Maryland Legal Alert for Financial Services

TARP CAPITAL PURCHASE PROGRAM – TREASURY DEPARTMENT ISSUES TERM SHEET FOR PRIVATE STOCK FINANCIAL INSTITUTIONS – DECEMBER 8 DEADLINE

Last night the Treasury Department issued the term sheet and Q&A’s for private stock financial institutions that want to participate in the TARP Capital Purchase Program.  The deadline for applying is December 8, 2008.  These institutions are:

• top-tier bank holding companies (BHC) and savings and loan holding companies (SLHC) whose securities are not traded on a national securities exchange and that engage solely or predominantly in activities that are permitted for financial holding companies,
• stock banks and savings associations that are neither publicly traded nor controlled by a BHC or a SLHC, and
• banks and savings associations that are not publicly traded and are controlled by a SLHC that is not publicly traded and does not engage solely or predominantly in activities that are permitted for financial holding companies.

S corporations and mutual banks and savings associations are excluded.  Treasury is still considering the application of the Capital Purchase Program to those business structures; as a result, the December 8 deadline does not apply to S-Corps and mutuals.

All banks and savings associations that qualify to apply should consider the pros and cons of taking advantage of the Capital Purchase Program.  If we can help you think through these issues, please contact Andrew Bulgin.