Capital Purchase Program

The `Healthy Bank` Program

Most banks have gotten their money through this program. When the Treasury Department started the Capital Purchase Program in October 2008, Treasury officials insisted that it was not a bailout for the banks, but rather a plan to help 'healthy' institutions lend in tough economic times. Some of the participants, however, have turned out to be not so healthy.

The program is voluntary, but a number of bank CEOs say they were urged strongly by regulators to join up. Some financial firms (like investment banks, credit card companies and insurance companies) have transformed into bank holding companies in order to participate.

As for the terms, the Treasury purchases preferred shares in the banks that pay a 5 percent dividend annually. After five years, the rate jumps to 9 percent. Treasury also receives warrants to purchase stock in the companies at a set price.

To see a list of companies that have returned the bailout money, click here.

Documents from the Treasury Department:
Individual Company Contracts
Term Sheet for Public Institutions
Securities Purchase Agreement for Public Institutions
Application Documents for All Banks

More info from www.financialstability.gov