushed, was not well  organized, and did not have clear instructions. In particular,  representatives from multiple institutions that we interviewed said that  they had about 3 weeks from the time they were contacted by  Treasury to prepare and submit documentation for the auction.  According to some of these representatives, this amount of time was  not sufficient to get regulatory approval to bid on their own shares.  Representatives from many of the institutions that we interviewed also  told us that the process was frustrating because Treasury did not  provide clear guidance for preparing documentation and disclosures,  causing them to incur significant expenses—cited as ranging from  $50,000 to $300,000 among the institutions we interviewed—to hire  lawyers and accountants to prepare documentation. In contrast, while  representatives from a few institutions that participated in later  auctions felt the process was rushed, others told us that they had  much more time to prepare for their auctions—up to 10 months in  some cases.
Treasury officials told us that they began reaching out to potential  auction participants in July 2011 to determine their plans for exiting  CPP and discuss the potential auctions. Although Treasury did not  begin discussing specific documentation requirements until it notified  a financial institution that it was scheduled for a particular upcoming  auction, Treasury officials said that they would have been willing to  move an institution that need more time to prepare to a later. Finally,  Treasury officials said that they would not expect the auction process  to be consistent for all auction participants, as a number of factors  could affect the amount of time an institution needed to prepare for an  auction. For example, institutions wishing to bid on their own shares at  auction would require additional time to obtain regulatory approval  compared to institutions that did not plan to submit their own bids.
Use of opt-out bid. Representatives from some institutions we  interviewed expressed frustration that Treasury used the institution’s  opt-out bid as the minimum bid for the auctions. According to  representatives from many of the financial institutions with whom we  spoke that had opted out of the pooled auction process, they were  surprised that their opt-out bid was used as the floor price in the  auction process. These representatives said that Treasury did not tell  them that their opt-out bid would be used as a floor price and that they  only found out when the auction began. Representatives from one  institution told us that Treasury did not notify them of this practice but  that they discovered it from other institutions that had already gone to  auction. Many of the representatives said they would have submitted  a higher bid in order to win the auction and retain ownership if they  had known that the opt-out bid would be used this way.
According to Treasury officials, financial institutions selected for the  pooled auctions would generally have a more difficult time being sold  individually at an auction, and the purpose of the minimum price,  which Treasury sets, is to ensure that any bids submitted at auction  would be at prices acceptable to Treasury. Treasury officials noted  that the opt-out bid may be the minimum price for an auction, and that  Treasury retains full discretion to determine what the minimum price  should be. The officials also said that the minimum price was  disclosed at the beginning of each auction and that Treasury notified  institutions that intended to bid on their own shares prior to the auction  so that the institution can finalize disclosure documents. Treasury  officials said that in the event that the clearing price was equal to the  opt-out price, the institution (or its designated bidder, if applicable)  would win all of its shares. Treasury officials also said that all  institutions had the option at auction to submit a bid above the  minimum price and that many institutions had done so. Finally,  Treasury officials said that any changes to the process that benefit the  financial institution would make the process less competitive for other  bidders at the expense of taxpayers.
Disclosure requirement. Representatives from some publicly traded  financial institutions with whom we spoke expressed frustration over  SEC’s requirement that they publicly disclose their intent to bid on  their own shares and the amount of capital they raised to do so.  Representatives from these institutions—which had internal,  nonpublic information available to them—said that this disclosure  requirement signaled to other bidders that the shares were an  attractive investment, raising the prices. Some financial institution  representatives also felt that they were at a disadvantage because the  other bidders knew, through the disclosure required by SEC, the  amount of capital the participant had available for bidding on its  shares. Conversely, the financial institutions had no knowledge about  the capital available to the other potential bidders. While the  disclosures may have resulted in higher returns to Treasury,  representatives from some of these institutions said the disclosures  put them at a disadvantage compared to the other bidders. According  to SEC officials, the purpose of the disclosure was to protect investors  by alerting them to the fact that the clearing price for the securities  offered in the auction could be affected by the institution’s bids. The  officials also said that this information was particularly relevant  because even assuming the institution has disclosed all material, non- public information to investors, the institution is always better informed  about its performance and prospects than any bidder or other third  party.
No matching bids. A number of financial institutions told us that they  would have preferred the option of matching the winning bid to be  able to retain ownership of their shares. However, Treasury officials  said that changes to the process benefitting the financial institutions  would make the process less competitive to potential bidders and less  beneficial for the taxpayer. In particular, Treasury officials said that  giving the institution the right to match the winning bid would make  other bidders less competitive, and could, in turn, discourage potential  bidders from participating.
Some of the concerns with the auction process cited by auction  participants with whom we spoke may have been caused by a difference  in motivations. According to a banking association, banks generally like to  retain ownership. Treasury officials said that their goal was to create a  competitive and transparent process that would maximize returns to  taxpayers. Treasury said that the auctions had been successful in helping  Treasury to wind down CPP and transfer ownership of the preferred  shares to the private sector.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to Treasury for its review and comment.  Treasury provided written comments that we have reprinted in appendix  II. In its written comments, Treasury noted that the report provided a  helpful overview of its strategy to wind down CPP. It also noted that  Treasury had realized a positive return of $17.8 billion on its CPP  investments as of June 28, 2013, and that 143 institutions remained in the  program representing a remaining investment of $5.5 billion. Treasury  also emphasized TARP’s effectiveness in preventing a collapse of the  financial system and in restarting economic growth.
We are sending copies of this report to the Financial Stability Oversight  Board, the Special Inspector General for TARP, interested congressional  committees and members, and Treasury. The report also is available at  no charge on the GAO website at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  A. Nicole Clowers at (202) 512-8678 or clowersa@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 III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of our report were to assess (1) the extent to which  Treasury had sold Capital Purchase Program (CPP) investments through  auctions and the returns on those investments; and (2) the CPP auction  process and institutions’ views on the process. To assess Treasury’s  wind-down strategy for CPP, we reviewed Treasury press releases and  interviewed Treasury officials on their auction implementation strategy. To  analyze the auction results, we reviewed data from Treasury and SNL  Financial—a private company that maintains a database of information  from publicly filed regulatory and financial reports—on the results of  recent auctions. The data included information on the names of  participating institutions, the par value of shares sold at auction, and the  sale prices for the shares, among other things. To obtain institutions’  views on the process, we interviewed representatives of 13 institutions  that had participated in the auction process. In selecting participating  institutions to interview, we sought representation from participants in  early as well as more recent auctions, geographic diversity, and a  balance of both private and public institutions. While we selected a  diverse group of auction participants to interview, their statements reflect  their specific experiences and should not be generalized to reflect the  views of all auction participants. We also interviewed individuals  knowledgeable about the CPP auction process, representatives from  trade associations for financial institutions, and officials from the  Securities and Exchange Commission.
We determined that the CPP program data from Treasury were  sufficiently reliable to assess the status of the program and the results of  CPP auctions. For example, we tested the Office of Financial Stability’s  internal controls over financial reporting as they related to our annual  audit of the office’s financial statements and found the information to be  sufficiently reliable based on the results of our audits of fiscal years 2009,  2010, 2011, and 2012 financial statements for TARP. We also compared  Treasury’s auction data to comparable data from SNL Financial and  accounted for any differences. We assessed the reliability of SNL  Financial data as part of previous studies and found the data to be  reliable for the purposes of our review. We verified that no changes had  been made that would affect the data’s reliability.
We conducted this performance audit from January 2013 to July 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.
section_title: Appendix II: Comments from the Office of Financial Stability
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Karen Tremba (Assistant  Director), Christopher Forys, Michael Mikota, Emily Chalmers, William  Chatlos, Marc Molino, and Patricia Moye made significant contributions to  this report.