TARP Capital Purchase Program Expanded To Include Mutual Holding Companies

On April 7, the U.S. Treasury Department (UST) published guidelines for insurance companies and other companies that are structured as bank or savings and loan holding companies in mutual organization¹ or their stock holding company subsidiaries to receive TARP funds under the Capital Purchase Program (CPP).² Initially, participation in the CPP was available only to publicly traded and privately held financial institutions (including those that were organized as S corporations).

The UST published its guidelines in the form of three separate term sheets that describe how (i) publicly traded subsidiary holding companies may participate in the CPP by issuing preferred stock, (ii) privately held subsidiary holding companies may participate by issuing preferred stock and (iii) top-tier mutual holding companies that do not have subsidiary holding companies may participate by issuing debt. The UST will determine eligibility and allocations for each mutual holding company