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March 19, 2009
Mark J. Tenhundfeld Senior Vice President Office of Regulatory Policy Phone: 202-663-5042 Fax: 202-828-5047 mtenhund@aba.com
Hon. Timothy F. Geithner Secretary of the Treasury United States Department of the Treasury 1500 Pennsylvania Avenue, NW, Room 3330 Washington, DC 20220 Dear Secretary Geithner, I am writing on behalf of the American Bankers Association to seek clarification on whether banks that have applied for, but have not yet received, funds under the Capital Purchase Program (CPP) will be subject to the new requirements imposed on banks that participate in federal programs going forward, such as the Capital Assistance Program (CAP). We applaud Treasury’s decision not to apply the new requirements retroactively, and we request that you clarify that this threshold decision applies to programs already announced and not solely to transactions already consummated. This suggested clarification will avoid the obvious inequity that would arise if Treasury were to create two classes of institutions within the same program. The purpose of the program remains unchanged. As far as we know, the application process and criteria have not changed. Thus, there is no reason to impose additional conditions on a separate class of banks. The inequity of having two classes of banks within the CPP would be compounded by the fact that the banks that would be subject to the additional requirements have been trying very hard to qualify for participation in the program since the CPP was announced. We appreciate very much the extraordinary efforts that Treasury staff and staff at the banking agencies have made to implement the CPP. However, despite these efforts, many applications remain to be processed even though they were filed at the same time as were those of banks that already have received funding. Indeed, S corporations still lack the standard documents needed to close, and mutual institutions do not even have a CPP term sheet. It would be patently unfair to those banks and to the other banks still awaiting funding to impose additional burdens on them solely because they were placed at the end of the line. CPP funds would put participating banks in a better position to continue providing services in their communities. Imposing additional requirements will create
further disincentives for these banks to participate, in contravention of the underlying purpose of the CPP. Thank you very much for your attention to this matter. Sincerely,
Mark J. Tenhundfeld
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