The Department of the Treasury (Treasury) established the TARP Community Development Capital Initiative (CDCI) in 2010 to purchase qualifying assets from U.S. banking organizations that are certified Community Development Financial Institutions (CDFIs). Banks, savings associations, bank holding companies, savings and loan holding companies and credit unions were eligible to participate. Funding to successful CDCI applicants was completed in September 2010. For a limited period of time, Treasury is offering interested CDCI participants the opportunity to exit the CDCI program by repurchasing the CDCI securities held by Treasury at fair value. The information collection provides instructions and an application for CDCI institutions that would like to apply to exit the CDCI program using this process.
Treasury established the Community Development Capital Initiative (CDCI) in 2010, pursuant to the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201, et seq.). The objective of CDCI is to provide emergency capital to Community Development Financial Institutions that provide services to underserved communities at a time when they were finding it harder to obtain credit as the economy was in a downturn. Funds were provided by the sale of securities to the Treasury through its Troubled Asset Relief Program (TARP) to provide needed capital to the CDCI institutions, which permitted the institutions to improve their capital structure and extend credit to underserved communities. The securities sold to Treasury have a two percent per annum dividend for preferred stock or 3.1 percent interest on subordinated debentures until 2018, when they step up to a 9 and 13.1 percent rate respectively.
Recognizing Treasuryâs interest in winding down the TARP investment programs in a manner which balances the speed of exit, maximizes the return to taxpayers and the need to preserve financial stability, and recognizing the current and persistent challenges the CDCI institutions face in raising capital in the private sector to replace TARP capital, Treasury determined to offer such institutions the option to repurchase their securities from Treasury at fair value. Because capital market conditions are currently favorable, Treasury determined that this is a propitious time to offer this early repurchase option. Additionally, because the step up in dividend or interest rates will occur for CDCI institutions in September 2018, it is beneficial for both Treasury and the institutions to allow the repurchases now. Treasury plans to accept applications for the repurchase of such securities by November 18, 2016 and anticipates that it will close all such transactions by December 30, 2016. In order to preserve financial stability and avoid market disruption for the CDCI institutions, it is critical that Treasury collect all information necessary to complete the allocation process as soon as possible so that the CDCI institutions may source replacement capital during the current capital market environment.
The collection no longer includes the application to participate in CDCI since initial applications are no longer being accepted. It does now include a new option for exiting the CDCI program which necessitates the use of a new form document and the collection of supporting documentation.
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
Early Repurchase Option
1505-0223_supporting_statement_2016.docx
Early Repurchase Option--resubmission