UNITED STATES DEPARTMENT OF THE TREASURYTHIRD TRANCHE REPORT TO CONGRESSDECEMBER 2, 2008
Third Tranche Report to Congress
meets the requirement for reporting at the $200 billioncommitment level under section 105(b) of the Emergency Economic Stabilization Act of 2008(EESA). The recent transaction with American International Group (AIG) under theSystemically Significant Failing Institution Program, when combined with the previous $161billion of transactions under the Capital Purchase Program, exceeded the $200 billioncommitment level. Treasury will submit the next report when transaction levels reach the $250billion level.The Report addresses the following six areas:
A description of all the transactions made during the reporting period.
A description of the pricing mechanism for the transaction.
A justification of the price paid for, and other financial terms associated with, thetransactions.
A description of the impact of the exercise of such authority on the financial system.
A description of the challenges that remain in the financial system, including anybenchmarks yet to be achieved.
An estimate of additional actions under the authority provided pursuant to EESA thatmay be necessary to address such challenges.
II. TRANSACTION INFORMATION BY PROGRAM
Third Tranche Report
reflects transactions under two programs. On November 17, 2008,Treasury closed $2.97 billion in transactions under the Capital Purchase Program (CPP).Treasury also closed a $40 billion transaction with AIG under the Systemically SignificantFailing Institution (SSFI) Program on November 26, 2008. A report of these transactions wasposted on Treasury’s web site and is attached here as Appendix 1.
Capital Purchase Program
The purpose of the CPP is to encourage U.S. financial institutions to build their capital base,which in turn increases their capacity to lend to U.S. businesses and consumers and to supportthe U.S. economy. Under the CPP, Treasury will purchase up to $250 billion of senior preferredshares on standardized terms. The Program is available to qualifying U.S. controlled banks,savings associations, and certain bank and savings and loan holding companies engaged solely orpredominately in financial activities permitted under the relevant law. We reported in detail onthe CPP in Treasury’s
First Tranche Report to Congress
Second Tranche Report to