Two Banks Repay $210 Million in Tarp Funds, Provide Additional Positive Return on TARP Bank Programs for Taxpayers

WASHINGTON – The U.S. Department of the Treasury announced that the following two financial institutions have repurchased Troubled Asset Relief Program (TARP) Capital Purchase Program (CPP) investments, delivering a total of $210 million in proceeds today for taxpayers.

•Bank of Kentucky Financial Corporation (Crestview Hills, KY): Repurchased all outstanding CPP preferred shares from Treasury’s original investment in the institution totaling $17.0 million and paid accrued dividends totaling $18,888. (Total Proceeds Today for Taxpayers: $17.0 million) Including today’s transaction, taxpayers received total dividends of $3.9 million from Bank of Kentucky Financial Corporation over the life of this $34.0 million TARP investment. Note: Bank of Kentucky Financial Corporation also repurchased CPP preferred shares totaling $17 million on December 22, 2010.

•First Midwest Bancorp, Inc. (Itasca, Illinois): Repurchased all outstanding CPP preferred shares from Treasury’s original investment in the institution totaling $193.0 million and paid accrued dividends totaling $214,444. (Total Proceeds Today for Taxpayers: $193.2 million) Including today’s transaction, taxpayers received total dividends of $28.6 million from First Midwest Bancorp, Inc. over the life of this $193.0 million TARP investment.

Treasury continues to hold warrants to purchase common stock in Bank of Kentucky Financial Corporation and First Midwest Bancorp, Inc. – the disposition of which would provide an additional return to the American taxpayer from Treasury’s investment beyond the dividend payments it received on the related preferred stock.

 

In March 2011, Treasury announced that TARP’s bank programs turned a profit. Since that time, further repayments and income through TARP’s bank programs, such as the payment announced today, provide additional positive returns for taxpayers.

 

With today’s proceeds, taxpayers have now recovered more than $258 billion from TARP’s bank programs through repayments, dividends, interest, and other income. That exceeds the original financial support Treasury made through those programs ($245 billion) by approximately $13 billion.

Treasury Announces Sale of Seven SBA 7(a) Securities

WASHINGTON – Today, the United States Department of the Treasury announced the sale of seven Small Business Administration (SBA) 7(a) securities executed through a Bid Wanted in Competition (BWIC) for approximately $58.0 million, which represents overall gains and income of approximately $1.3 million for those SBA 7(a) securities.  The closing date for the seven securities is expected to occur on or about October 24, 2011. 

 

SBA 7(a) securities are comprised of the portion of loans guaranteed by the Small Business Administration which finance a wide-range of small business needs, including working capital, machinery, equipment, furniture, and fixtures. 

 

Treasury originally invested in 31 SBA 7(a) securities with a value of approximately $368 million.  Those securities were comprised of 1,001 loans from 17 different industries, including retail, food services, manufacturing, scientific and technical services, healthcare, educational services, and others.  Treasury has now sold a total of 23 securities for approximately $271.7 million, representing overall income and gains of approximately $7.5 million.  After the closing, Treasury will continue to hold 8 SBA 7(a) securities. 

 

Treasury acquired its SBA 7(a) securities portfolio under the Troubled Asset Relief Program (TARP).  Treasury purchased the securities in order to help restart the flow of credit to small businesses.  Purchasing securities from participating "pool assemblers" enabled them to purchase additional small business loans from loan originators.  Since Treasury began purchasing SBA 7(a) securities, the SBA 7(a) market has recovered, as exhibited by new pool issuance volumes returning to pre-crisis levels. 

 

The disposition of these SBA 7(a) securities is part of Treasury's ongoing efforts to wind down TARP.  The Obama Administration will continue its strong commitment to ensuring that small businesses have the capital they need to create jobs and strengthen economic growth through the implementation of the Small Business Jobs Act and a number of other critical programs.

 

EARNEST Partners, which has acted as Treasury's Financial Agent for the SBA 7(a) securities portfolio, will continue to execute the securities disposition through broker-dealers on behalf of Treasury.  Prospective purchasers of SBA 7(a) securities held by Treasury should contact EARNEST Partners by e-mailing UCSBTeam@earnestpartners.com or by calling (404) 815-8772.

Libertarians to Occupiers: Crony capitalism is the problem

WASHINGTON - Libertarian Party Chair Mark Hinkle released the following statement:

 

"I have been following the Occupy protesters, who call themselves the '99%', with interest.

 

"It's true that 99% of Americans do not enjoy the special benefits of crony capitalism. Crony capitalism is very different from real capitalism. In crony capitalism, government hands out special favors and protections to politically well-connected businesses.

 

"The TARP bailouts, Solyndra, and the military-industrial complex are all facets of crony capitalism.

 

"Libertarians love free markets and hate crony capitalism.

 

"Unfortunately, hypocritical Republican politicians have taught a lot of Americans to think that 'free markets' means freedom for government and big business to engage in crony capitalism.

 

"That's not what free markets are. A free market is where the government leaves businesses alone, does not attempt to pick winners and losers, does not stifle competition, does not hand out corporate welfare, and does not absolve businesses of liability for their actions. Most of our economy today does not resemble a free market at all.

 

"It's unfortunate that so many businesses today go to the government begging for handouts and special treatment. I wish they wouldn't. But the real problem is the politicians who choose to give those favors to them, at everyone else's expense.

 

"I hope the Occupy protesters will start to direct their anger away from Wall Street and big businesses, and toward our government, which has done so much to destroy free markets and entrench crony capitalism."

 

For more information, or to arrange an interview, call LP Executive Director Wes Benedict at 202-333-0008 ext. 222.

 

The LP is America's third-largest political party, founded in 1971.  The Libertarian Party stands for free markets, civil liberties, and peace. You can find more information on the Libertarian Party at our website.

 

P.S.  If you have not already done so, please join the Libertarian Party. We are the only political party dedicated to free markets, civil liberties, and peace. You can also renew your membership. Or, you can make a contribution separate from membership.

Taxpayers Recover Nearly $900 Million From TARP Warrant Sales During Last Six Months

Cumulative Proceeds from Warrant Dispositions Now Reach More Than $9 Billion Since TARP’s Inception

WASHINGTON – The US Department of the Treasury today released the latest TARP Warrant Disposition Report including data during the six months ending June 30, 2011.  During that period, Treasury received more than $886 million in gross proceeds from the disposition of 20 warrant positions through repurchases and auctions of institutions in the Capital Purchase Program (CPP), the Targeted Investment Program (TIP) and the Asset Guarantee Program (AGP). Since the TARP’s inception, Treasury has received more than $9 billion in gross proceeds from the disposition of warrants associated with investments made through CPP, TIP and AGP.    

As a result of these dispositions and other TARP repayments and income, taxpayers have now recovered $314 billion (76 percent) compared to the $413 billion disbursed to date for the program.

“Although the central purpose of TARP was to help stabilize the financial markets during a time of severe crisis, the receipt of these funds is positive news for taxpayers,” said Treasury Assistant Secretary for Financial Stability Tim Massad. “We will continue our diligent efforts to protect taxpayer interests as we wind down the TARP program.”

The TARP Warrant Disposition Report released today provides an overview of the warrants received by Treasury, an explanation of the warrant disposition process and the results achieved on behalf of taxpayers.

The Emergency Economic Stabilization Act of 2008 (EESA) generally required that Treasury receive warrants in connection with the purchase of troubled assets.  A major part of the TARP was the CPP. It was created in October 2008 to stabilize the financial system by investing capital in viable banks of all sizes nationwide. Under this program as well as other programs to support the financial system, Treasury invested $245 billion in more than 700 banks.  Treasury has already recovered $256 billion and will realize a profit on these programs.

Under the CPP, Treasury purchased shares of senior preferred stock or other securities from qualifying U.S.-controlled banks, savings associations, and other financial institutions. As part of its investment, Treasury also received warrants to purchase shares of common stock or other securities from the banks. The purpose of the warrants was to provide taxpayers with an additional potential return on the government's investment.

When a bank repays the CPP investment, it has the right to repurchase its warrants at an agreed upon fair market value. The warrants do not trade on any market and do not have observable market prices. Accordingly, Treasury has established a methodology for evaluating a company's determination of fair market value. If a bank chooses not to repurchase its warrants, then Treasury intends to sell the warrants to a third party.

The first CPP warrant repurchase was completed in May 2009, and Treasury began the public sale of warrants to third parties in December 2009. Treasury follows a consistent process to dispose of the CPP warrants for all banks, regardless of the size of the institution or the warrant position. This process is designed to ensure that taxpayers receive fair market value for the CPP warrants whether they are repurchased by the issuer or sold to a third party.

As of June 30, 2011, Treasury held warrants to purchase common stock in 19 financial institutions that have fully repaid their CPP investments and in 171 publicly traded companies in which the CPP investment is still outstanding. Treasury intends to continue to execute a consistent and transparent disposition process that achieves fair market values and protects taxpayer interests.

Treasury Receives $2 Billion TARP Repayment from American International Group (AIG)

WASHINGTON – Today, the U.S. Department of the Treasury announced that it had received an additional repayment from American International Group (AIG) of $2.15 billion funded through the proceeds from the previously announced sale of AIG’s Nan Shan life insurance subsidiary. The proceeds were used to pay back the U.S. taxpayers’ investment in AIG through the redemption of an equal portion of Treasury’s preferred equity interests in AIA Aurora LLC, a subsidiary of AIG.

“This is another important milestone in AIG’s remarkable turnaround,” said Assistant Secretary for Financial Stability Tim Massad. “We continue to make progress in recovering the taxpayers’ investments in AIG.” 

During the financial crisis, the U.S. Government's support for AIG totaled approximately $180 billion.

After today’s repayment, the U.S. Government’s remaining outstanding investment in AIG through Treasury is $51 billion. In addition, the Federal Reserve Bank of New York has loans to Maiden Lane II and III ($18.8 billion, including principal and accrued interest outstanding). These Federal Reserve Bank of New York loans are collateralized by assets with value well in excess of the outstanding loan balances ($31.7 billion).

Overall, Treasury has received $313 billion in repayments and other income from its TARP investments – more than 76 percent of the $412 billion disbursed under the program to date.   

Background on Treasury Investment in AIG

In January 2011, AIG completed a recapitalization transaction which resulted in AIG repaying all the outstanding loans provided by the Federal Reserve Bank of New York.  Also at that time, Treasury received 1.655 billion shares of AIG common stock (approximately 92 percent of AIG’s outstanding common stock) and $20.4 billion in preferred equity interests in AIG. Since then Treasury has sold 200 million shares of AIG for proceeds of $5.8 billion and AIG has made payments to Treasury, including the repayment announced today, of $11.4 billion on the preferred equity interests.

Treasury Exits Investment in Chrysler Group LLC

WASHINGTON - Today, the U.S. Department of the Treasury announced that it received $560 million in proceeds from the sale of its remaining stake in Chrysler Group LLC to Fiat.  With the closing of this transaction, Treasury has fully exited its investment in Chrysler Group under the Troubled Asset Relief Program (TARP).

Fiat paid $500 million to Treasury for its 98,461 shares or 6 percent fully diluted equity interest in Chrysler Group.  Fiat also paid $60 million to Treasury for its rights under an agreement with the UAW retirement trust pertaining to the trust's shares in Chrysler Group.

“With today's closing, the US government has exited its investment in Chrysler at least six years earlier than expected,” said Assistant Secretary for Financial Stability Tim Massad.  “This is a major accomplishment and further evidence of the success of the Administration’s actions to assist the US auto industry, which helped save a million jobs during the worst economic crisis since the Great Depression.”

Fiat held a call option to purchase Treasury’s equity interest in Chrysler Group.  This option was exercisable for the twelve months following the repayment of the Treasury loan provided to Chrysler Group.  On May 24, 2011, Chrysler Group repaid $5.1 billion in TARP loans and terminated its ability to draw a remaining $2.1 billion TARP loan commitment.  On May 27, 2011, Fiat notified Treasury of Fiat’s irrevocable commitment to exercise its option to purchase Treasury’s 6 percent fully diluted equity interest in Chrysler Group.  Pursuant to the Call Option Agreement, the price for the 6 percent fully diluted equity interest in Chrysler Group was determined based on negotiation between Fiat and Treasury.

Treasury committed a total of $12.5 billion to Old Chrysler and Chrysler Group under TARP’s Automotive Industry Financing Program (AIFP).  With the closing of today’s transaction and Chrysler Group’s repayment in full of its TARP loans in May, more than $11.2 billion of that amount has been returned to taxpayers through principal repayments, interest, and cancelled commitments.  Treasury is unlikely to fully recover the difference of $1.3 billion owed by Old Chrysler.  Treasury has the right to recover proceeds from the disposition of the liquidation trust associated with the bankruptcy of Old Chrysler but does not expect a material recovery from those assets.

Lazard served as Treasury's exclusive financial advisor on today’s transaction.​

$1.7 Billion Additional TARP Funds Returned to Taxpayers, Positive Return on TARP Bank Programs Reaches $10 Billion

WASHINGTON – The U.S. Department of the Treasury announced that all of the Troubled Asset Relief Fund (TARP) funds invested in Marshall and Ilsley Corporation (“M&I Bank”) of Milwaukee, Wisconsin have been returned to taxpayers. Today, in connection with its acquisition of M&I Bank, Bank of Montreal (BMO) purchased Capital Purchase Program (CPP) preferred shares totaling $1.7 billion and a related warrant that had been issued to Treasury by M&I Bank and paid accrued dividends on those preferred shares.

In March, Treasury announced that the TARP bank programs turned a profit. Since that time, all further repayments and income through TARP’s bank programs, such as the payment announced today, provide additional positive returns for taxpayers.

With today’s proceeds, taxpayers have now recovered approximately $255 billion from TARP’s bank programs through repayments, dividends, interest, and other income. That exceeds the original financial support Treasury made through those programs ($245 billion) by approximately $10 billion. Treasury currently estimates that bank programs within TARP will ultimately provide a lifetime positive return of approximately $20 billion to taxpayers.

Further details on today’s TARP repayment are included below:

•M&I Bank (Milwaukee, Wisconsin): BMO purchased CPP preferred shares totaling $1.7 billion, purchased warrants to purchase common stock in M&I Bank for $3.3 million and paid accrued dividends totaling $11.9 million. (Total Proceeds Today for Taxpayers: $1.7 billion)

Further information on total payments and other income for taxpayers from TARP’s $1.7 billion preferred share purchase in M&I Bank are included below:

M&I Bank TARP Payments and Income Summary ($ in millions)
Preferred Share Purchase (7/5/11)	$1,715.0
Final Dividend Payment (7/5/11)	$11.9
Warrant Purchase (7/5/11)	$3.3
Previous Dividend Payments (N/A)	$214.6
Total Lifetime Taxpayer Proceeds	$1,944.8
Original Preferred Share Purchase by Treasury	$1,715.0
Positive Return from Taxpayer Proceeds	$229.8

Treasury Department Announces Pricing of Public Offering of Central Pacific Financial Common Stock

WASHINGTON -- The U.S. Department of the Treasury announced today that it priced a secondary public offering of 2,850,000 shares of common stock of Central Pacific Financial Corp. (the “Company”) at $12.75 per share.  The aggregate net proceeds to Treasury from the offering are expected to be $35,883,281.25. 

After this offering, Treasury will continue to hold 2,770,117 shares of the Company’s common stock and warrants to purchase 79,288 shares of the Company’s common stock.  Treasury’s initial preferred stock investment in the Company, made as part of the Troubled Asset Relief Program’s (TARP) Capital Purchase Program (CPP), was exchanged for common stock on February 18, 2011 as part of a larger recapitalization of the Company.  Today’s sale is part of Treasury's ongoing efforts to exit its remaining TARP investments.

The closing is expected to occur on or about June 22, 2011, subject to customary closing conditions.  Sandler O’Neill & Partners was the book-running manager for the offering, and C.L. King & Associates, Guzman & Company and SL Hare Capital were co-managers.   

A registration statement relating to the shares in this offering and shares held by certain other selling shareholders was previously filed by the Company and declared effective by the Securities and Exchange Commission (“SEC”).  A post-effective amendment no. 1 and post-effective amendment no. 2 to the registration statement have been filed by the Company with the SEC and have been declared effective.  These filings are available on the SEC’s website at www.sec.gov.

Before you invest, you should read the prospectus in the registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering.  You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, any of the underwriters of the offering will arrange to send you the prospectus if you request it. Copies of the prospectus may be obtained when available from Sandler O’Neill & Partners, L.P., 919 Third Avenue, 6th Floor, New York, NY 10022 (1-866-805-4128), C.L. King & Associates, 410 Park Avenue, 17th Floor, New York, NY 10022 (212-421-3242), Guzman & Company, 101 Aragon Ave, Coral Gables, FL 33134 (305-374-3600) and SL Hare Capital, 10635 Santa Monica Boulevard, Suite 115, Los Angeles, CA 90025 (310-479-1680).

This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.