More than $16 billion in investments has been distributed so far this year under the capital purchase program. As the U.S. Department of the Treasury issues rules for senior executives at participating bank-holding companies, it is also trying to establish more transparency.
President Barack Obama’s new Treasury Secretary Timothy Geithner issued a statement Wednesday outlining a number of steps to bring more transparency to the Troubled Asset Relief Program, which was established under the Emergency Economic Stabilization Act of 2008.
“In the coming weeks, we will unveil a series of reforms to help stabilize the nation’s financial system and get credit flowing again to families and businesses,” Geithner said in the statement. “Included in those reforms will be a commitment to increase transparency and oversight.”
The American Bankers Association issued a news release earlier this month in support of congressional action to release the remaining TARP funds. The group noted that the original $350 billion has been over-allocated even though many banks have not yet had an opportunity to apply for CPPÂ funds.
Wells Fargo & Co., which has already received $25 billion in CPP investments, said in its earnings report yesterday that it did not intend to tap TARP funds again.
A statement from the Treasury this month indicated that term sheets have been released for CPP investments in S corporations taxed under Subchapter S of Chapter 1 of the Internal Revenue Code.
Another Treasury announcement outlined rules for chief executive officers, chief financial officers and the next three most highly compensated executive officers of any firm receiving CPP investments. Compensation shouldn’t reward risky behavior, while clawbacks will be required in cases where results were fabricated to boost compensation. Golden parachutes are prohibited, and executive compensation in excess of $500,000 per executive will not be tax deductible by the company.
The Treasury — which has allocated more than $250 billion in CPP investments to date — recently announced last week the following $17 billion investments in the following bank-holding companies.
