The Treasury Department this morning provided additional information on the implementation of the Treasury Capital Purchase Program, including an application form and guidelines for the application process.
The application form requires the institution to submit basic information about the institution, the amount of the preferred stock investment that the institution is requesting from Treasury, as well as information regarding the amount of authorized but unissued preferred stock and common stock that the institution currently has available for purchase.
The application must be submitted to the appropriate federal banking agency for the applicant institution. If the applicant is a bank holding company, the application should be submitted to both the appropriate Federal Reserve Bank and the supervisor of the largest insured depository institution controlled by the applicant. All interested institutions are encouraged to discuss the application with their regulator before filing.
As part of the application, the institution must acknowledge that it has reviewed the investment agreements and related documentation, which will be posted on the Treasury’s website. If there are any conditions, including any representations and warranties, in the investment documents that cannot be complied with by November 14, 2008, the institution must provide a brief explanation and a timeline for reaching compliance. The institution also must identify and describe any mergers, acquisitions or other capital raisings that are currently pending or are under negotiation and the expected consummation date.
It is not necessary to wait until the transaction documents are posted to submit the application. If an institution files an application prior to the availability of the investment documents, the institution must file an amended application which includes responses to any items in the application that require prior review of the investment agreement.
Applications for the Capital Purchase Program will be treated as confidential proposals. Applications that are denied or withdrawn will not be disclosed. However, it appears that applications that are approved will become publicly available, as the Treasury has stated that any applicant desiring confidential treatment of specific portions of the application must submit a request in writing with the application. Such requests would be appropriate where non-public information about a merger or capital raising transaction is provided.
If the institution receives preliminary approval to participate in the Capital Purchase Program from the Treasury, the applicant will have 30 days from the date of notification to submit the investment agreements and related documentation. Although not expressly stated, it appears that applications will be processed as received, rather than Treasury waiting until November 14 to decide which institutions have been accepted. No specific time period for processing applications was provided. Rather applications will be process “as expeditiously as possible.” Treasury Secretary Paulson emphasized in his remarks that the available funds are not being allocated on a first-come, first-served basis and there are adequate funds available for all qualified institutions.
The information released this morning did not provide any further details on how private companies, mutual institutions or other institutions with special circumstances will participate in the program. Secretary Paulson stated that the application made available today should be used by publicly-held institutions. However, the application form and related guidelines do not state that it is restricted to publicly-held institutions and the form requests information regarding the type of company making the application.