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L SP E N A ER 202.622.1419 Hotline: 877.SIG.2009 SIGTARP@do.treas.gov www.SIGTARP.gov RA M LE D OG UB SIG-QR-11-02 CT INSPE OR GE TRO SIGTARP: Quarterly Report to Congress | April 28, 2011 SIGTARP Q2 2011 AL CI ASS E T R ELIEF PR SIGTARP Office of the Special Inspector General for the Troubled Asset Relief Program Advancing Economic Stability Through Transparency, Coordinated Oversight and Robust Enforcement Quarterly Report to Congress April 28, 2011 MISSION SIGTARP’s mission is to advance economic stability by promoting the efficiency and effectiveness of TARP management, through transparency, through coordinated oversight, and through robust enforcement against those, whether inside or outside of Government, who waste, steal or abuse TARP funds. STATUTORY AUTHORITY SIGTARP was established by Section 121 of the Emergency Economic Stabilization Act of 2008 (“EESA”) and amended by the Special Inspector General for the Troubled Asset Relief Program Act of 2009 (“SIGTARP Act”). Under EESA and the SIGTARP Act, the Special Inspector General has the duty, among other things, to conduct, supervise and coordinate audits and investigations of any actions taken under the Troubled Asset Relief Program (“TARP”) or as deemed appropriate by the Special Inspector General. In carrying out those duties, SIGTARP has the authority set forth in Section 6 of the Inspector General Act of 1978, including the power to issue subpoenas. Office of the Special Inspector General for the Troubled Asset Relief Program General Telephone: 202.622.1419 Hotline: 877.SIG.2009 SIGTARP@do.treas.gov www.SIGTARP.gov Contents Executive Summary Program Updates and Financial Overview Oversight Activities of SIGTARP SIGTARP Recommendations on the Operation of TARP Report Organization 3 11 12 13 13 Section 1 The Office of the Special Inspector General for the Troubled asset relief program SIGTARP Creation and Statutory Authority SIGTARP Oversight Activities Since the January 2011 Quarterly Report The SIGTARP Organization 15 17 18 30 Section 2 TARP overview TARP Funds Update Financial Overview of TARP Homeowner Support Programs Financial Institution Support Programs Asset Support Programs Automotive Industry Support Programs Executive Compensation 33 35 38 57 102 140 156 166 Section 3 tarp operations and administration TARP Administrative and Program Expenditures Current Contractors and Financial Agents 169 171 172 Section 4 SIGTARP Recommendations Update on SIGTARP’s Recommendations Regarding Capital Purchase Program Restructurings and Recapitalizations and Small Business Lending Fund Refinancings Recommendations Regarding Treasury’s Process for Contracting for Professional Services Under TARP 179 196 Endnotes 181 182 appendices A. Glossary B. Acronyms and Abbreviations C. Reporting Requirements D. Transaction Detail E. Cross-Reference of Report to the Inspector General Act of 1978 F. Public Announcements of Audits G. Key Oversight Reports and Testimonies H. Correspondence I. Organizational Chart 219 224 226 230 306 307 308 313 320 EXECUTIVE SUMMARY investigations 4 special inspector general I troubled asset relief program quarterly report to congress I april 28, 2011 The Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”) is committed to vigorous oversight of the Troubled Asset Relief Program’s (“TARP”) unprecedented commitment of billions of taxpayer dollars. Recent events, including the expiration of Treasury’s authority to initiate new TARP investments, the continued repayment of TARP funds by larger banks, and the issuance by the Congressional Oversight Panel (“COP”) of its final TARP report, have contributed to the perception that TARP is drawing to a close. This is simply not the case. TARP may have entered a new phase, but it is far from over. As of March 31, 2011, approximately $146.8 billion in TARP funds was still outstanding, and there is close to $60 billion obligated and available to be spent. TARP programs, extraordinary in their scope, scale and complexity, were designed to last years. For example, TARP’s almost $30 billion Public Private Investment Program is scheduled to last at least seven more years. Congress understood that TARP might last for many years, and that oversight would be essential throughout TARP’s existence. In the Emergency Economic Stabilization Act of 2008 (“EESA”), Congress created SIGTARP to provide vital oversight and law enforcement for as long as Treasury holds an asset under TARP. In other words, SIGTARP will remain “on watch” as long as TARP assets remain outstanding. With the closure this month of COP — a key TARP oversight body — and the public perception that TARP is ending, it is now more critical than ever that SIGTARP remain vigilant in protecting taxpayers. TARP’s financial outlook is improving, with more institutions repaying TARP and cost estimates continuing to decline. Nevertheless, it bears repeating that Treasury’s ultimate return on its TARP investments depends on many variables that are largely unknowable at this time, including the ability to sell certain securities in the market (such as American International Group, Inc. and General Motors Company), the ability of many banks to repay (over 550 banks have yet to repay TARP’s Capital Purchase Program investment), and the extent to which Treasury will spend funds allocated to its housing programs. TARP’s costs, of course, involve more than just dollars and cents. It will take many years to assess the full extent of all costs associated with TARP. As SIGTARP and others have documented, the non-financial costs include TARP’s contribution to the moral hazard associated with massive infusions of Government funds into some of the very institutions that engaged in risky behavior that contributed to the financial crisis. Many of those institutions remain “too big to fail.” Today, the biggest banks are bigger than ever. These banks continue to enjoy unwarranted advantages over their smaller competitors such as better access to capital and cheaper credit. These advantages exist just by virtue of the pervasive belief — shared by their executives, counterparties, creditors, and the credit rating agencies — that the Government will bail them out if necessary. While the underlying problem may have pre-dated TARP, it is now more severe than ever. And in terms of market perception, it has not yet been solved by the Dodd-Frank Wall Street Reform and 5 6 special inspector general I troubled asset relief program Consumer Protection Act (“Dodd-Frank Act”). As regulators work to implement the Dodd-Frank Act’s reforms, continued oversight will be critical in determining the extent to which the Act ultimately meets its promise of ending the concept of “too big to fail.” The integrity of our financial system is still at risk. Indeed, the stakes could not be higher. Further evidence that TARP’s end remains distant lies in recent activity related to TARP housing programs. Unfortunately, Treasury’s signature program — the Home Affordable Modification Program (“HAMP”) — has been beset by problems from the outset. Many of these problems relate to the structure of the program, which puts the ultimate decision to modify a mortgage in the hands of mortgage servicers, whose performance has been extraordinarily poor. SIGTARP, through its Hotline, continues to receive a substantial number of complaints from the public regarding HAMP servicer performance. These complaints include loss of paperwork by the servicer, a lack of servicer communication or contradictory information, trial modification periods that extend six months or more, and negative credit reporting for homeowners enrolled in a trial modification. SIGTARP, along with TARP’s other oversight bodies, has long urged Treasury to get tougher on servicers. Treasury noted recently that it will start requiring all HAMP servicers to assign a single point of contact for homeowners, that it will start grading the largest HAMP servicers on “key performance metrics,” and will begin withholding financial incentives for servicers receiving an unsatisfactory grade. These may be encouraging first steps. However, it is too early to tell whether these steps will have a meaningful impact. Treasury’s other housing programs and subprograms are in earlier stages of development. These include, for example, the Hardest-Hit Fund, the 2MP Second Lien Modification program, and the FHA Short Refinance program, all of which have yet to produce substantial results. As these programs develop, SIGTARP will continue to conduct strong oversight and make recommendations for improvement where appropriate. SIGTARP is the only agency whose primary law enforcement mission is the swift and robust detection and investigation of those who seek to profit criminally from TARP. When Congress created SIGTARP, it understood that TARP’s extraordinary expenditure of taxpayer funds would inevitably attract criminal and other unlawful conduct. In 2009, FBI Director Robert Mueller predicted that fraud related to bailout money would be the “next wave of financial fraud cases.” Congress assigned SIGTARP with primary responsibility for policing TARP to minimize losses to fraud and to bring to justice those who attempt to profit from TARP unlawfully. SIGTARP takes this mandate seriously, working hard to deliver the accountability the American people demand and deserve. SIGTARP’s investigative staff is comprised of dedicated and highly experienced special agents and attorneys who hail from a wide range of Federal agencies. SIGTARP co-chairs the quarterly report to congress I april 28, 2011 Rescue Fraud Working Group of the President’s Financial Fraud Enforcement Task Force (“FFETF”). SIGTARP also leverages its resources through partnerships with other Federal, state, and local law enforcement agencies to ensure that justice is done. Similar to the FBI, SIGTARP has the authority to investigate crime, but not to prosecute crime. SIGTARP’s investigations are making a difference with substantial results in a remarkably short time frame. As of the drafting of this report, 61 individuals and 18 entities had been charged in criminal or civil actions related to SIGTARP investigations, with 22 individuals criminally convicted. SIGTARP helped prevent over $550 million in taxpayer funds from being lost to fraud, and has assisted in the recovery of over $151 million. With more than 150 ongoing investigations, SIGTARP is committed to stopping ongoing fraud, deterring criminal behavior, and bringing criminals to justice. Statistics, of course, never tell the whole story. While SIGTARP’s investigations remain confidential, and not all investigations lead to the filing of charges, SIGTARP has uncovered and will continue to investigate a variety of familiar white collar fraud schemes that have been “repackaged” into TARP-related fraud. Some of these are perpetrated by con artists looking to exploit vulnerable victims, as with the rash of mortgage modification schemes directed at struggling homeowners or ponzi-like schemes directed at investors. Others are complex accounting and securities fraud perpetrated by bank executives seeking funding under TARP’s Capital Purchase Program (“CPP”). There are also a variety of fraud schemes against TARP recipients who count the American taxpayers as investors. All of these schemes have real victims, be they homeowners turning over their scarce resources, or American taxpayers whose dollars funded TARP and who have the right to see their investment protected against fraud. Like other sophisticated white collar crime, the more complex of these schemes are difficult to detect and take time to investigate, with complicated, opaque, and often-convoluted transactions carefully constructed to hide the truth. That is why prosecution of these cases often follows behind the programs that attract the criminal behavior. SIGTARP’s investigative activities will increasingly become public with the filing of charges against more and more criminals. Several recent convictions and criminal charges illustrate the most common types of fraud SIGTARP has uncovered and is investigating. SIGTARP is describing these fraud schemes to warn those who may fall prey to these schemes and to deter those who may be contemplating or engaged in fraud. Criminals are naturally opportunistic and will always follow the money. Lore has it that infamous bank robber Willie Sutton, when asked why he robbed banks, replied, “Because that’s where the money is.” TARP was where the money was, and still is, and we have seen that criminals soon followed. 7 8 special inspector general I troubled asset relief program Schemes to Steal Money from TARP’s Capital Purchase Program Close to 3,000 banks and other financial institutions applied for TARP capital through CPP. The CPP application rested largely on the institution’s books and records. Given the breadth and depth of the financial crisis, it is hardly surprising that some of these applications were contaminated by fraud. Many banks faced gaping holes in their balance sheets — holes often created by fraud or excessive risk-taking that contributed to the financial crisis. SIGTARP is investigating whether executives at some of those banks schemed to solve their problems through theft or attempted theft of millions of TARP dollars to fill the holes created by their bad acts. Hallmarks of the schemes include the maintenance of two sets of books, roundtrip transactions (described below), insider self-dealing, and the use of other opaque transactions and sophisticated accounting fraud. At the heart of these schemes is an abuse of power by key bank insiders who defraud bank regulators as a means to enrich themselves at the expense of their targeted victims, the very taxpayers who funded TARP. Charles Antonucci, the former president and CEO of The Park Avenue Bank became the first defendant convicted of directly attempting to steal money from CPP. Antonucci pled guilty in Federal court in New York to a number of offenses including making fraudulent claims that he contributed $6.5 million to the bank when in fact it was a roundtrip transaction — in which he borrowed the bank’s funds and reinvested them back in the bank. This fraudulently inflated the bank’s capital in its $11 million unsuccessful CPP application. In a separate case, a Federal grand jury in Georgia indicted Mark Conner, Chairman and CEO of FirstCity Bank (“FirstCity”) and Clayton Coe, Vice President, for allegedly misrepresenting loans on the bank’s books and falsifying documents and information presented to the loan committee and the Board of Directors, including that some of the loans were for borrowers purchasing property owned by Conner and Coe personally. To cover their tracks, Conner, Coe and their co-conspirators allegedly misled bank regulators. They attempted to obtain $6.1 million in FirstCity’s unsuccessful CPP application. Given that TARP was originally envisioned to deal with “toxic assets,” — primarily troubled mortgages and mortgage-backed securities — it is no surprise that SIGTARP has found fraud related to those assets. Such is the case with the fraud scheme perpetrated by senior executives of Taylor, Bean & Whitaker Mortgage (“TBW”), once the largest non-depository mortgage lender in the country, and senior executives of TBW’s lender, The Colonial BancGroup, Inc. (“Colonial”), which applied for CPP funds. On April 19, 2011, Lee Bentley Farkas, the former chairman of TBW, was convicted after a 10-day jury trial in connection with the largest and longest running bank and TARP fraud scheme in the United States which ultimately led to the failures of TBW and Colonial’s subsidiary Colonial Bank. Six individuals from Colonial and TBW had entered guilty pleas for their quarterly report to congress I april 28, 2011 roles in these $2.9 billion schemes. The SEC also filed civil charges against several of these individuals. This is the most significant criminal prosecution to date rising out of the financial crisis. Investigators working for SIGTARP originally identified the massive fraud scheme in connection with Colonial’s application for $570 million in taxpayer funding through TARP’s CPP. Colonial’s TARP application was conditionally approved for $553 million contingent on the bank raising $300 million in private capital. SIGTARP uncovered that Farkas and his co-conspirators caused Colonial to falsely represent to Treasury that Colonial Bank had secured $300 million in private investor funding. SIGTARP quickly determined that the private capital supposedly raised by Colonial Bank, by and through Farkas and his co-conspirators, did not originate from private investors but instead appeared to be money that the co-conspirators had improperly diverted from Ocala Funding, a mortgage lending facility controlled by TBW. Evidence at trial established that in connection with the TARP application, Colonial submitted financial data and filings that included materially false information related to mortgage loans and securities held by Colonial Bank as a result of the fraudulent scheme perpetrated by Farkas and his co-conspirators. As part of their guilty pleas, TBW and Colonial senior executives admitted to concealing TBW’s overdrawn account at Colonial through a pattern of sweeping overnight money from one TBW account to another, and through fictitious “sales” of mortgages to Colonial, a fraud scheme dubbed “Plan B.” They knew that the mortgages either did not exist or that TBW had already committed or sold them to others. The convictions in this case are a result of the dedicated and selfless work of the staff of SIGTARP and its law enforcement partners through the FFETF including DOJ, the United States Attorney’s Office in the Eastern District of Virginia, the FBI and many others. Fraud Schemes by Those who Claim to be Affiliated with or Have Expertise in TARP Con artists are exploiting TARP’s very existence by claiming affiliation with or expertise in TARP programs. These fraudsters take advantage of the publicity surrounding TARP programs such as HAMP. The most common scheme is the mortgage modification advance-fee scheme in which fraudsters steal from struggling homeowners by falsely promising that they can navigate the often murky waters of the modification process, for a fee of $1,500 or more paid in advance. These schemes have devastating consequences for their victims, who often use their last dollars to pay con artists who then take the money and run. Hallmarks of this scheme include the perpetrators holding themselves out as experts in HAMP, and providing “advice” that their victims will have a better chance of getting a HAMP 9 10 special inspector general I troubled asset relief program modification if they stop making mortgage payments and cease all communication with their mortgage servicer. To further lure their victims, they make money-back guarantees that they have no intention of keeping. SIGTARP is putting a stop to these schemes. A SIGTARP investigation led to the conviction in a California Federal court of Glenn Rosofsky, Michael Trap, and Roger Jones. These defendants mailed solicitation letters to individuals who were behind on their mortgage payments. Their letters were designed to mimic official Federal Government correspondence. The letters contained false statements that induced thousands of homeowners to pay $2,500 to $3,000 each to purchase loan modification services that were never delivered. Howard Shmuckler has also been charged in a state indictment in Maryland in connection with an alleged mortgage modification scheme. Shmuckler and his partners allegedly advertised through Spanish-speaking radio stations and targeted struggling homeowners with delinquent subprime mortgages. Shmuckler allegedly guaranteed success or their money back and directed homeowners to stop making mortgage payments and not to contact their lenders. In another type of fraud scheme, Lori Macakanja, who worked for a HUD-approved housing counseling agency, was charged in a Federal criminal complaint in New York based on her alleged false claims to homeowners that the money they gave her would be used for trial payments in modifications. Instead, Macakanja allegedly spent the money at casinos and on her own mortgage. SIGTARP has also uncovered ponzi schemes and unregistered securities offering fraud that take unlawful advantage of the publicity and complexity surrounding the whole TARP program. The perpetrators of these schemes falsely represent to their victims that the investment in question is connected to TARP and is therefore particularly safe. Gordon Grigg, a financial advisor, is currently serving a 10-year prison term for his role in a ponzi scheme investigated by SIGTARP in which, during the height of the financial crisis, he embezzled nearly $11 million from investors through false statements that he had access to “TARPbacked securities.” There is no such thing as a “TARP-backed security.” In January 2010, the SEC, working with SIGTARP, filed a civil complaint against Newpoint Financial Services, Inc., its co-owners John Farahi and Gissou Rastegar Farahi, and its controller Elaheh Amouei, charging them with a $20 million unregistered offering fraud aimed at Iranian-Americans, many of whom were falsely told that they were investing in FDIC-insured certificates of deposit, Government bonds, or corporate bonds issued by companies backed by TARP funds. The defendants allegedly lured victims through John Farahi’s daily finance radio show on a Farsilanguage radio station with false promises that they were guaranteed to get their money back, when in reality, the money went to Farahi’s multi-million dollar personal residence in Beverly Hills and Farahi’s risky options futures trading, in which he lost more than $18 million. Those who may fall prey to these types of schemes should beware. Struggling homeowners paying for assistance to navigate HAMP modifications should be wary quarterly report to congress I april 28, 2011 of promises that seem too good to be true. Potential investors who are guaranteed safe investments that promise TARP backing should perform due diligence to understand the security and the risk of loss of their investment. Schemes to Steal Money from TARP Recipients Through TARP, Treasury, and by extension the American people, became shareholders in hundreds of financial institutions. Just as any investor, the taxpayers suffer from crimes committed against TARP recipients. SIGTARP is committed to protecting those investments. Fraud against a TARP recipient can take any number of forms. Robert Egan and Bernard McGarry, the president and chief operating officer of Mount Vernon Money Center, a New York ATM and payroll cash management business, pled guilty for misappropriating client money, which included the funds of several TARP recipients. In another case, Thomas Fu and Cheri Shyu, owners of Galleria USA, Inc., a California home décor importer, were indicted by a Federal grand jury with allegedly defrauding a consortium of eight banks, including TARP recipients. According to the indictment, the defendants allegedly exaggerated — as much as 100 times — the company’s in-transit inventory and accounts receivables. Fu and Shyu also allegedly fabricated bills of lading and invoices to support the exaggerated numbers and hide Galleria’s true financial status. The TARP-related fraud schemes uncovered, and being investigated, by SIGTARP cause serious harm to real victims, as criminals preyed on the vulnerability we faced as a nation. Fortunately, the efforts of SIGTARP and its law enforcement partners have stopped many of these schemes dead in their tracks, preventing greater harm. SIGTARP will continue to work to bring to justice those criminals — including those in positions of power and responsibility — who seek to profit from the financial crisis by exploiting TARP through fraud. PROGRAM UPDATES AND FINANCIAL OVERVIEW TARP consists of 13 programs. Because TARP investment authority expired on October 3, 2010, no new obligations may be made with TARP funds. However, dollars that have already been obligated to existing programs may still be expended. As of October 3, 2010, $474.8 billion had been obligated across TARP to provide support for U.S. financial institutions, the automobile industry, the markets in certain types of asset-backed securities, and homeowners. Of the obligated amount, $410.5 billion had been spent as of March 31, 2011, leaving $58.9 billion in five programs remaining as obligated and available to spend after accounting for a $5 billion reduction in exposure to possible future liabilities. According to Treasury, through March 31, 2011, 143 TARP recipients — including 10 with the largest CPP investments — had paid back all of their principal or repurchased shares, and 22 TARP recipients had made partial repayments by paying back some of their principal or repurchasing from Treasury some of their preferred shares, for a total 11 12 special inspector general I troubled asset relief program of $263.7 billion of repayments and reductions in exposure. As of March 31, 2011, this left $146.8 billion in TARP funds outstanding. In addition to the principal repayments, Treasury has received interest and dividend payments on its investments, as well as revenue from the sale of its warrants. According to Treasury, as of March 31, 2011, the Government had received $37.0 billion in interest, dividends, and other income, including $8.9 billion in proceeds that had been received from the sale of warrants and stock received as a result of exercised warrants. At the same time, some TARP participants have missed dividend payments. Among CPP participants, 173 missed dividend or interest payments to the Government as of March 31, 2011, for a total of $277.3 million in unpaid CPP dividends. OVERSIGHT ACTIVITIES OF SIGTARP SIGTARP has issued 14 audit reports, including two that have been issued since the end of last quarter. In addition to “Extraordinary Financial Assistance Provided to Citigroup, Inc.,” discussed in SIGTARP’s January 2011 Quarterly Report, SIGTARP also issued “Treasury’s Process for Contracting for Professional Services under the Troubled Asset Relief Program.” This report, released on April 14, 2011, discussed the results of SIGTARP’s audit of the contracting processes of Treasury’s Office of Financial Stability (“OFS”) related to legal fee billing and SIGTARP’s audit of fee bills submitted by the law firm Venable LLP. For a more detailed discussion of this audit and Treasury’s responses thereto, see Section 4: “SIGTARP Recommendations” of this report. Section 1: “The Office of the Special Inspector General for the Troubled Asset Relief Program” of this report discusses SIGTARP’s announcement of two new audit projects during the past quarter, as well as 12 other previously announced audits in process. SIGTARP’s Investigations Division has developed into a highly sophisticated white collar investigative agency. As of March 31, 2011, SIGTARP had more than 150 ongoing criminal and civil investigations, many in partnership with other law enforcement agencies. Although much of SIGTARP’s investigative activity remains confidential, over the past quarter there have been significant public developments in a number of SIGTARP’s investigations. For a description of recent developments, including those relating to SIGTARP investigations into The Colonial BancGroup, Inc. / Taylor, Bean & Whitaker, FirstCity Bank, Orion Bank, Nations Housing Modification Center, HomeFront, Inc., Galleria USA, Inc., Karl Rodney (New York Carib News, Inc.), Residential Relief Foundation, The Park Avenue Bank, and Omni National Bank, see Section 1 of this report. quarterly report to congress I april 28, 2011 SIGTARP RECOMMENDATIONS ON THE OPERATION OF TARP One of SIGTARP’s oversight responsibilities is to provide recommendations to Treasury so that TARP programs can be designed or modified to facilitate effective oversight and transparency and to prevent fraud, waste, and abuse. Section 4 “SIGTARP Recommendations” provides updates on existing recommendations and summarizes implementation measures for previous recommendations. This quarter, Section 4 includes a follow-up discussion of recommendations related to the restructuring or recapitalization of Treasury’s CPP investments, or their refinancing into the Small Business Lending Fund (“SBLF”), that were first published in SIGTARP’s January 2011 Quarterly Report. Section 4 reviews the recommendations as well as Treasury’s adoption of those recommendations. Additionally, Section 4 addresses four new SIGTARP recommendations contained in the audit report “Treasury’s Process for Contracting for Professional Services under the Troubled Asset Relief Program,” released on April 14, 2011. The recommendations are designed to address weaknesses in OFS contracts for legal services as well as in OFS procedures for the review of legal fee bills. Treasury has stated its intent to adopt the four recommendations and has already taken steps to implement them. REPORT ORGANIZATION The report is organized as follows: • Section 1 discusses the activities of SIGTARP. • Section 2 details how Treasury has spent TARP funds thus far and contains an explanation or update of each program. • Section 3 describes the operations and administration of the Office of Financial Stability, the office within Treasury that manages TARP. • Section 4 discusses SIGTARP’s recommendations to Treasury with respect to the operation of TARP. The report also includes numerous appendices containing, among other things, figures and tables detailing all TARP investments through March 31, 2011, except where otherwise noted. 13 14 special inspector general I troubled asset relief program section 1 The Office of the Special Inspector General for the Troubled Asset Relief Program investigations 16 special inspector general I troubled asset relief program quarterly report to congress I april 28, 2011 SIGTARP CREATION AND STATUTORY AUTHORITY The Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”) was created by Section 121 of the Emergency Economic Stabilization Act of 2008 (“EESA”). Under EESA, SIGTARP has the responsibility, among other things, to conduct, supervise, and coordinate audits and investigations of the purchase, management, and sale of assets under the Troubled Asset Relief Program (“TARP”) and, with certain limitations, any other action taken under EESA. SIGTARP is required to report quarterly to Congress to describe SIGTARP’s activities and to provide certain information about TARP over that preceding quarter. EESA gives SIGTARP the authorities listed in Section 6 of the Inspector General Act of 1978, including the power to obtain documents and other information from Federal agencies and to subpoena reports, documents, and other information from persons or entities outside the Government. TARP investment authority expired on October 3, 2010. As a result, Treasury cannot make new purchases or guarantees of troubled assets. This termination of authority, however, does not affect Treasury’s ability to administer existing troubled asset purchases and guarantees. In accordance with Section 106(e) of EESA, Treasury may expend TARP funds after October 3, 2010, as long as it does so pursuant to obligations entered into before that date. SIGTARP’s oversight mandate did not end with the expiration of Treasury’s authorization for new TARP funding. Rather, under the authorizing provisions of EESA, SIGTARP is to carry out its duties until the Government has sold or transferred all assets and terminated all insurance contracts acquired under TARP. In other words, SIGTARP will remain “on watch” as long as TARP assets remain outstanding. 17 18 special inspector general I troubled asset relief program SIGTARP OVERSIGHT ACTIVITIES SINCE THE JANUARY 2011 QUARTERLY REPORT SIGTARP has continued to fulfill its oversight role on multiple parallel tracks: investigating allegations of fraud, waste, and abuse in TARP programs; auditing various aspects of TARP and TARP-related programs and activities; coordinating closely with other oversight bodies; and striving to promote transparency in TARP programs. SIGTARP Investigations Activity SIGTARP’s Investigations Division has developed into a highly sophisticated whitecollar investigative agency. As of March 31, 2011, SIGTARP had more than 150 ongoing criminal and civil investigations, many in partnership with other law enforcement agencies. From SIGTARP’s inception through the drafting of this report, its investigations have delivered substantial results, including: • asset recoveries of $151 million, with an additional estimated savings of $555.2 million through fraud prevention • civil or criminal actions against 61 individuals, including 41 senior officers (CEOs, owners, founders, or senior executives) of their organizations • criminal convictions of 22 defendants • civil cases naming 18 corporate or other legal entities as defendants SIGTARP’s investigations concern suspected TARP fraud, accounting fraud, securities fraud, insider trading, bank fraud, mortgage fraud, mortgage-servicer misconduct, fraudulent advance-fee schemes, public corruption, false statements, obstruction of justice, theft of trade secrets, money laundering, and tax-related matters. Although the majority of SIGTARP’s investigative activity remains confidential, over the past quarter there have been significant public developments in several SIGTARP investigations. The Colonial BancGroup, Inc./Taylor, Bean & Whitaker On April 19, 2011, Lee Bentley Farkas, the former chairman of Taylor, Bean & Whitaker Mortgage Corporation (“TBW”), was convicted in a jury trial of 14 counts of bank, wire and securities fraud that included charges relating to his role in attempting to steal $553 million from TARP through the fraudulent application of The Colonial BancGroup, Inc. (“Colonial”) to the Capital Purchase Program (“CPP”). Notwithstanding Colonial’s conditional approval to receive TARP funds, SIGTARP notified Treasury of its investigation, thereby ensuring that no TARP funds were disbursed to Colonial. Farkas was also convicted in a fraud scheme involving more than $2.9 billion that contributed to the failures of Colonial and TBW and that victimized numerous other public and private institutions. Farkas quarterly report to congress I april 28, 2011 is scheduled to be sentenced on July 1, 2011, and faces a maximum prison term of anywhere from 20 to 30 years for each count of conviction. In August 2009, Colonial Bank (a subsidiary of Colonial) was seized by its regulator, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. Colonial BancGroup filed for bankruptcy in August 2009. To date, six individuals from Colonial Bank and TBW have entered guilty pleas in the U.S. District Court for the Eastern District of Virginia for their roles in various aspects of the bank and TARP-fraud schemes. Paul Allen, the former chief executive officer (“CEO”) of TBW, pled guilty on April 1, 2011, to one count of conspiracy to commit bank and wire fraud and one count of making false statements to the Department of Housing and Urban Development (“HUD”). Allen admitted that he and others engaged in a scheme to defraud financial institutions that had invested in TBW’s wholly owned lending facility, Ocala Funding. Shortly after Ocala Funding was established, Allen learned that inadequate assets were backing its commercial paper — a deficiency referred to within TBW as a “hole” in Ocala Funding. Allen admitted that he kept the chairman of TBW, Farkas, informed of the collateral shortfall, and that Farkas told him that the “hole” had been moved from Ocala Funding to Colonial Bank. Allen was later directed to approach a private equity investor to secure capital to help meet a $300 million private capital requirement that Treasury had set for Colonial Bank to receive $553 million from TARP. Although Allen failed to secure the funding from the investor, he admitted in court that TBW Chairman Farkas represented to others that the investor was a $50 million participant and that the chairman diverted $5 million from Ocala Funding to an escrow account in the investor’s name. This deception caused Colonial Bank to falsely announce that it had met its $300 million capital contingency and to send a letter to the FDIC stating that all investors had met a 10% escrow deposit requirement. Allen also admitted to making false statements in a letter he sent to HUD, through Ginnie Mae, regarding TBW’s audited financial statements for the fiscal year ended March 31, 2009. Allen is scheduled to be sentenced on June 21, 2011. Sean W. Ragland, the former senior financial analyst at TBW, pled guilty on March 31, 2011, to conspiring to commit bank and wire fraud for his role in the scheme to defraud financial investors in Ocala Funding. Ragland learned of the Ocala Funding “hole” and reported its status to senior TBW executives. Ragland was also aware that TBW co-conspirators were improperly transferring hundreds of millions of dollars from Ocala Funding to TBW accounts. Ragland admitted that, at the direction of other co-conspirators, he prepared fraudulent documents that inflated the aggregate value of the loans held in Ocala Funding. He sent this false information to the financial institution’s investors, other third parties, and to an outside auditing firm. Ragland is scheduled to be sentenced on June 21, 2011. 19 20 special inspector general I troubled asset relief program Teresa Kelly, the former operations supervisor in Colonial Bank’s Mortgage Warehouse Lending Division, pled guilty on March 16, 2011, to conspiracy to commit bank, wire, and securities fraud. According to court records, Kelly and her co-conspirators caused TBW to engage in sales to Colonial Bank of fictitious securities that were not backed by collateral and had no value. Kelly and others caused the false information to be entered into Colonial Bank’s books and records, giving the appearance that Colonial Bank owned a 99% interest in legitimate securities serviced by TBW, when in fact the securities had no value and could not be sold. Kelly is scheduled for sentencing on June 17, 2011. In a related action, the Securities and Exchange Commission (“SEC”) filed an enforcement action against Kelly on March 16, 2011, in the U.S. District Court for the Eastern District of Virginia. Raymond Bowman, the former president of TBW, pled guilty on March 14, 2011, to conspiracy to commit bank, wire, and securities fraud, and to lying to SIGTARP and Federal Bureau of Investigation (“FBI”) agents. Bowman admitted that from 2003 through August 2009 he and his co-conspirators, including former TBW Chairman Farkas, engaged in a fraud scheme that caused Colonial Bank and Colonial BancGroup to purchase tens of millions of dollars of worthless assets. They also caused Colonial BancGroup to report false information in its financial statements and to artificially inflate the value of TBW’s mortgage-servicing rights. Bowman is scheduled to be sentenced on June 10, 2011. Catherine Kissick, the former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division, pled guilty on March 2, 2011, to conspiracy to commit bank, wire, and securities fraud. According to court documents, Kissick admitted that from 2002 through August 2009, she and her co-conspirators, including former TBW Chairman Farkas, engaged in a scheme to defraud various entities and individuals, including Colonial Bank, Colonial BancGroup, TARP, and the investing public. In connection with the TARP application, Colonial BancGroup submitted materially false financial data and filings as a result of the fraudulent scheme perpetrated by Kissick and her co-conspirators. Further, Kissick admitted that she deleted and instructed members of her staff to delete electronic communications on their Blackberry hand-held devices to evade SIGTARP subpoenas. Kissick is scheduled to be sentenced on June 17, 2011. The SEC also filed an enforcement action against Kissick on March 2, 2011, in the U.S. District Court for the Eastern District of Virginia. Desiree Brown, the former treasurer of TBW, pled guilty on February 24, 2011, to conspiracy to commit bank, wire, and securities fraud. Brown admitted to participating in a fraud scheme that included generating money for TBW through fictitious “sales” of mortgage loans to Colonial Bank by sending the bank mortgage data for loans that did not exist or that TBW had already committed or sold to other third-party investors. The scheme also included the fraudulent effort to quarterly report to congress I april 28, 2011 obtain TARP funding through the materially false Colonial BancGroup CPP application. Brown is scheduled to be sentenced on June 10, 2011. The SEC also filed an enforcement action against Brown on February 24, 2011, in the U.S. District Court for the Eastern District of Virginia. The cases, brought in coordination with the President’s Financial Fraud Enforcement Task Force (“FFETF”), are being investigated by SIGTARP, FBI, the Office of the Inspector General of the FDIC (“FDIC OIG”), the Office of the Inspector General of HUD (“HUD OIG”), the Office of the Inspector General of the Federal Housing Finance Agency (“FHFA OIG”), and the Internal Revenue Service Criminal Investigation Division (“IRS-CI”). The Financial Crimes Enforcement Network (“FinCEN”) of the Department of the Treasury also provided support. FirstCity Bank On March 16, 2011, a Federal grand jury sitting in the Northern District of Georgia indicted Mark A. Conner and Clayton A. Coe, two former top officers of FirstCity Bank (“FirstCity”) in Stockbridge, Georgia, with conspiracy to commit bank fraud and substantive counts of bank fraud. Additionally, Coe was charged with making false statements to a financial institution and Conner was charged with conducting a continuing financial crimes enterprise for two years that generated more than $5 million in unlawful proceeds. Conner served in a variety of senior positions at FirstCity between 2004 and 2009, including president, vice chairman of the board of directors, and acting chairman and CEO. Coe served as a vice president and as FirstCity’s senior commercial loan officer. The indictment alleges that Conner, Coe, and others conspired to defraud FirstCity’s loan committee and board of directors into approving multiple, multimillion dollar commercial loans to borrowers who, unbeknownst to FirstCity, were actually purchasing property owned by Conner or Coe personally. Their actions then caused at least 10 other federally insured banks to invest in the fraudulent loans — in effect shifting all or part of the risk of default to the other banks. To cover their tracks, and as part of the alleged scheme, Conner, Coe, and their co-conspirators routinely misled federal and state bank regulators and examiners; attempted to obtain federal government assistance through TARP; and engaged in other misconduct in an attempt to avoid seizure by regulators and prevent the discovery of their fraud scheme. FirstCity was seized by state and federal authorities on March 20, 2009. On the morning of March 20, 2011, the two-year anniversary of FirstCity’s failure, Conner was arrested at Miami International Airport upon his arrival from the Turks and Caicos Islands. On the morning of March 27, 2011, Coe was also arrested at Miami International Airport upon his return from the Turks and Caicos Islands. The case continues to be investigated by SIGTARP, FBI, IRS-CI, and FDIC OIG. 21 22 special inspector general I troubled asset relief program Orion Bank On March 30, 2011, a Federal grand jury sitting in the Middle District of Florida returned an indictment against Jerry J. Williams, former president, CEO, and board chairman of Orion Bancorp, Inc., and Orion Bank (“Orion”), for conspiracy to commit bank fraud and to deceive federal and state bank examiners. Williams was also charged with two counts of misapplication of bank funds; two counts of making false entries in Orion’s reports; mail fraud; wire fraud; and money laundering. In October 2008, Orion Bancorp, Inc., filed an application for $64 million of TARP money through CPP. According to the indictment, Williams orchestrated a complex conspiracy to fraudulently raise $100 million in capital and falsify bank records in order to mislead state and federal regulators as to the bank’s true financial condition. This was accomplished by two “round-trip” transactions through which Orion’s own funds were used to create the illusion of genuine capital infusions, creating the false impression to regulators that Orion’s capital position had improved considerably. On March 30, 2011, criminal informations were filed in the U.S. District Court for the Middle District of Florida, separately charging Francesco Mileto, Thomas Hebble, and Angel Guerzon for their involvement in the scheme. Mileto was charged with conspiracy to commit bank fraud. Hebble and Guerzon were charged with conspiracy to commit bank fraud and obstruction of a Federal bank examination. Florida’s Office of Financial Regulation closed Orion Bank on November 13, 2009, and named the FDIC as receiver. The FDIC estimates that Orion’s failure will cost the Deposit Insurance Fund more than $600 million. The case is being investigated by SIGTARP, FBI, IRS-CI, the Office of the Inspector General of the Federal Reserve Board (“FRB OIG”), and FDIC OIG. Nations Housing Modification Center As discussed in previous SIGTARP reports, Glenn Rosofsky, Roger Jones, and Michael Trap pled guilty to their involvement in a fraudulent loan-modification scheme. The conspiracy sold loan-modification services to homeowners who were delinquent on their monthly mortgage payments. Using the names “Nations Housing Modification Center” (“NHMC”) and “Federal Housing Modification Department,” the conspiracy used false and fraudulent statements and representations to induce customers to pay advance fees of $2,500 - $3,000 each to purchase loan-modification services from NHMC. The fraud grossed at least $900,000 from more than 300 homeowners. On January 24, 2011, Rosofsky was sentenced by the U.S. District Court for the Southern District of California to 63 months incarceration and 36 months of supervised release and ordered to pay restitution of $456,749 following his previous guilty plea to one count of conspiracy to commit wire fraud and money laundering; one count of money laundering; and one count of filing a false tax return. quarterly report to congress I april 28, 2011 On January 18, 2011, Jones was sentenced in the same court to 33 months incarceration and 36 months of supervised release, and ordered to pay restitution of $456,749 following his previous guilty plea to one count of conspiracy to commit wire fraud and money laundering; one count of money laundering; and one count of filing a false tax return. At his guilty plea, Jones admitted not only to participating in the conspiracy, but also to making material false statements to SIGTARP agents that significantly obstructed or impeded an aspect of the SIGTARP investigation. Trap, who pled guilty to conspiracy to commit wire fraud and money laundering, is expected to be sentenced later this spring. This case was jointly investigated by SIGTARP, IRS-CI, the Federal Trade Commission (“FTC”), the San Diego District Attorney’s Office, and the U.S. Attorney’s Office for the Southern District of California, with the support of FinCEN and the New York High Intensity Financial Crime Area. HomeFront, Inc. On January 29, 2011, a criminal complaint was filed in U.S. District Court for the Western District of New York charging Lori J. Macakanja with mail fraud and falsifying documents in connection with a scheme to defraud struggling homeowners seeking mortgage modifications. Macakanja was employed as a housing counselor by HomeFront, Inc. (“HomeFront”), a HUD-approved housing counseling agency in western New York. According to the complaint, Macakanja unlawfully solicited and received money from HomeFront clients by falsely claiming that the money would be used for loan modifications designed to prevent foreclosure on their homes. Instead, it is alleged that Macakanja spent the money at casinos and on her own mortgage. The complaint alleges that more than 100 HomeFront clients were collectively defrauded of more than $200,000. The complaint is the result of an investigation by SIGTARP and the Mortgage Fraud Task Force of Western New York, which includes agents and personnel from the U.S. Postal Inspection Service (“USPIS”), HUD OIG, IRS-CI, U.S. Secret Service (“Secret Service”), and FBI. Galleria USA, Inc. On March 9, 2011, a Federal grand jury sitting in the Central District of California returned an indictment against Thomas Chia Fu and his wife, Cheri L. Shyu, owners of Galleria USA, Inc. (“Galleria”) for defrauding a consortium of eight banks, including several TARP recipients. According to the indictment, the defendants fraudulently obtained and drew on a $130 million line of credit by exaggerating Galleria’s in-transit inventory and accounts receivables and by fabricating bills of lading and invoices to hide the company’s true financial status. The defendants were arrested on March 10, 2011. The case was investigated by SIGTARP, FBI, and Secret Service. 23 24 special inspector general I troubled asset relief program Karl Rodney (New York Carib News, Inc.) On February 11, 2011, a criminal information was filed in the U.S. District Court for the District of Columbia by prosecutors with Department of Justice’s Public Integrity Section charging Karl Rodney, co-founder of Carib News, Inc., and the Carib News Foundation, with one count of making a false statement within the jurisdiction of a Committee of the U.S. House of Representatives in seeking approval for a privately funded trip to the “Carib News Foundation Multi-National Business Conference” in Antigua and Barbuda in November 2007. Several key sponsors of the conference were TARP recipient banks. The information charges Rodney with violating the Federal false statement statute for failing to “identify [in the travel certification form submitted to the Committee] all the sponsors of the trip” and for failing “to disclose [in the certification form] all the sources that had earmarked funds and other support to finance aspects of the trip.” The case was investigated by SIGTARP and FBI. Rodney pled guilty to the charges in the information on April 14, 2011. Residential Relief Foundation As previously reported, pursuant to a November 17, 2010, order of the U.S. District Court for the District of Maryland, the FTC halted the operations of the Residential Relief Foundation and affiliated companies and individuals. On February 7, 2011, the court ordered the continuation of the temporary restraining order and further ordered that the temporary receiver begin liquidation of stipulated property. These actions were based on a civil complaint filed by the FTC alleging that the defendants violated Federal law by falsely claiming that they would obtain loan modifications and significantly lower mortgage payments for consumers in return for upfront fees. The complaint also charged the defendants with misrepresenting an affiliation with the Federal Government, falsely claiming to have taken reasonable and appropriate measures to protect consumers’ personal information from unauthorized access, and improperly disposing of consumers’ information in unsecured dumpsters, in violation of the FTC Act. SIGTARP provided investigative support for the FTC action. The Park Avenue Bank On January 4, 2011, Carlos Peralta pled guilty in the U.S. District Court for the Southern District of New York to one count of wire fraud. Peralta participated in a fraudulent investment scheme through which he caused the pastors of a church in Coral Springs, Florida, to wire $103,940 from a Florida bank account to one at The Park Avenue Bank (“Park Avenue Bank”) in New York. As previously reported, on October 8, 2010, Charles Antonucci, former president and CEO of Park Avenue Bank, pled guilty in the U.S. District Court for the quarterly report to congress I april 28, 2011 Southern District of New York to offenses including securities fraud, making false statements to bank regulators, bank bribery, and embezzlement of bank funds. Antonucci had previously been arrested in March 2010 after attempting to steal $11 million of TARP funds by, among other things, making fraudulent claims about the bank’s capital position. With his guilty plea Antonucci became the first defendant convicted of attempting to steal from the taxpayers’ investment in TARP. The ongoing investigation is being conducted by SIGTARP, FBI, U.S. Immigration and Customs Enforcement, the New York State Banking Department Criminal Investigations Bureau, and FDIC OIG. Omni National Bank On January 5, 2011, Karim Lawrence pled guilty in the U.S. District Court for the Northern District of Georgia to one count of corruptly accepting hundreds of thousands of dollars in cash and other things of value in exchange for the awarding of Omni National Bank (“Omni”)-funded renovation contracts on foreclosed properties owned by Omni. Omni was a national bank headquartered in Atlanta with branch offices in Birmingham, Alabama; Tampa, Florida; Fayetteville, North Carolina; Houston and Dallas, Texas; Chicago, Illinois; and Philadelphia, Pennsylvania. Omni failed and was taken over by the FDIC on March 27, 2009. Prior to its failure, Omni applied for, but did not receive, TARP funding under CPP. This ongoing investigation is being conducted by SIGTARP, FDIC OIG, USPIS, and FBI. SIGTARP Audit Activity SIGTARP has initiated a total of 28 audits and two evaluations since its inception. SIGTARP has issued a total of 14 audit reports, including two since the close of the quarter ended December 31, 2010. In the past quarter, SIGTARP also announced two new audit projects. In addition, 12 other previously announced audits and evaluations are in progress; SIGTARP anticipates releasing reports on those audits in the coming months. On January 13, 2011, SIGTARP released the audit report, “Extraordinary Financial Assistance Provided to Citigroup, Inc.” Details were discussed in SIGTARP’s Quarterly Report to Congress dated January 26, 2011 (the “January 2011 Quarterly Report”). On April 14, 2011, SIGTARP released the audit report, “Treasury’s Process for Contracting for Professional Services under the Troubled Asset Relief Program.” See Section 4: “SIGTARP Recommendations” in this report for SIGTARP’s recommendations to Treasury to address weaknesses in Treasury’s Office of Financial Stability (“OFS”) contracts for legal services as well as OFS procedures for the review of legal bills. 25 26 special inspector general I troubled asset relief program Audits and Evaluations Underway SIGTARP has ongoing audits and evaluations on 12 previously announced topics and expects to issue those reports in the coming months. Office of the Special Master Decisions on Executive Compensation This audit is examining the decisions of the Office of the Special Master for TARP Executive Compensation on executive compensation at firms receiving exceptional TARP assistance. This audit assesses the criteria used by the Special Master to evaluate executive compensation and whether the criteria were applied consistently. CPP Applications Receiving Conditional Approval This audit is examining those CPP applications that received preliminary approval from Treasury’s Investment Committee conditioned upon the institutions meeting certain requirements before funds were disbursed. One example was Colonial, which received CPP approval conditioned on its raising $300 million in private capital, but was later the center of a major fraud investigation initiated by SIGTARP that led to the conviction of Farkas on charges that he attempted to defraud Treasury of more than $550 million in connection with its conditional approval of Colonial’s application for TARP funds. The audit assesses the basis for the decision granting such conditional approvals and the bank regulators’ roles in such decisions; whether and how timeframes were established for meeting such conditions; and whether internal controls were in place to ensure that the conditions were met before funds were disbursed. Term Asset-Backed Securities Loan Facility (“TALF”) Collateral Monitors’ Valuation This audit is examining the Federal Reserve’s basis for hiring collateral monitors for the TALF program; the role of the collateral monitors; and the appropriateness of the approved loan amounts. CPP Exit Strategy This audit is examining the process that Treasury and Federal banking regulators established for banks to repay Treasury and exit CPP. Home Affordable Modification Program (“HAMP”) Internal Controls Building on SIGTARP’s other audit work regarding HAMP, this audit is examining the extent to which Treasury has established a system of internal controls for HAMP.1 This audit is also reviewing the reasons Treasury reported erroneous redefault rates through June 2010 in its “Servicer Performance Report” and the corrective actions Treasury is taking to help assure that its future performance reports are accurate. quarterly report to congress I april 28, 2011 Application of the HAMP Net Present Value (“NPV”) Test This audit, conducted in response to a request from Senator Jeff Merkley and eight other Senators, is examining the following issues: (i) whether participating loan servicers are correctly applying the NPV test under the program; (ii) the extent to which Treasury ensures that servicers are appropriately applying the NPV test per HAMP guidelines when assessing borrowers for program eligibility; and (iii) the procedures servicers follow to communicate to borrowers the reasons for NPV test failure, as well as to identify the full range of loss mitigation options available to such borrowers. Hardest-Hit Fund (“HHF”) Undertaken at the request of Representative Darrell Issa, this audit is examining (i) the extent to which Treasury applied consistent and transparent criteria, including applicable provisions of EESA, in selecting the states and programs to receive money under HHF; (ii) the extent to which Treasury has determined the programs to be funded by HHF are innovative as compared to existing Federal and state programs; (iii) whether Treasury has put sufficient mechanisms in place to prevent waste, fraud, and abuse in HHF; and (iv) the goals and metrics Treasury has adopted and reported to the public for the operation of HHF. Decision-Making Process Regarding Citigroup Inc. Deferred Tax Assets Undertaken at the request of Representative Dennis Kucinich, this evaluation is examining (i) the rationale behind Treasury’s decision to issue Notice 2010-2 (the “Notice”) regarding Internal Revenue Code Section 382, which limits the amount of net operating losses a corporation experiencing a change of ownership may use to offset future taxable income; (ii) whether Treasury was aware of the tax effect that may result from the Notice’s issuance; (iii) the identity of principal decision makers involved in issuing the Notice; and (iv) the extent to which Treasury’s policy to timely dispose of TARP investments factored into the issuance decision. Assessment of American International Group, Inc. (“AIG”) Severance Payments At the request of Senator Charles Grassley, SIGTARP is conducting an evaluation and review of executive compensation regulations issued by Treasury in relation to severance payments to certain former executives at AIG. Additionally, this evaluation is examining the circumstances of an alleged conflict of interest within the Office of the Special Master. 27 28 special inspector general I troubled asset relief program Review of Treasury’s Investment in General Motors Company (“GM”) This audit is examining Treasury’s decision-making process relating to its substantial investment in GM, specifically (i) Treasury’s process and plans, and its supporting analyses, for its actual and/or planned disposal of its investments in GM, and (ii) the role Treasury played in reviewing, approving, or otherwise participating in GM’s decision to acquire AmeriCredit (now GM Financial). Review of GM’s Decision to “Top Up” the Pension Plan for Hourly Workers of Delphi Automotive LLP (“Delphi”) This audit is examining GM’s decision to “top up” Delphi’s pension plan for hourly workers, including (i) Treasury’s role in GM’s decision to top up the pension plan and (ii) whether the Administration or the Automotive Task Force pressured GM to provide additional funding for the plan. PPIP Internal Controls Undertaken at the request of Senator Claire McCaskill, this audit is examining (i) the extent and effectiveness of Treasury’s oversight and monitoring for each PPIF; (ii) the extent to which each PPIF manager’s internal controls address the compliance requirements of the limited partnership agreement and other applicable laws and regulations; and (iii) the extent to which Treasury and PPIF managers have implemented controls to identify, mitigate, and resolve potential conflicts of interest. New Audits Underway Over the past quarter SIGTARP announced the following two new audit projects: Review of the Process for Refinancing Treasury’s TARP Investments to the Small Business Lending Fund (“SBLF”) In conjunction with our ongoing review of the process through which institutions exit TARP, this audit is examining Treasury’s process for refinancing TARP investments to SBLF. Review of Treasury’s Investment under TARP’s CPP This audit is examining how selected financial institutions used CPP funds and the effectiveness of management controls over their use. Specifically, we will examine: (i) Treasury’s oversight of financial institutions’ management of CPP funds, including whether allowing CPP-recipient banks to purchase failed banks meets the objectives of CPP, and whether financial restructuring agreements were in the Government’s best interest; (ii) whether the expenses incurred with CPP funds were reasonable and consistent with law, including restrictions on executive compensation; and (iii) the effectiveness of risk management of loans made with CPP funds. quarterly report to congress I april 28, 2011 SIGTARP Hotline One of SIGTARP’s primary investigative priorities is to operate the SIGTARP Hotline and thus provide a simple, accessible way for the American public to report concerns, allegations, information, and evidence of violations of criminal and civil laws in connection with TARP. From its inception in February 2009 through March 31, 2011, the SIGTARP Hotline has received and analyzed more than 26,000 Hotline contacts. These contacts run the gamut from expressions of concern over the economy to serious allegations of fraud involving TARP, and a substantial number of SIGTARP’s investigations were generated in connection with Hotline tips. The SIGTARP Hotline can receive information anonymously. SIGTARP honors all applicable whistleblower protections and will provide confidentiality to the fullest extent possible. SIGTARP urges anyone aware of waste, fraud or abuse involving TARP programs or funds, whether it involves the Federal Government, state and local entities, private firms or individuals, to contact its representatives at 877-SIG2009 or www.sigtarp.gov. Communications with Congress One of the primary functions of SIGTARP is to ensure that members of Congress remain adequately and promptly informed of developments in TARP initiatives and of SIGTARP’s oversight activities. To fulfill that role, the Special Inspector General and staff meet regularly with and brief members and Congressional staff: • On January 21 and 24, 2011, SIGTARP Deputy Special Inspector General Christy Romero presented open briefings for House and Senate staff, respectively. The focus of each briefing was SIGTARP’s January 2011 Quarterly Report. • On January 26, 2011, then Special Inspector General Neil Barofsky testified before the House Committee on Oversight and Government Reform. The title of the hearing was “Bailouts and the Foreclosure Crisis: Report of the Special Inspector General for the Troubled Asset Relief Program.” Then Special Inspector General Barofsky’s testimony included an overview of SIGTARP’s January 2011 Quarterly Report, which was released at the hearing. • On March 2, 2011, then Special Inspector General Barofsky testified before the House Committee on Financial Services, Subcommittee on Insurance, Housing and Community Opportunity. The title of the hearing was “Legislative Proposals to End Taxpayer Funding for Ineffective Foreclosure Mitigation Programs.” Then Special Inspector General Barofsky’s testimony included a discussion of SIGTARP’s audit work and recommendations related to TARP’s foreclosuremitigation programs. • On March 17, 2011, then Special Inspector General Barofsky testified before the Senate Committee on Banking, Housing and Urban Affairs. The title of the hearing was “TARP Oversight: Evaluating Returns on Taxpayer Investments.” Then Special Inspector General Barofsky’s testimony focused on a review of the TARP program to date. 29 30 special inspector general I troubled asset relief program • On March 24, 2011, Deputy Special Inspector General Romero presented an open briefing on “SIGTARP 101” for the new staff members of the House committees of jurisdiction. • On March 30, 2011, then Special Inspector General Barofsky testified before the House Committee on Oversight and Government Reform, Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs. The title of the hearing was “Has Dodd-Frank Ended Too Big to Fail?” Then Special Inspector General Barofsky’s testimony focused on the impact of TARP and the Dodd-Frank Wall Street Reform and Consumer Protection Act on the problems related to the continued existence of institutions deemed “too big to fail.” Copies of the written testimony, hearing transcripts, and a variety of other materials associated with Congressional hearings since SIGTARP’s inception are posted at www.sigtarp.gov/reports.shtml. THE SIGTARP ORGANIZATION SIGTARP has worked to build its organization through various complementary strategies, leveraging the resources of other agencies, and, where appropriate and cost-effective, obtaining services through SIGTARP’s authority to contract. SIGTARP continues to make substantial progress in building its operation. Hiring As of March 31, 2011, SIGTARP had 136 personnel, including one detailee from FBI. SIGTARP’s employees hail from many Federal agencies, including the Justice Department, FBI, IRS-CI, Air Force Office of Special Investigations, the Government Accountability Office (“GAO”), the Congressional Oversight Panel for TARP, the Transportation Department, the Energy Department, the SEC, the Secret Service, USPS, U.S. Army Criminal Investigation Command, Naval Criminal Investigative Service, Treasury-Office of the Inspector General, Department of Energy-Office of the Inspector General, Department of Transportation-Office of the Inspector General, Department of Homeland Security-Office of the Inspector General, FDIC OIG, Office of the Special Inspector General for Iraq Reconstruction, and HUD OIG. SIGTARP employees also hail from various private-sector businesses and law firms. Hiring is ongoing. The SIGTARP organizational chart, as of March 31, 2011, can be found in Appendix I: “Organizational Chart.” quarterly report to congress I april 28, 2011 Budget On February 2, 2010, the Administration submitted to Congress Treasury’s fiscal year 2011 budget request, which includes SIGTARP’s full initial request for $49.6 million. Adjusting for the fiscal year 2011 pay-raise reduction, the annual amount has been revised to $49.4 million. Public Law 111-242, Public Law 111-322, Public Law 112-4 and Public Law 112-6, the Continuing Appropriations Act of 2011 as amended and extended through April 8, 2011, provides $18.9 million based on an annual estimate of $36.3 million. Figure 1.1 provides a detailed breakdown of SIGTARP’s fiscal year 2011 budget, which reflects an adjusted total spending plan of $44.4 million, which includes, among other things, portions of SIGTARP’s initial funding that have not yet been spent. On February 14, 2011, the Administration submitted to Congress Treasury’s fiscal year 2012 budget request, which includes SIGTARP’s funding request for $47.4 million. Figure 1.2 provides a detailed breakdown of SIGTARP’s fiscal year 2012 budget, which reflects a total of $49.1 million. Physical and Technical SIGTARP Infrastructure SIGTARP occupies office space at 1801 L Street, NW, in Washington, D.C., the same office building in which most Treasury officials managing TARP are located. To facilitate more efficient and effective investigative activities across the nation, SIGTARP has also opened regional offices in New York City, Los Angeles, San Francisco, and Atlanta. SIGTARP has a website, www.SIGTARP.gov, on which it posts all of its reports, testimony, audits, contracts, and more. Since its inception, SIGTARP’s website has had more than 50.7 million web “hits,” and there have been more than 3.6 million downloads of SIGTARP’s quarterly reports, which are available on the site.2 Figure 1.1 SIGTARP FY 2011 PROPOSED BUDGET ($ MILLIONS, PERCENTAGE OF $44.4 MILLION) Other Services $2.1, 5% Advisory Services $8.1 18% 49% Salaries and Benefits $22.0 25% Interagency Agreements $11.0 Travel/ Transportation $1.2, 3% Figure 1.2 SIGTARP FY 2012 PROPOSED BUDGET ($ MILLIONS, PERCENTAGE OF $49.1 MILLION) Other Services $3.5 Advisory Services $6.1 7% 12% Interagency Agreements $10.2 21% Travel/ Transportation $1.3, 3% 57% Salaries and Benefits $28.0 31 32 special inspector general I troubled asset relief program s ection 2 tarp overview 34 special inspector general I troubled asset relief program quarterly report to congress I april 28, 2011 This section summarizes how the U.S. Department of the Treasury (“Treasury”) has managed the Troubled Asset Relief Program (“TARP”). This section also reviews TARP’s overall finances, provides updates on established TARP component programs, and gives the status of TARP executive compensation restrictions. TARP FUNDS UPDATE Because TARP investment authority expired on October 3, 2010, no new obligations may be made with TARP funds. However, dollars that have already been obligated to existing programs may still be expended. As of October 3, 2010, $474.8 billion had been obligated to 13 announced programs. Of the obligated amount, as of March 31, 2011, $410.5 billion had been spent and $58.9 billion remained obligated and available to be spent. Also, $5 billion was obligated under the Asset Guarantee Program (“AGP”) but was not expended; those dollars are not available for further use.3 Initial authorization for TARP funding came through the Emergency Economic Stabilization Act of 2008 (“EESA”), which was signed into law on October 3, 2008.4 EESA appropriated $700 billion to “restore liquidity and stability to the financial system of the United States.”5 On December 9, 2009, the Secretary of the Treasury (“Treasury Secretary”) exercised the powers granted him under Section 120(b) of EESA and extended TARP through October 3, 2010.6 In accordance with Section 106(e) of EESA, Treasury may expend TARP funds after October 3, 2010, as long as it does so pursuant to obligations entered into before that date.7 The Dodd-Frank Wall Street Reform and Consumer Protection Act (“DoddFrank Act”), which became law (Public Law 111-203) on July 21, 2010, amended the timing and amount of TARP funding.8 The upper limit of the Treasury Secretary’s authority to purchase and guarantee assets under TARP was reduced to $475 billion from the original $700 billion available. With the expiration of TARP funding authorization, no new expenditures may be made through the Capital Purchase Program (“CPP”), the Capital Assistance Program (“CAP”), the Targeted Investment Program (“TIP”), AGP, the Auto Supplier Support Program (“ASSP”), the Auto Warranty Commitment Program (“AWCP”), the Unlocking Credit for Small Businesses (“UCSB”) initiative, or the Community Development Capital Initiative (“CDCI”), because all obligated dollars have been spent. For five programs — the Making Home Affordable (“MHA”) program, the Systemically Significant Failing Institutions (“SSFI”) program, the Term Asset-Backed Securities Loan Facility (“TALF”), the Public-Private Investment Program (“PPIP”), and the Automotive Industry Financing Program (“AIFP”) — dollars that were obligated but unspent as of October 3, 2010, are available to be expended up to the obligated amount. No new obligations may be made for TARP programs. Table 2.1 provides a breakdown of program obligations, expenditures, Obligations: Definite commitments that create a legal liability for the Government to pay funds. 35 36 special inspector general I troubled asset relief program and obligations available to be spent as of March 31, 2011. Table 2.1 lists 10 TARP subprograms, instead of all 13, because it excludes CAP (which was never funded) and summarizes three programs under “Automotive Industry Support Programs.” Cost Estimates Several Government agencies are responsible under EESA for generating cost estimates for TARP, including the Office of Management and Budget (“OMB”), the Congressional Budget Office (“CBO”), and Treasury, whose estimated costs are audited each year by the Government Accountability Office (“GAO”). Beginning with OMB’s August 2009 cost estimate of a $341 billion loss, the cost estimates have continued to decrease.9 On November 15, 2010, Treasury issued its fiscal year 2010 audited agency financial statements for TARP, which contained its cost estimate as of September 30, 2010.10 Treasury estimated that the ultimate cost of TARP would be Table 2.1 Obligations, Expenditures, and Obligations Available to Be Spent ($ Billions) Obligation Expenditure Available to Be Spent Housing Programs under TARP $45.6 $1.4 $44.3 CPP Program 204.9 204.9 0.0 CDCIa 0.6 0.2 0.0 SSFI 69.8 67.8 2.0 TIP 40.0 40.0 0.0 AGP 5.0 0.0 0.0 TALF 4.3 0.1 4.2 PPIP 22.4 16.0 6.4b UCSB 0.4 0.4 0.0 81.8 79.7 2.1 $474.8 $410.5 $58.9d Automotive Industry Support Programs (AIFP, ASSP, and AWCP)c Total Notes: Numbers may not total due to rounding. Obligation figures are as of 10/3/2010 and expenditure figures are as of 3/31/2011. a CDCI obligation amount of $570.1 million. There are no remaining dollars to be spent on CDCI. Of the total obligation, $363.3 million was related to CPP conversions for which no additional CDCI cash was expended and $100.7 million was for new CDCI expenditures for previous CPP participants. Of the total obligation, only $106.0 million went to non-CPP institutions. b Total obligation of $22.4 billion and expenditure of $16.0 billion for PPIP includes $356.3 million of the initial obligation to The TCW Group, Inc. (“TCW”) that was funded. TCW subsequently repaid the funds that were invested in its PPIF; however, these dollars are not included in the amount available to be spent. c Includes $80.7 billion for AIFP, $0.6 billion for AWCP, and $0.4 billion for ASSP. d The $5 billion reduction in exposure under AGP is not included in the expenditure total because this amount was not an actual cash outlay. Sources: Treasury, Transactions Report, 3/31/2011; Treasury, response to SIGTARP data call, 4/6/2011. quarterly report to congress I april 28, 2011 $78 billion, down from its previous cost estimates of $101 billion on May 31, 2010, and $105 billion on March 31, 2010. On February 14, 2011, OMB issued the Administration’s fiscal year 2012 budget proposal, which contained an estimated lifetime cost estimate for TARP of $48 billion. In calculating the estimate, OMB used data as of November 30, 2010.11 Postings on Treasury’s website indicate that Treasury appears to have adopted the $48 billion estimate in the Administration’s fiscal year 2012 budget.12 The $48 billion estimate assumes that all housing funds will be spent. On March 29, 2011, CBO issued an updated TARP cost estimate based on its evaluation as of March 3, 2011.13 CBO estimated that the ultimate cost of TARP would be $19 billion.14 The most recent TARP program cost estimates from each agency are listed in Table 2.2. According to Treasury, the highest losses from TARP are expected to come primarily from housing programs and assistance to the automotive industry.15 A notable difference exists between CBO’s estimate for TARP housing programs, which Table 2.2 Cost (gain) of TARP Programs ($ Billions) OMB Estimate, President’s FY 2012 Budget 2/14/2011 11/30/2010 $46 CBO Estimate 3/29/2011 3/3/2011 $13 Treasury Estimate, TARP Audited Agency Financial Statement 11/15/2010 9/30/2010 $46 CPP (6) (16) (11) SSFI 12 14 37 TIP and AGP (7) (7) (8) TALF 0 0 0 PPIP 0 0 (1) 20 14 15 * * * Program Name Report issued: Data as of: Housing Programs under TARP Automotive Industry Support Programsa Otherb Total $64 Interest on Reestimates e Adjusted Total $19 c $78d (16) $48d Notes: Numbers may not total due to rounding. a Includes AIFP, ASSP, and AWCP. b Consists of CDCI and UCSB, both of which have estimated costs between –$500 million and $500 million. c The estimate is before administrative costs and interest effects. d The estimate includes interest on reestimates but excludes administrative costs. e Cumulative interest on reestimates is an adjustment for interest effects of changes in TARP subsidy costs from original subsidy estimates; such amounts are a component of the deficit impacts of TARP programs but are not a direct programmatic cost. Sources: OMB Estimate—OMB, “Analytical Perspectives, Budget of the United States Government, Fiscal Year 2012,” 2/14/2011, www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/spec.pdf, accessed 3/21/2011; CBO Estimate—CBO, “Report on the Troubled Asset Relief Program–March 2011,” 3/2011, www.cbo.gov/ftpdocs/121xx/doc12118/03-29-TARP.pdf, accessed 3/30/2011; CBO, response to SIGTARP data call, 3/31/2011; Treasury Estimate—Treasury, “Office of Financial Stability Agency Financial Report–Fiscal Year 2010,” 9/30/2010, www.treasury.gov/initiatives/financial-stability/briefing-room/reports/agency_reports/ Documents/2010%20OFS%20AFR%20Nov%2015.pdf, accessed 4/12/2011. 37 38 special inspector general I troubled asset relief program Figure 2.1 CUMULATIVE TARP OBLIGATIONS, EXPENDITURES, REPAYMENTS, AND REDUCTIONS IN EXPOSURE ($ BILLIONS) assumes that only $13 billion of the $46 billion obligated will be spent, and Treasury’s and OMB’s continued assertions that all of the obligated funds will be expended.16 $500 400 $474.8 FINANCIAL OVERVIEW OF TARP $410.5 300 $263.7 200 100 0 TARP Obligationsa TARP Expendituresb TARP Repayments and Reductions in Exposurec Notes: Numbers may not total due to rounding. Obligations reported as of 10/3/2010. Expenditures and repayments and reductions in exposure reported as of 3/31/2011. a Treasury experienced a $2.6 billion loss on some investments under CPP. b Expenditure total does not include $5.0 billion for AGP as this amount was not an actual cash outlay. c Repayments include $179.1 billion for CPP, $40.0 billion for TIP, $29.6 billion for Auto Programs, $0.8 billion for PPIP, $9.1 billion for SSFI, and a $5 billion reduction in exposure for AGP. The $9.1 billion payment for SSFI includes amounts applied to (i) pay accrued preferred returns and (ii) redeem the outstanding liquidation amount. Sources: Treasury, Transactions Report, 3/31/2011; Treasury, response to SIGTARP data call, 4/6/2011. Common Stock: Equity ownership entitling an individual to share in corporate earnings and voting rights. The enactment of the Dodd-Frank Act reduced TARP’s maximum investment authority from $698.8 billion to $475.0 billion.17 The $698.8 billion represented the initial $700.0 billion authorized for TARP by EESA less a $1.2 billion reduction as a result of the Helping Families Save Their Homes Act of 2009.18 Treasury has obligated $474.8 billion of the $475.0 billion. Of the total obligations, $410.5 billion was expended as of March 31, 2011, through 13 announced programs intended to support U.S. financial institutions, companies, and individual mortgage borrowers.19 According to Treasury, as of March 31, 2011, 143 TARP recipients had paid back all of their principal or repurchased shares and 22 TARP recipients had partially repaid their principal or repurchased their shares, for a total of $263.7 billion including a $5.0 billion reduction in Government exposure under AGP.20 As of March 31, 2011, $146.8 billion of TARP funds remained outstanding, and $58.9 billion was still available to be spent.21 Figure 2.1 provides a snapshot of the cumulative obligations, expenditures, repayments, and exposure reductions as of March 31, 2011. As of March 31, 2011, the Government had also collected $37.0 billion in interest, dividends, and other income, including approximately $8.9 billion in proceeds from the sale of warrants and stock received as a result of exercised warrants.22 Most of the outstanding TARP money is in the form of equity ownership in troubled, or previously troubled, companies. Treasury (and therefore the taxpayer) remains a shareholder in companies that have not repaid the Government. Treasury’s equity ownership is largely in two forms — common and preferred stock — although it also has received debt in the form of senior subordinated debentures. Preferred Stock: Equity ownership that usually pays a fixed dividend before distributions for common stock owners but only after payments due to debt holders and depositors. It typically confers no voting rights. Preferred stock also has priority over common stock in the distribution of assets when a bankrupt company is liquidated. Senior Subordinated Debentures: Debt instrument ranking below senior debt but above equity with regard to investors’ claims on company assets or earnings. Senior debt holders are paid in full before subordinated debt holders are paid. There may be additional distinctions of priority among subordinated debt holders. 39 quarterly report to congress I april 28, 2011 As of March 31, 2011, obligated funds totaling $58.9 billion were still available to be drawn down by TARP recipients under five of TARP’s 13 announced programs.23 TARP’s component programs fall into four categories, depending on the type of assistance offered: • Homeowner Support Programs — These programs are intended to help homeowners who are having trouble making their mortgage payments by subsidizing loan modifications, loan servicer costs, potential equity declines, and incentives for foreclosure alternatives. • Financial Institution Support Programs — These programs share a common stated goal of stabilizing financial markets and improving the economy. • Asset Support Programs — These programs attempt to support asset values and market liquidity by providing funding to certain holders or purchasers of assets. • Automotive Industry Support Programs — These programs are intended to stabilize the U.S. automotive industry and promote market stability. Figure 2.2 shows how TARP funding is distributed among the four program categories. Homeowner Support Programs The stated purpose of TARP’s homeowner support programs is to help homeowners and financial institutions that hold troubled housing-related assets. Although Treasury originally committed to use $50.0 billion in TARP funds for these programs, it obligated only $45.6 billion.24 Figure 2.2 TARP OBLIGATIONS OUTSTANDING, REPAYMENTS, AND REDUCTIONS IN EXPOSURE BY SUPPORT CATEGORY ($ BILLIONS) $300 250 200 $233.2 150 100 50 • Making Home Affordable (“MHA”) Program — According to Treasury, this foreclosure mitigation effort is intended to “help bring relief to responsible homeowners struggling to make their mortgage payments, while preventing neighborhoods and communities from suffering the negative spillover effects of foreclosure, such as lower housing prices, increased crime, and higher taxes.”25 MHA, for which Treasury has obligated $29.9 billion, has many components, including several funded through TARP: the Home Affordable Modification Program (“HAMP”), the Federal Housing Administration (“FHA”) HAMP loan modification option for FHA-insured mortgages (“Treasury FHA-HAMP”), the U.S. Department of Agriculture Rural Housing Service’s Rural Development (“RD”) HAMP (“RD-HAMP”), and the Second Lien Modification Program (“2MP”).26 HAMP in turn encompasses various initiatives in addition to the modification of first-lien mortgages, including the Home Affordable Foreclosure Alternatives (“HAFA”) program, the Home Price Decline Protection (“HPDP”) program, the Home Affordable Unemployment Program (“UP”), and the Principal Reduction Alternative (“PRA”) program. HAMP is intended to help 0 $87.1 $45.6 $0.8 $26.2 Homeowner Financial Asset Support Institution Support a Programs Support Programsc Programsb $29.6 $52.2 Automotive Industry Support Programsd Repayments and Reductions in Exposure Obligations Outstanding Notes: Numbers may not total due to rounding. Obligations reported as of 10/3/2010. Expenditures, repayments, and reductions in exposure reported as of 3/31/2011. a Includes MHA. b CPP, CDCI, SSFI, TIP, and AGP. Repayments are composed of $179.1 billion for CPP, $40.0 billion for TIP, $9.1 billion for SSFI, and a $5.0 billion reduction in exposure under AGP. The $9.1 billion repayment for SSIF includes amounts applied to (i) pay accrued preferred returns and (ii) redeem the outstanding liquidation amount. c TALF, PPIP, and UCSB. Repayments are composed of $0.8 billion for PPIP. d AIFP, ASSP, and AWCP. Repayments are composed of $28.5 billion for AIFP, $0.4 billion for ASSP, and $0.6 billion for AWCP. Sources: Treasury, Transactions Report, 3/31/2011; Treasury, response to SIGTARP data call, 4/6/2011. 40 special inspector general I troubled asset relief program homeowners with mortgage modifications and foreclosure-prevention efforts.27 Additionally, part of the overall MHA obligation of $29.9 billion includes $2.7 billion to support the Treasury/FHA Second Lien Program (“FHA2LP”), which complements the FHA Short Refinance program and is intended to support the extinguishment of second-lien loans.28 As of March 31, 2011, HAMP had expended $1.1 billion of TARP money.29 Total expenditures in incentives and payments for HAFA were $19.1 million in connection with 5,253 deed-in-lieu and short sale transactions. Expenditures in incentives and payments for 2MP were $14.4 million in connection with 1,125 full extinguishments, 1,013 partial extinguishments, and 19,091 permanent modifications of second liens.30 As of March 31, 2011, there were 266,454 active permanent first-lien modifications under the completed TARP-funded portion of HAMP, an increase of 28,938 active permanent modifications over the past quarter.31 In addition, the Government-sponsored enterprises (“GSEs”) have provided 320,462 active permanent modifications, an increase of 36,348 over the past quarter.32 For more detailed information, including participation numbers for each of the MHA programs and subprograms, see the “Making Home Affordable Programs” discussion in this section. • Housing Finance Agency (“HFA”) Hardest-Hit Fund — The stated purpose of this program was to provide TARP funds to create “measures to help families in the states that have been hit the hardest by the aftermath of the burst of the housing bubble.”33 Treasury obligated $7.6 billion for this program in four increments: an initial amount of $1.5 billion made available on June 23, 2010; a second amount of $600.0 million made available on August 3, 2010; a third amount of $2.0 billion made available on September 23, 2010; and a final amount of $3.5 billion made available on September 29, 2010.34 As of March 31, 2011, $166.1 million had been drawn down by the states from the HardestHit Fund.35 See the “Making Home Affordable Programs” discussion in this section for more detailed information. • FHA Short Refinance — Treasury estimates that this program will use $10.8 billion of TARP funding, which includes approximately $8.1 billion to purchase a letter of credit to provide loss protection on refinanced first liens. Additionally, to facilitate the refinancing of new FHA-insured loans under this program, Treasury has allocated approximately $2.7 billion in TARP funds for incentive payments to servicers and holders of existing second liens for full or partial principal extinguishments under the related FHA2LP; these funds are part of the overall HAMP funding of $29.9 billion, as noted above.36 As of March 31, 2011, there had been 107 refinancings under the program.37 For more detailed information, see the “Making Home Affordable Programs” discussion in this section. quarterly report to congress I april 28, 2011 Financial Institution Support Programs Treasury primarily invests capital directly into the financial institutions it aids. For TARP purposes, financial institutions included banks, bank holding companies, and, if deemed critical to the financial system, some systemically significant institutions.38 • Capital Purchase Program (“CPP”) — Under CPP, Treasury directly purchased preferred stock or subordinated debentures in qualifying financial institutions (“QFIs”).39 CPP was intended to provide funds to “stabilize and strengthen the U.S. financial system by increasing the capital base of an array of healthy, viable institutions, enabling them [to] lend to consumers and business[es].”40 Treasury invested $204.9 billion in 707 institutions through CPP. According to Treasury, $179.1 billion in principal (or 87.4%) had been repaid as of March 31, 2011, leaving an outstanding balance of $25.9 billion.41 Of the repaid amount, $363.3 million was converted from CPP investments into CDCI and therefore still represents outstanding obligations to TARP.42 CPP closed on December 29, 2009.43 Treasury continues to manage its portfolio of CPP investments, including, for certain struggling institutions, converting its preferred equity ownership into a more junior form of equity ownership, often at a discount to par value (which may result in a loss) in an attempt to preserve some value that might be lost if these institutions were to fail. For more detailed information, see the “Capital Purchase Program” discussion in this section. • Community Development Capital Initiative (“CDCI”) — Under CDCI, Treasury used TARP money to buy preferred stock in or subordinated debt from Community Development Financial Institutions (“CDFIs”). Treasury intended for CDCI to “improve access to credit for small businesses in the country’s hardest-hit communities.”44 Under CDCI, TARP made capital investments in the preferred stock or subordinated debt of eligible banks, bank holding companies, thrifts, and credit unions.45 Eighty-four institutions have received $570.1 million in funding under CDCI.46 However, 28 of these institutions converted their existing CPP investment into CDCI ($363.3 million of the $570.1 million) and 10 of those that converted received combined additional funding of $100.7 million under CDCI.47 Only $106 million of CDCI money went to institutions that were not already TARP recipients. • Small Business Lending Fund (“SBLF”) — On September 27, 2010, the President signed into law the Small Business Jobs Act of 2010, which created the SBLF with a $30 billion authorization. The Administration intends for the fund to stimulate small-business lending.48 Under SBLF, Treasury invests capital in banks with less than $10 billion in assets in return for preferred shares or debt instruments, in a manner similar to that followed under CPP and CDCI, albeit with incentives to increase certain types of lending and with fewer governance provisions.49 On December 20, 2010, Treasury published Systemically Significant Institutions: Term referring to financial institutions whose failure would impose significant losses on creditors and counterparties, call into question the financial strength of similar institutions, disrupt financial markets, raise borrowing costs for households and businesses, and reduce household wealth (also commonly used to describe institutions considered “too big to fail”). Qualifying Financial Institutions (“QFIs”): Private and public U.S.-controlled banks, savings associations, bank holding companies, certain savings and loan holding companies, and mutual organizations. Community Development Financial Institutions (“CDFIs”): Financial institutions eligible for Treasury funding to serve urban and rural low-income communities through the CDFI Fund. CDFIs were created in 1994 by the Riegle Community Development and Regulatory Improvement Act. These entities must be certified by Treasury; certification confirms that they target at least 60% of their lending and other economic development activities to areas underserved by traditional financial institutions. 41 42 special inspector general I troubled asset relief program Special Purpose Vehicle (“SPV”): Off-balance-sheet legal entity that holds transferred assets presumptively beyond the reach of the entities providing the assets, and is legally isolated. terms under which CPP and CDCI recipients are permitted to refinance into SBLF.50 Although this program operates outside of TARP, many TARP recipients will likely convert their investments from CPP to SBLF and thus could benefit from lower dividend rates, non-cumulative dividends, and the removal of rules on executive compensation and luxury expenditures.51 As of March 31, 2011, the original application deadline for banks, Treasury had received 542 applications, of which 250 were from existing TARP recipients (including one current CDCI participant) that had applied to refinance their investments under SBLF. Treasury has extended the application deadline for banks to May 16, 2011. For more detailed information, see the “Small-Business Lending Initiatives” discussion in this section. • Systemically Significant Failing Institutions (“SSFI”) Program — SSFI enabled Treasury to invest in systemically significant institutions to prevent them from failing.52 Only one firm received SSFI assistance: American International Group, Inc. (“AIG”). There were two TARP investments in AIG. On November 25, 2008, Treasury bought $40 billion of AIG’s preferred stock, the proceeds of which were used to repay a portion of AIG’s debt to the Federal Reserve Bank of New York (“FRBNY”). Then, on April 17, 2009, Treasury obligated approximately $29.8 billion to an equity capital facility that AIG has been allowed to draw on as needed.53 On January 14, 2011, AIG executed its previously announced Recapitalization Plan with Treasury, FRBNY, and the AIG Credit Facility Trust (“AIG Trust”). According to Treasury, the intent of the restructuring was to facilitate the repayment of AIG’s government loans and investments.54 In carrying out the Recapitalization Plan: 0 AIG repaid and terminated its revolving credit facility with FRBNY with cash proceeds that it had received from sales of equity interests in two companies: American International Assurance Co., Ltd. (“AIA”) and American Life Insurance Company (“ALICO”).55 0 AIG redeemed FRBNY’s remaining $6.1 billion interest in the special purpose vehicles (“SPVs”) that hold AIA and ALICO.56 AIG next drew down an additional $20.3 billion in available TARP funds from the equity capital facility and purchased an equivalent amount of FRBNY’s preferred interest in the SPVs; AIG then provided the preferred interest to Treasury. AIG designated its remaining $2 billion TARP equity capital facility to a new Series G standby equity commitment available for general corporate purposes.57 0 AIG issued common stock in exchange for the preferred shares held by Treasury and the AIG Trust. The conversion of the TARP preferred stock increased the Government’s total common equity ownership in AIG from 79.8% to approximately 92.1%.58 quarterly report to congress I april 28, 2011 On March 8, 2011, AIG sold its equity interests in MetLife, Inc., for $9.6 billion, repaying Treasury $6.9 billion from the proceeds, which included a $300.0 million expense reserve related to the sale of ALICO to MetLife. The remaining $3.0 billion was placed in escrow for obligations that may be owed to MetLife as required by the terms of the ALICO sale.59 This transaction repaid the ALICO SPV balance and, according to Treasury, reduced Treasury’s remaining preferred interest in the AIA SPV to $11.3 billion.60 For more detailed information, see the “Systemically Significant Failing Institutions Program” discussion in this section. • Targeted Investment Program (“TIP”) — Through TIP, Treasury invested in financial institutions it deemed critical to the financial system.61 There were two expenditures under this program, totaling $40 billion — the purchases of $20 billion each of senior preferred stock in Citigroup Inc. (“Citigroup”) and Bank of America Corp. (“Bank of America”).62 Treasury also accepted common stock warrants from each, as required by EESA. Both banks fully repaid Treasury for its TIP investments.63 Treasury auctioned its Bank of America warrants on March 3, 2010, and auctioned its Citigroup warrants on January 25, 2011.64 For more information on these two transactions, see the “Targeted Investment Program and Asset Guarantee Program” discussion in this section. • Asset Guarantee Program (“AGP”) — AGP was designed to provide insurance-like protection for a select pool of mortgage-related or similar assets held by participants whose portfolios of distressed or illiquid assets threatened market confidence.65 Treasury, the Federal Deposit Insurance Corporation (“FDIC”), and the Federal Reserve offered certain loss protections in connection with $301 billion in troubled Citigroup assets.66 In exchange for providing the loss protection, Treasury received $4 billion of preferred stock that was later converted to trust preferred securities (“TRUPS”) on a dollar-for-dollar basis. The FDIC received $3 billion of preferred stock that was similarly converted.67 On December 23, 2009, in connection with Citigroup’s TIP repayment, Citigroup and the Government terminated the AGP agreement. Under the agreement, Treasury’s guarantee commitment was terminated with no loss to the Government. In addition, Treasury agreed to cancel $1.8 billion of the TRUPS issued by Citigroup, reducing the amount of preferred stock from $4.0 billion to $2.2 billion, in exchange for early termination of the guarantee. Additionally, the FDIC and Treasury agreed that at the close of Citigroup’s participation in the FDIC’s Temporary Liquidity Guarantee Program, the FDIC will transfer to Treasury $800 million of TRUPS that it retained as a premium, if no loss is suffered.68 On September 30, 2010, Treasury announced the sale of all of its TRUPS for $2.2 billion in gross proceeds, which represents a profit to taxpayers.69 On January 25, 2011, Treasury auctioned for $67.2 million the warrants it had received from Citigroup under AGP.70 For more information on this Senior Preferred Stock: Shares that give the stockholder priority dividend and liquidation claims over junior preferred and common stockholders. Illiquid Assets: Assets that cannot be quickly converted to cash. Trust Preferred Securities (“TRUPS”): Securities that have both equity and debt characteristics, created by establishing a trust and issuing debt to it. 43 44 special inspector general I troubled asset relief program program, see the “Targeted Investment Program and Asset Guarantee Program” discussion in this section. Asset Support Programs Asset-Backed Securities (“ABS”): Bonds backed by a portfolio of consumer or corporate loans, e.g., credit card, auto, or small-business loans. Financial companies typically issue ABS backed by existing loans in order to fund new loans for their customers. Commercial Mortgage-Backed Securities (“CMBS”): Bonds backed by one or more mortgages on commercial real estate (e.g., office buildings, rental apartments, hotels). Legacy Securities: Real estate-related securities originally issued before 2009 that remained on the balance sheets of financial institutions because of pricing difficulties that resulted from market disruption. Non-Agency Residential MortgageBacked Securities (“non-agency RMBS”): Financial instruments backed by a group of residential real estate mortgages (i.e., home mortgages for residences with up to four dwelling units) not guaranteed or owned by a Government-sponsored enterprise (“GSE”) or a Government agency. The stated purpose of these programs was to support the liquidity and market value of assets owned by financial institutions. These assets included various classes of asset-backed securities (“ABS”) and several types of loans. Treasury’s asset support programs sought to bolster the balance sheets of financial firms and help free capital so that these firms could extend more credit to support the economy. • Term Asset-Backed Securities Loan Facility (“TALF”) — TALF was originally designed to increase credit availability for consumers and small businesses through a $200 billion Federal Reserve loan program. TALF provided investors with non-recourse loans secured by certain types of ABS, including credit card receivables, auto loans, equipment loans, student loans, floor plan loans, insurance-premium finance loans, loans guaranteed by the Small Business Administration (“SBA”), residential mortgage servicing advances, and commercial mortgage-backed securities (“CMBS”).71 The last subscription for newly issued CMBS was settled on June 28, 2010; this marked the program’s closure to new loans.72 TALF ultimately provided $71.1 billion in Federal Reserve financing. Of that amount, as of March 31, 2011, $19.2 billion remained outstanding.73 FRBNY facilitated 13 TALF subscriptions of non-mortgage-related ABS over the life of the program totaling approximately $59.0 billion, with $15.5 billion of TALF borrowings outstanding as of March 31, 2011.74 FRBNY also conducted 13 CMBS subscriptions totaling $12.1 billion, with $3.7 billion in loans outstanding as of March 31, 2011.75 Treasury originally obligated $20 billion of TARP funds to support this program by providing loss protection to the loans extended by FRBNY in the event that a borrower surrendered the ABS collateral and walked away from the loan.76 As of March 31, 2011, there had been no surrender of collateral.77 Treasury reduced its obligation for TALF to $4.3 billion based on the amount of loans outstanding at the end of the active lending phase of the program in June 2010. As of March 31, 2011, $15.8 million in TARP funds had been allocated under TALF for administrative expenses.78 For more information on these activities, see the “TALF” discussion in this section. • Public-Private Investment Program (“PPIP”) — PPIP’s goal was to restart credit markets by using a combination of private equity, matching Government equity, and Government debt to purchase legacy securities, i.e., CMBS and non-agency residential mortgage-backed securities (“non-agency RMBS”).79 Under the program, eight Public-Private Investment Funds (“PPIFs”) managed by private asset managers invested in non-agency RMBS and CMBS. Although Treasury initially pledged up to $30.0 billion for PPIP, the obligation is now quarterly report to congress I april 28, 2011 limited to $22.4 billion.80 As of March 31, 2011, the PPIFs had drawn down $16.0 billion in debt and equity financing from Treasury funding out of the total obligation, which includes $840.5 million that has been repaid.81 As the PPIFs continue to make purchases, they will continue to have access to draw down the remaining funding through the end of their respective investment periods, the last of which will close in December 2012.82 For details about the program structure and fund-manager terms, see the “Public-Private Investment Program” discussion in this section. • Unlocking Credit for Small Businesses (“UCSB”)/Small Business Administration (“SBA”) Loan Support Initiative — In March 2009, Treasury officials announced that Treasury would buy up to $15 billion in securities backed by SBA loans under UCSB.83 Treasury entered into agreements with two pool assemblers, Coastal Securities, Inc. (“Coastal Securities”), and Shay Financial Services, Inc. (“Shay Financial”).84 Under the agreements, Treasury’s agent, Earnest Partners, purchased SBA pool certificates from Coastal Securities and Shay Financial without confirming to the counterparties that Treasury was the buyer.85 Treasury obligated a total of $400.0 million for UCSB and made purchases of $368.1 million in securities under the program. For more information on the program, see the discussion of “Unlocking Credit for Small Businesses/Small Business Administration Loan Support” in this section. Automotive Industry Financing Program (“AIFP”) TARP’s automotive industry support through AIFP aimed to “prevent a significant disruption of the American automotive industry, which would pose a systemic risk to financial market stability and have a negative effect on the economy of the United States.”86 Through AIFP, Treasury made emergency loans to Chrysler Holding LLC (“Chrysler”), Chrysler Financial Services Americas LLC (“Chrysler Financial”), and General Motors Company (“GM”). Additionally, Treasury bought senior preferred stock from GMAC Inc. (“GMAC”), which was later renamed Ally Financial Inc. (“Ally Financial”), and assisted Chrysler and GM during their bankruptcy restructurings. Treasury initially allocated $84.8 billion to AIFP, then reduced the total obligation to $81.8 billion.87 As of March 31, 2011, $79.7 billion had been disbursed through AIFP and $29.6 billion in principal had been repaid. These investments paid an additional $3.8 billion in dividends, interest, and fees.88 These figures include the amounts related to AIFP, ASSP, and AWCP. With respect to AIFP support to GM, in return for a total of $49.5 billion in loans, Treasury received $6.7 billion in debt in GM (which was subsequently repaid), in addition to $2.1 billion in preferred stock and a 60.8% common equity stake.89 On December 2, 2010, GM closed an initial public offering in which Treasury sold a portion of its ownership stake for $13.5 billion in net proceeds, SBA Pool Certificates: Ownership interest in bonds backed by SBA-guaranteed loans. 45 46 special inspector general I troubled asset relief program reducing its ownership percentage to 33.3% (an amount that could be diluted should GM’s bondholders or the United Auto Workers Retiree Medical Benefits Trust exercise warrants they received).90 On December 15, 2010, GM repurchased the $2.1 billion in preferred stock from Treasury. On March 31, 2011, GM made a debt payment of $50 million. Treasury’s remaining investment in GM as of March 31, 2011, was approximately $27.1 billion.91 On April 5, 2011, GM made a debt payment of $45 million; Treasury’s investment in GM remains approximately $27.1 billion. With respect to AIFP support to Chrysler, Treasury provided $12.5 billion in loan commitments to Chrysler, Inc. (“Old Chrysler”), and Chrysler Group LLC (“New Chrysler”), of which $2.1 billion remains available to be drawn down. Treasury also received a 9.9% equity stake, which was diluted to 9.2% on January 10, 2011, when Fiat increased its ownership interest by meeting certain performance metrics.92 Fiat further increased its ownership in New Chrysler to 30% on April 12, 2011, after New Chrysler surpassed an international sales and revenue target and reached a pact to expand its presence through 90% of Fiat dealerships in Latin America. Following this increase in Fiat’s ownership stake in New Chrysler, Treasury’s equity ownership interest in New Chrysler’s common equity decreased from 9.2% to 8.6% and may be diluted further.93 With respect to AIFP support to Ally Financial, Treasury invested a total of $17.2 billion. On December 30, 2010, Treasury’s investment was restructured to provide for a 73.8% common equity stake, $2.7 billion in TRUPS (including amounts received in warrants that were immediately converted into additional securities), and $5.9 billion in mandatorily convertible preferred shares.94 Treasury sold the $2.7 billion in TRUPS on March 2, 2011.95 On March 31, 2011, Ally Financial announced that it had filed a registration statement with the Securities and Exchange Commission (“SEC”) for a proposed initial public offering of common stock owned by Treasury. The timing of the offering, the number of shares to be offered, and the price range had yet to be determined.96 Treasury provided a $1.5 billion loan to Chrysler Financial, which was fully repaid with interest in July 2009.97 For details on assistance to these companies, see the “Automotive Industry Support Programs” discussion in this section. AIFP also included two subprograms: • Auto Supplier Support Program (“ASSP”) — According to Treasury, this program was intended to provide auto suppliers “with the confidence they need to continue shipping their parts and the support they need to help access loans to pay their employees and continue their operations.”98 The original allocation of $5.0 billion was reduced to $3.5 billion — $1.0 billion for Chrysler and $2.5 billion for GM.99 Of the $3.5 billion available, only $413.1 million was quarterly report to congress I april 28, 2011 borrowed.100 After purchasing substantially all of the assets of Old GM and Old Chrysler, New GM and New Chrysler assumed the debts associated with ASSP.101 After repayment of all funds expended under ASSP, along with $115.9 million in interest, fees, and other income, ASSP ended on April 5, 2010, for GM and on April 7, 2010, for Chrysler.102 For more information, see the “Auto Supplier Support Program” discussion in this section. • Auto Warranty Commitment Program (“AWCP”) — This program was designed to bolster consumer confidence by guaranteeing Chrysler and GM vehicle warranties during the companies’ restructuring through bankruptcy. It ended in July 2009 after Chrysler fully repaid its AWCP loan of $280.1 million with interest and GM repaid just the principal — $360.6 million — of its loan.103 The following tables and figures summarize the status of TARP and TARPrelated initiatives: • • • • Table 2.3 — total funds subject to SIGTARP oversight as of March 31, 2011 Table 2.4 — obligations/expenditures by program as of March 31, 2011 Table 2.5 and Table 2.6 — summary of TARP terms and agreements Table 2.7 — summary of largest warrant positions held by Treasury, by program, as of March 31, 2011 • Table 2.8 — summary of dividends, interest payments, and fees received, by program, as of March 31, 2011 For a report of all TARP purchases, obligations, expenditures, and revenues, see Appendix C: “Reporting Requirements.” 47 48 special inspector general I troubled asset relief program Table 2.3 TOTAL FUNDS SUBJECT TO SIGTARP OVERSIGHT, AS OF 3/31/2011 ($ BILLIONS) Program Brief Description or Participant Total Funding ($) TARP Funding ($) Capital Purchase Program (“CPP”) CLOSED Investments in 707 banks; received $179.1 billion in principal repayments $204.9 ($179.1) $204.9 ($179.1) Automotive Industry Financing Program (“AIFP”) GM, Chrysler, GMAC, Chrysler Financial; received $28.5 billion in loan repayments 80.7 (28.5) 80.7 (28.5) Auto Supplier Support Program (“ASSP”) CLOSED Government-backed protection for auto parts suppliers; received $0.4 billion in loan repayments 0.4a (0.4) 0.4a (0.4) Auto Warranty Commitment Program (“AWCP”) CLOSED Government-backed protection for warranties of cars sold during the GM and Chrysler bankruptcy restructuring periods 0.6 (0.6) 0.6 (0.6) Unlocking Credit for Small Businesses (“UCSB”) Purchase of securities backed by SBA loans 0.4b 0.4b Systemically Significant Failing Institutions (“SSFI”) AIG Investment; received $9.1 billion in repayments 69.8 (9.1)c 69.8 (9.1)c Targeted Investment Program (“TIP”) CLOSED Citigroup, Bank of America investments 40.0 (40.0) 40.0 (40.0) Asset Guarantee Program (“AGP”) CLOSED Citigroup, ring-fence asset guarantee 301.0 (301.0) 5.0 (5.0) Term Asset-Backed Securities Loan Facility FRBNY non-recourse loans for purchase of asset-backed (“TALF”) securities 71.1 (51.9) 4.3d (0.0) Housing Programs under TARP Modification of mortgage loans 70.6e 45.6f Community Development Capital Initiative (“CDCI”) CLOSED Investments in Community Development Financial Institutions (“CDFIs”) 0.6 0.6 29.8g (0.8) 22.4h (0.8) $869.9 $474.8 Public-Private Investment Program (“PPIP”) Disposition of legacy assets; Legacy Securities Program Total Obligations Notes: Numbers may not total due to rounding. Numbers in red represent repayments and reductions in exposure as of 3/31/2011. a Treasury’s original commitment under this program was $5 billion, which was reduced to $3.5 billion effective 7/1/2009. Of the $3.5 billion available, only $413 million was borrowed. b Treasury reduced commitment from $15 billion to an obligation of $400 million. c The $9.1 billion repayment for SSFI includes amounts applied to (i) pay accrued preferred returns and (ii) redeem the outstanding liquidation amount. d Treasury reduced obligation from $20 billion to $4.3 billion. e Program was initially announced as a $75 billion initiative with $50 billion funded through TARP. Treasury reduced the commitment from $50 billion to an obligation of $45.6 billion; therefore, including the $25 billion estimated to be spent by the Government-sponsored Enterprises (“GSEs”), the total program amount is $70.6 billion. f Treasury reduced commitment from $50 billion to an obligation of $45.6 billion. g PPIP funding includes $7.4 billion of private-sector equity capital. Includes $0.4 billion of initial obligations to The TCW Group, Inc., which has been repaid. h Treasury reduced commitment from $30 billion to approximately $22.4 billion in debt and equity obligations to the Public-Private Investment Funds. Sources: Treasury, Transactions Report, 3/31/2011; Treasury Press Release, “U.S. Government Finalizes Terms of Citi Guarantee Announced in November,” 1/16/2009, www.treasury.gov/press-center/pressreleases/Pages/hp1358.aspx, accessed 6/8/2009; FRBNY, response to SIGTARP data call, 4/6/2011; Treasury, “Making Home Affordable Updated Detailed Program Description,” 3/4/2009, www.treasury. gov/press-center/press-releases/Documents/housing_fact_sheet.pdf, accessed 7/2/2010; Treasury, “Legacy Securities Public-Private Investment Program, Program Update – Quarter Ended September 30, 2010,” 10/20/2010, www.treasury.gov/initiatives/financial-stability/investment-programs/ppip/Documents/External%20Report%20-%2009-10%20vFinal.pdf, accessed 1/13/2011. quarterly report to congress I april 28, 2011 Table 2.4 obligation/EXPENDITURE LEVELS BY PROGRAM, AS OF 3/31/2011 ($ BILLIONS) Amount Percent (%) Released Immediately 250.0 52.6% Released Under Presidential Certificate of Need 100.0 21.1% Released Under Presidential Certificate of Need & Resolution to Disapprove Failed 350.0 73.7% (1.2) -0.3% (223.8) -47.1% $475.0 100.0% Obligation Obligation as Percent of Released Repaid/ Reduced Exposure Capital Purchase Program (“CPP”): $204.9 43.1% ($179.1) CPP Total Gross $204.9 43.1% ($179.1) Authorized Under EESA $700.0 Helping Families Save Their Home Act of 2009 The Dodd-Frank Act Total Released Less: Obligations by Treasury under TARPa Community Development Capital Initiative (“CDCI”): $0.6 — CDCI Total $0.6 0.1% — $69.8 14.7% ($9.1) $69.8 14.7% ($9.1) $20.0 4.2% ($20.0) 20.0 4.2% (20.0) $40.0 8.4% ($40.0) $5.0 1.1% ($5.0) $5.0 1.1% ($5.0) $4.3 0.9% — TALF Total $4.3 0.9% — Unlocking Credit for Small Businesses (“UCSB”): $0.4 0.1% UCSB Total $0.4 0.1% — $49.5 10.4% ($22.4) General Motors Acceptance Corporation LLC (“GMAC”) 17.2 3.6% (2.7) Chrysler Holding LLC 12.5 2.6% (1.9) Obligation Outstanding Section Reference “Financial Institution $25.9 Support Programs” “Financial Institution $0.6 Support Programs” Systemically Significant Failing Institutions (“SSFI”) Program: American International Group, Inc. (“AIG”)b SSFI Total b $60.7 “Financial Institution Support Programs” Targeted Investment Program (“TIP”): Bank of America Corporation Citigroup, Inc. TIP Total “Financial Institution Support Programs” — Asset Guarantee Program (“AGP”): Citigroup, Inc.c AGP Total “Financial Institution Support Programs” — Term Asset-Backed Securities Loan Facility (“TALF”): TALF LLC $4.3 $0.4 “Asset Support Programs” “Asset Support Programs” Automotive Industry Financing Program (“AIFP”): General Motors Corporation (“GM”) Chrysler Financial Services Americas LLCd AIFP Total 1.5 0.3% (1.5) $80.7 17.0% (28.5) “Automotive Industry Support Programs” $52.2 Continued on next page. 49 50 special inspector general I troubled asset relief program obligation/Expenditure Levels by Program, as of 03/31/2011 (Billions) (Continued) Less: Obligations by Treasury under TARPa Obligation Obligation as Percent of Released Repaid/ Reduced Exposure $0.3 0.1% ($0.3) 0.1 0.0% (0.1) $0.4 0.1% ($0.4) $0.4 0.1% ($0.4) 0.3 0.1% (0.3) $0.6 0.1% ($0.6) Obligation Section Outstanding Reference Automotive Supplier Support Program (“ASSP”): GM Suppliers Receivables LLCe Chrysler Holding LLC e ASSP Total “Automotive Industry Support Programs” — Automotive Warranty Commitment Program (“AWCP”): General Motors Corporation (“GM”) Chrysler Holding LLC AWCP Total “Automotive Industry Support Programs” — Legacy Securities Public-Private Investment Program (“PPIP”) $2.6 0.5% ($0.5) Wellington Management Legacy Securities PPIF Master Fund, LP Invesco Legacy Securities Master Fund, L.P. 3.4 0.7% — AllianceBernstein Legacy Securities Master Fund, L.P. 3.5 0.7% — Blackrock PPIF, L.P. 2.1 0.4% — AG GECC PPIF Master Fund, L.P. 3.7 0.8% — RLJ Western Asset Public/Private Master Fund, L.P. 1.9 0.4% — Marathon Legacy Securities Public-Private Investment Partnership, L.P. 1.4 0.3% — Oaktree PPIP Fund, L.P. 3.5 0.7% — UST/TCW Senior Mortgage Securities Fund, L.P. 0.4 0.1% ($0.4) $22.4 4.7% ($0.8) $6.3 1.3% — 5.1 1.1% — J.P.Morgan Chase Bank, NA 3.2 1.3% — OneWest Bank 1.8 0.4% — f PPIP Total “Asset Support Programs” $21.6 Making Home Affordable (“MHA”): Home Affordable Modification Program (“HAMP”) Countrywide Home Loans Servicing LP Wells Fargo Bank, NA Bank of America, N.A. 1.6 0.3% — GMAC Mortgage, Inc. 1.5 0.3% — American Home Mortgage Servicing, Inc 1.3 0.3% — CitiMortgage, Inc. 1.1 0.2% — Litton Loan Servicing LP 1.1 0.2% — 6.8 1.4% — Housing Finance Agency: Hardest Hit Funds Program (“HFA”) 7.6 1.6% — Treasury FHA Refinance 8.1 1.7% — $45.6 9.6% — $474.8 100.0% Other Financial Institutions MHA Total TARP Obligations Subtotal TARP Repayments/Reductions in Exposure Subtotal TARP Obligations Outstanding Subtotal “Homeowner Support Programs” $45.6 ($263.7) $211.2 quarterly report to congress I april 28, 2011 obligation/Expenditure Levels by Program, as of 03/31/2011 (Billions) (Continued) Notes: Numbers may not total due to rounding. From a budgetary perspective, what Treasury has obligated to spend (e.g., signed agreements with TARP fund recipients). b The $9.1 billion repayment for SSFI includes amounts applied to (i) pay accrued preferred returns and (ii) redeem the outstanding liquidation amount. c Treasury committed $5 billion to Citigroup under AGP; however, the funding was conditional based on losses that could potentially be realized and may potentially never be expended. This amount was not an actual outlay of cash. d Treasury’s $1.5 billion loan to Chrysler Financial represents the maximum loan amount. The loan was incrementally funded until it reached the maximum amount of $1.5 billion on 4/9/2009. e Represents an SPV created by the manufacturer. Balance represents the maxiumum loan amount, which will be funded incrementally. Treasury’s original commitment under this program was $5 billion, but subsequently reduced to $3.5 billion effective 7/1/2009. Of the $3.5 billion available, only $413 million was borrowed. f Treasury selected nine fund management firms to establish PPIFs. One PPIF manager, The TCW Group, Inc., subsequently withdrew. According to Treasury, the current PPIP obligation is $22.4 billion; this includes $365.25 million of an initial obligation to TCW that was funded. TCW repaid the funds that were invested in their PPIF. a Sources: Emergency Economic Stabilization Act, P.L. 110-343, 10/3/2008; Library of Congress, “A joint resolution relating to the disapproval of obligations under the Emergency Economic Stabilization Act of 2008,” 1/15/2009, www.thomas.loc.gov, accessed 1/25/2009; Helping Families Save Their Homes Act of 2009, P.L. 111-22, 5/20/2009; Treasury, Transactions Report, 3/31/2011; Treasury, Transactions Report — Housing Programs, 3/30/2011; Treasury, response to SIGTARP data call, 4/6/2011; Treasury, Section 105(a) Report, 8/10/2010. 51 52 special inspector general I troubled asset relief program Table 2.5 DEBT AGREEMENTS TARP Program Company CPP – 52 QFIs S Corps AIFP General Motors AIFP General Motors AIFP AIFP AIFP Chrysler Chrysler Financial Chrysler Date of Cost Agreement Assigned 1/14/2009a $0.5 billion Description of Investment Investment Information Interest / Dividends Term of Agreement Senior Subordinated Securities Each QFI may issue senior securities 7.7% for first 5 years; with an aggregate principal amount of 13.8% thereafter 1% – 3% of its risk-weighted assets, but not to exceed $25 billion. 30 years Senior Subordinated Security Warrants that are exercised immediately Treasury will receive warrants to 13.8% purchase an amount equal to 5% of the senior securities purchased on the date of investment. 30 years Debt Obligation with 12/31/2008 $19.8 billionb Warrants and Additional Note This loan was funded incrementally; $4 billion funded on 12/31/2008, $5.4 billion funded on 1/21/2009, and $4 billion funded on 2/17/2009. Subsequently, this loan was then amended; $2 billion on 4/22/2009 and $4 billion on 5/20/2009 (General Advances). In addition, on 5/27/2009, $361 million was set aside in an SPV for the AWCP (Warranty Advances). 1/16/2009 Debt Obligation This loan was exchanged for a portion of GM’s common equity interest in GMAC LLC on 5/29/2009. See 3-month LIBOR + 3% “Equity Agreement” table for more information. Debt Obligation with Additional Note Loan of $4 billion; Additional note of $267 million (6.67% of the maximum loan amount). Subsequently, this loan was then amended; $500 million on 4/29/2009, this amount was never drawn and subsequently de-obligated (General Advances). In addition, on 4/29/2009, $280 million was set aside in an SPV for the AWCP, this advance was repaid (Warrant Advances). Debt Obligation with Additional Note Loan was funded incrementally at $100 million per week until it reached the maximum amount of $1.5 billion LIBOR + 1% for first on 4/9/2009. Additional note is $75 year LIBOR + 1.5% for 1/16/2014 million (5% of total loan size), which remaining years vests 20% on closing and 20% on each anniversary of closing. Debt Obligation with Additional Note Loan of $3.0 billion committed to Chrysler for its bankruptcy period. Subsequently, this loan was (i) the greater of (a) amended; $757 million was added on 3-month Eurodollar or (b) 2% plus (ii) 3.0% 5/20/2009. Treasury funded $1.9 billion during bankruptcy period. The remaining amount will be de-obligated. 1/2/2009c 1/16/2009 5/1/2009 $0.9 billion $4.8 billionb $1.5 billion $3.8 billion For General Advances— (i) the greater of (a) 3-month LIBOR or (b) 2% plus (ii) 3%; For Warrant Advances (i) the greater 12/29/2011 of (a) 3-month LIBOR for the related interest period or (b) 2% plus (ii) 3.5% 1/16/2012 For General Advances— (i) the greater of (a) 3-month LIBOR or (b) 2% plus (ii) 3%; For Warrant Advances (i) the greater 1/2/2012 of (a) 3-month LIBOR for the related interest period or (b) 2% plus (ii) 3.5% 9/30/2009, subject to certain conditions Continued on next page. quarterly report to congress I april 28, 2011 DEBT AGREEMENTS TARP Program Company AIFP AIFP PPIP CDCI – Credit Unions Chrysler General Motors All All CDCI – All S Corps (CONTINued) Date of Cost Agreement Assigned Description of Investment 5/27/2009 Commitment to New CarCo Acquisition LLC (renamed Chrysler Group LLC on or about 6/10/2009) of up to $6.6 billion. The total loan amount is up to $7.1 billion including $500 million of debt assumed Debt Obligation with from Treasury’s 1/2/2009 credit Additional Note, Equity agreement with Chrysler Holding LLC. Interest The debt obligations are secured by a first priority lien on the assets of New CarCo Acquisition LLC (the company that purchased Chrysler LLC’s assets in a sale pursuant to Section 363 of the Bankruptcy Code). 6/3/2009, amended 7/10/2009 9/30/2009 and later $6.6 billion $30.1 billion $20 billion Debt Obligation with Additional Note Debt Obligation with Contingent Interest Promissory Note Investment Information Original $30.1 billion funded. Amended loan documents provided that $986 million of the original DIP loan was left for the old GM. In addition $7.1 billion was assumed by New GM of which $0.4 billion was repaid resulting in $6.7 billion remaining outstanding. Each of the loans will be funded incrementally, upon demand by the fund manager. Interest / Dividends Term of Agreement For $2 billion: (i) The 3-month Eurodollar rate, plus (ii) (a) 5% or, on loans extended past the original maturity date, (b) 6.5%. For $5.1 billion note: (i) The 3-month Eurodollar Rate plus 7.91% and (ii) an additional $17 million in PIK interest per quarter. For other notes: 3-month Eurodollar rate plus 7.91%. For $2 billion note: 12/10/2011; provided that issuer may extend maturity for up to $400 million of principal to 6/10/2017. For other notes: 6/10/2017. Originally, (i) the greater of (a) 3-Month Eurodollar or (b) 2% plus (ii) 3.0%. For amounts assumed by New GM, the interest rates became (i) the greater of (a) 3-month Eurodollar or (b) 2% plus (ii) 5%. Originally 10/31/2009, for amounts assumed by New GM, June 10, 2015, subject to acceleration. LIBOR + 1% The debt obligation for each fund matures at the earlier of the dissolution of the fund or 10 years. Each QCU may issue CDCI Senior Securities with an aggregate principal Subordinated Debt for amount equal to not more than 3.5% 2% for first 8 years, 9% Credit Unions of its total assets and not more than thereafter 50% of the capital and surplus of the QCU. Each QFI may issue CDCI Senior Securities with an aggregate principal amount equal to not more than 5% of (i), if the QFI is a Certified Entity the risk-weighted assets of the QFI, or Subordinated Debt for 3.1% for first 8 years, (ii), if the QFI is not a Certified Entity, S Corps 13.8% thereafter the sum of the RWAs of each of the Certified Entities, in each case less the aggregate capital or, as the case may be, principal amount of any outstanding TARP assistance of the QFI. Notes: Numbers affected by rounding. a Announcement date of CPP S-Corporation Term Sheet. b Amount includes AWCP commitments. c Date from Treasury’s 1/27/2009 Transactions Report. The Security Purchase Agreement has a date of 12/31/2008. Sources: Treasury, “Loan and Security Agreement By and Between General Motors Corporation as Borrower and The United States Department of Treasury as Lender Dated as of December 31, 2008,” 12/31/2008; Treasury, “General Motors Corporation, Indicative Summary of Terms for Secured Term Loan Facility,” 12/19/08; Treasury, “General Motors Promissory Note,” 1/16/2009; Treasury, “Loan and Security Agreement By and Between Chrysler Holding LLC as Borrower and The United States Department of Treasury as Lender Dated as of December 31, 2008.” 12/31/2008, Treasury, “Chrysler, Indicative Summary of Terms for Secured Term Loan Facility,” 12/19/2008; Treasury, “Chrysler LB Receivables Trust Automotive Industry Financing Program, Secured Term Loan, Summary of Terms,” 1/16/2009; OFS, response to SIGTARP draft report, 1/30/2009; Treasury, Transactions Report, 9/30/2010; Treasury, response to SIGTARP data call, 10/7/2010; Treasury’s “TARP Community Development Capital Initiative Program Agreement, CDFI Bank / Thrift Senior Preferred Stock, Summary of CDCI Senior Preferred Terms,” 4/26/2010; Treasury’s “TARP Community Development Capital Initiative CDFI Credit Unions Senior Securities Summary of Terms of CDCI Senior Securities,” 4/26/2010; Treasury’s “TARP’s Community Development Capital Initiative CDFI Subchapter S Corporation Senior Securities Summary of Terms of CDCI Senior Securities,” 4/26/2010. 53 54 special inspector general I troubled asset relief program Table 2.6 Equity Agreements TARP Program Company Date of Agreement CPP – Public 10/14/2008a and later CPP – Private SSFI SSFI TIP 286 QFIs 369 QFIs American International Group, Inc. American International Group, Inc. 11/17/2008b and later 4/17/2009 4/17/2009 Citigroup Inc. 12/31/2008 Cost Assigned $200.1 billion $4 billion $41.6 billionc $29.8 billiond $20.0 billione Description of Investment Investment Information Dividends Senior Preferred Equity 1-3% of risk-weighted assets, not to exceed $25 billion for each QFI 5% for first 5 years, Perpetual 9% thereafter Common Stock Purchase Warrants 15% of senior preferred amount — Preferred Equity 1-3% of risk-weighted assets, not to exceed $25 billion for each QFI 5% for first 5 years, Perpetual 9% thereafter Preferred Stock Purchase Warrants that are exercised immediately 5% of preferred amount 9% Perpetual Non-Cumulative Preferred Equity $41.6 billion aggregate liquidation preference 10% Perpetual Common Stock Purchase Warrants 2% of issued and outstanding common stock on investment date of 11/25/2008; the warrant was originally for 53,798,766 shares and had a $2.50 exercise price, but after the 6/30/2009 split, it is for 2,689,938.30 shares and has an exercise price of $50. — Up to 10 years Non-Cumulative Preferred Equity Up to $29.8 billion aggregate liquidation preference. As of 10% 9/30/2009, the aggregate liquidation preference was $3.2 billion. Perpetual (life of the facility is 5 years) Common Stock Purchase Warrants 150 common stock warrants — outstanding; $0.00002 exercise price Up to 10 years Trust Preferred Securities $20 billion 10% Perpetual Warrants 10% of total preferred stock issued; $10.61 exercise price — Up to 10 years 9% Converts to common equity interest after 7 years Mandatorily Convertible Preferred Stockf AIFP AIFP GMAC Inc. GMAC Inc. 12/29/2008 5/21/2009 $5.0 billion $7.5 billion $5 billion Term of Agreement Up to 10 years Preferred Stock Purchase Warrants that are exercised immediately 5% of original preferred amount 9% Converts to common equity interest after 7 years Mandatorily Convertible Preferred Stockg $4.5 billion 9% Converts to common equity interest after 7 years Preferred Stock Purchase Warrants that are exercised immediately 5% of original preferred amount 9% Converts to common equity interest after 7 years Common Equity Interestg $3.0 billion — Perpetual Continued on next page. quarterly report to congress I april 28, 2011 Equity Agreements TARP Program Company AIFP AIFP AIFP GMAC Inc. GMAC Inc. GMAC Inc. (CONTINued) Date of Agreement 5/29/2009 12/30/2009 12/30/2009 Cost Assigned Description of Investment $0.9 billion Common Equity Interest $2.5 billion $1.3 billion 8% Redeemable upon the repayment of the debenture 9% Converts to common equity interest after 7 years $1.3 billion Preferred Stock Purchase Warrants that are exercised immediately 5% of preferred amount $5.5 billion AGP Citigroup Inc. 12/23/2009 $2.2 billion Trust Preferred Securities with warrants $780.2 million Perpetual Mandatorily Convertible Preferred Stock Common Equity Interesth All — 5% of trust preferred amount $5.5 billion CDCI This equity interest was obtained by exchanging a prior debt obligation with General Motors. See “Debt Agreements” table for more information. Trust Preferred purchase warrants that are exercised immediately 12/30/2009 9/30/2009 and $10 billion later Term of Agreement $2.5 billion GMAC Inc. All Dividends Trust Preferred Securities AIFP PPIP Investment Information Each of the membership interest Membership interest will be funded upon demand from in a partnership the fund manager. Preferred Equity for banks & thrift institutions Perpetual — 8 years with the possibility of extension for 2 additional years. 5% of risk-weighted assets for banks 2% for first eight Perpetual and bank holding companies. years, 9% thereafter Notes: Numbers affected by rounding. a Announcement date of CPP Public Term Sheet. b Announcement date of CPP Private Term Sheet. c AIG exchanged Treasury’s $40 billion investment in cumulative preferred stock (obtained on 11/25/2008) for non-cumulative preferred stock, effectively cancelling the original $40 billion investment. d The Equity Capital Facility was announced as a $30 billion commitment, but Treasury reduced this amount by the value of the AIGFP Retention Payment amount of $165 million. e Citigroup exchanged its $20 billion senior preferred equity (obtained on 12/31/2008) for trust preferred securities. f On 12/31/2009, Treasury exchanged $5.25 billion of preferred stock, which it acquired on December 29, 2009, into mandatorily convertible preferred stock (“MCP”). g On 12/31/2009, Treasury converted $3.0 billion of its existing MCP, which was invested in May 2009, into common equity. Treasury’s equity ownership of GMAC increased from 35% to 56% due to this conversion. h On 12/31/2010, Treasury converted $5.5 billion of its existing MCP, which was invested in May 2009, into common equity. Treasury’s equity ownership of GMAC increased from 56% to 74% due to this conversion. Sources: Treasury, “TARP Capital Purchase Program Agreement, Senior Preferred Stock and Warrants, Summary of Senior Preferred Terms,” 10/14/2008; Treasury, “TARP Capital Purchase Program Agreement, (Non-Public QFIs, excluding S Corps and Mutual Organizations) Preferred Securities, Summary of Warrant Terms,” 11/17/2008; Treasury, “Securities Purchase Agreement dated as of November 25, 2008 between American International Group, Inc. and United States Department of Treasury,” 11/25/2008; Treasury, “TARP AIG SSFI Investment, Senior Preferred Stock and Warrant, Summary of Senior Preferred Terms,” 11/25/2008; Treasury, “Securities Purchase Agreement dated as of January 15, 2009 between Citigroup, Inc. and United States Department of Treasury,” 1/15/2009; Treasury, “Citigroup, Inc. Summary of Terms, Eligible Asset Guarantee,” 11/23/2008; “Securities Purchase Agreement dated as of January 15, 2009 between Bank of America Corporation and United States Department of Treasury,” 1/15/2009; Treasury, “Bank of America Summary of Terms, Preferred Securities,” 1/16/2009; Treasury, “GMAC LLC Automotive Industry Financing Program, Preferred Membership Interests, Summary of Preferred Terms,” 12/29/2008; Treasury, Transactions Report, 3/31/2011; Treasury, response to SIGTARP data call, 10/7/2010; Treasury, “TARP Community Development Capital Initiative Program Agreement, CDFI Bank/Thrift Senior Preferred Stock, Summary of CDCI Senior Preferred Terms,” 4/26/2010; Treasury, “TARP Community Development Capital Initiative CDFI Credit Unions Senior Securities Summary of Terms of CDCI Senior Securities,” 4/26/2010; Treasury, “TARP’s Community Development Capital Initiative CDFI Subchapter S Corporation Senior Securities Summary of Terms of CDCI Senior Securities,” 4/26/2010; Treasury, “Treasury Converts Nearly Half of Its Ally Preferred Shares to Common Stock,” 12/30/2010; Ally Financial Inc. (GOM ), 8-K, 12/30/2010. 55 56 special inspector general I troubled asset relief program Table 2.7 LARGEST POSITIONS IN WARRANTS HELD BY TREASURY, BY PROGRAM, AS OF 3/31/2011 Transaction Date Current Number of Warrants Outstanding Strike Price Stock Price as of 3/31/2011 “In” or “Out” of “the Money?”a Amount “In the Money” or “Out of the Money” as of 3/31/2011 Regions Financial Corporation 11/14/2008 48,253,677 $10.88 $7.26 OUT ($3.62) KeyCorp 11/14/2008 35,244,361 $10.64 $8.88 OUT ($1.76) Huntington Bancshares 11/14/2008 23,562,994 $8.90 $6.64 OUT ($2.26) Popular, Inc. 12/05/2008 20,932,836 $6.70 $2.92 OUT ($3.78) Citizens Republic Bancorp, Inc. 12/12/2008 17,578,125 $2.56 $0.89 OUT ($1.67) Synovus Financial Corp. 12/19/2008 15,510,737 $9.36 $2.40 OUT ($6.96) Marshall & Ilsley Corporation 11/14/2008 13,815,789 $18.62 $7.99 OUT ($10.63) SunTrust Banks, Inc. 11/14/2008 11,891,280 $44.15 $28.84 OUT ($15.31) 2,689,938 $50.00 $35.14 OUT ($14.86) 150 $0.00 $35.14 IN $35.14 Participant Capital Purchase Program (“CPP”): Systemically Significant Failing Institutions (“SSFI”) Program: AIGb 11/25/2008 AIG 4/17/2009 b c Notes: Numbers affected by rounding. a When a stock’s current price rises above the warrant’s strike price, it is considered “in the money;” otherwise, it is considered “out of the money.” b All warrant and stock data for AIG are based on the 6/30/2009 reverse stock split of 1 for 20. c Strike price is $0.00002. Sources: Treasury, Transactions Report, 3/31/2011; Treasury, Dividends and Interest Report, 3/31/2011; Treasury, response to SIGTARP data call, 4/6/2011; Market Data: Capital IQ, Inc. (a division of Standard & Poor’s), www.capitaliq.com, accessed 4/4/2011. Table 2.8 DIVIDENDS, INTEREST, DISTRIBUTION, AND OTHER INCOME PAYMENTS Dividends Interest Distributiona Other Incomeb Total AGP $442,964,764 $— $— $2,589,197,045 $3,032,161,809 AIFPc 2,472,988,301 1,187,782,368 — 15,000,000 3,675,770,669 ASSP — 31,949,931 — 84,000,000 115,949,931 CDCI 3,328,967 1,615,147 — — 4,944,114 CPPd 10,653,485,550 67,611,724 — 14,285,560,948 25,006,658,222 PPIP TIP UCSB Total — 116,424,927 537,664,761 20,644,319 674,734,007 3,004,444,444 — — 1,446,025,527 4,450,469,972 — 6,059,958 — — 6,059,958 $537,664,761 $18,440,427,840 $36,966,748,682 $16,577,212,027 $1,411,444,055 Note: Data as of 3/31/2011. a Distributions are investment proceeds from the PPIF’s trading activities allocated to the partners, including Treasury, not later than 30 days after the end of each quarter. b Other income includes Citigroup common stock gain for CPP, Citigroup payment for AGP, additional note proceeds from the auto programs and the Consumer and Business Lending Initiative/SBA 7(a) programs, and repayments associated with the termination of the TCW fund for PPIP. c Includes AWCP. d Includes $13 million fee received as part of the Popular exchange. Source: Treasury, Transactions Report, 3/31/2011; Treasury, Section 105(a) Report, 12/10/2010; Treasury, Dividends and Interest Report, 3/31/2011; Treasury, response to SIGTARP data call, 10/18/2010. quarterly report to congress I april 28, 2011 HOMEOWNER SUPPORT PROGRAMS The Administration announced the Making Home Affordable (“MHA”) program on February 18, 2009.104 As initially announced, the program was intended “to help as many as three to four million financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now and sustainable over the long term.”105 MHA and related programs include four initiatives funded by the Troubled Asset Relief Program (“TARP”): a loan modification program (which includes distinct subprograms), a Federal Housing Administration (“FHA”)Treasury refinancing program, a program to support state-funded foreclosure prevention programs, and a program that offers homeowners an opportunity to modify their second mortgages to make them more affordable when their first mortgages have already been modified. These programs, along with parallel programs at the Government-sponsored enterprises (“GSEs”), make up what was originally announced as a $75 billion initiative.106 Of the anticipated $75 billion cost for MHA, $50 billion was originally to be funded through TARP. Treasury has since reduced this amount to a final program obligation of $45.6 billion for MHA and its related programs.107 TARP funds support the Home Affordable Modification Program (“HAMP”), the Second Lien Modification Program (“2MP”), the Hardest-Hit Fund (“HHF”), and the FHA Short Refinance programs, along with efforts at FHA and the U.S. Department of Agriculture’s (“USDA”) Rural Housing Service (“RHS”) to use HAMP to modify mortgages that those agencies insure or guarantee.108 TARP funds are not used for incentive payments for modifications related to loans owned or guaranteed by the GSEs — the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Fannie Mae and Freddie Mac pay those incentives from their operating funds. Servicers of loans owned or securitized by a GSE are required to participate in that specific GSE’s HAMP for their entire portfolio of loans. Modifications of GSE loans are covered by servicers’ contracts with the GSEs and the GSEs’ servicing guides. When HAMP was announced, the Administration estimated that the GSEs would contribute up to $25 billion to modify mortgages that they own or guarantee.109 MHA and related programs include the following initiatives: • HAMP — HAMP is intended to encourage loan servicers (“servicers”) and investors, through incentive payments, to modify eligible first-lien mortgages so that the monthly payments of homeowners who are currently in default or at imminent risk of default will be reduced to affordable and sustainable levels. HAMP also includes the following subprograms: çç Home Price Decline Protection (“HPDP”) — HPDP is intended to encourage additional investor participation and HAMP modifications in areas with recent price declines by providing TARP-funded incentives to offset potential losses in home values.110 Loan Servicers: Companies that perform administrative tasks on monthly mortgage payments until the loan is repaid. These tasks include billing, tracking, and collecting monthly payments; maintaining records of payments and balances; allocating and distributing payment collections to investors in accordance with each mortgage loan’s governing documentation; following up on delinquencies; and initiating foreclosures. Investors: Owners of mortgage loans or bonds backed by mortgage loans who receive interest and principal payments from monthly mortgage payments. Servicers manage the cash flows from borrowers’ monthly payments and distribute them to investors according to Pooling and Servicing Agreements (“PSAs”). 57 58 special inspector general I troubled asset relief program Short Sales: Sales of a home for less than the unpaid mortgage balance. A borrower sells the home and the lender collects the proceeds as full satisfaction of the unpaid mortgage balance, thus avoiding the foreclosure process. Deeds-in-Lieu of Foreclosure: Instead of going through foreclosure, the borrower voluntarily surrenders the deed to the home lender as satisfaction of the unpaid mortgage balance. Underwater Mortgage: Mortgage loan on which a homeowner owes more than the home is worth, typically as a result of a decline in the home’s value. • • • • çç Principal Reduction Alternative (“PRA”) — PRA is intended to encourage the use of principal reduction in modifications for eligible borrowers whose homes are worth significantly less than the remaining outstanding balances of their first-lien mortgage loans. It provides TARP-funded incentives to offset a portion of the principal reduction provided by the investor.111 çç Home Affordable Unemployment Program (“UP”) — UP is intended to offer assistance to unemployed homeowners through temporary forbearance of a portion of their payments.112 çç Home Affordable Foreclosure Alternatives (“HAFA”) — HAFA is intended to provide incentives to servicers and borrowers to pursue short sales and deeds-in-lieu of foreclosure for HAMP-eligible borrowers in cases in which the borrower is unable or unwilling to enter into a modification.113 2MP — 2MP is intended to modify second-lien mortgages when a corresponding first lien is modified under HAMP. However, the requirement to modify second liens applies only to servicers that executed a Servicer Participation Agreement (“SPA”) to participate in 2MP prior to October 3, 2010.114 As of March 31, 2011, 17 servicers are participating in 2MP. These servicers represent approximately 55% to 60% of the second-lien servicing market.115 Agency-Insured Programs — Like their TARP counterparts, these initiatives for home loans insured by FHA or guaranteed by RHS and the Department of Veterans Affairs (“VA”) offer assistance to eligible borrowers whose mortgages are backed by these Government agencies to reduce payments on their first-lien mortgages to more affordable levels.116 Treasury is providing TARP incentives to encourage modifications under the FHA and RHS modification programs. FHA Short Refinance — This initiative, which is partially supported by TARP funds, is intended to encourage FHA refinancing of existing underwater mortgage loans that are not presently insured by FHA. To facilitate the refinancing of new FHA-insured loans under this program, TARP funds will provide incentives to existing second-lien holders of participating servicers who agree to partial or full extinguishment of second liens under the Treasury/FHA Second-Lien Program (“FHA2LP”). The initiative also provides that Treasury, through TARP, will provide up to $8 billion in loss coverage on newly originated FHA first-lien loans.117 Housing Finance Agency (“HFA”) HHF — A TARP-funded program, HHF is intended to fund state-run foreclosure prevention programs in states hit hardest by the decrease in home prices and in states with high unemployment rates. Eighteen states and the District of Columbia have received approval for aid through the program.118 quarterly report to congress I april 28, 2011 Status of TARP Funds Obligated to MHA and Related Programs Treasury obligated $45.6 billion to support MHA and its related programs, of which $1.4 billion, or 3.0%, has been expended as of March 31, 2011.119 Effective October 1, 2010, Treasury established that the aggregate amount available to pay servicer, borrower, and investor incentives under MHA-related programs would be capped at $29.9 billion.120 The remaining $15.7 billion is allocated to funding the FHA Short Refinance and HFA HHF programs. The amount obligated to each MHA-participating servicer is established pursuant to its Program Participation Cap under its SPA with Treasury.121 Treasury set each servicer’s initial cap by estimating the number of services expected to be performed by each servicer across all MHA and MHA-related programs in which it participates during the term of the SPA. According to Treasury, a servicer’s cap will be adjusted based on several factors: (1) upward or downward, pursuant to a Servicer Cap Model that aims to reallocate funds from servicers that have a relatively large amount of unused funds under their cap to servicers with a relatively small amount of unused funds under their cap, or (2) downward, based on Treasury’s analysis of the servicer’s eligible loan portfolio.122 Treasury announced the following program-specific cost estimates for MHA and its related programs: • Treasury has indicated that the $29.9 billion obligated to making incentive payments is apportioned among the different programs as follows:123 çç $21.4 billion will be allocated to pay borrower, servicer, and investor incentives for first-lien modifications under HAMP, including approximately $2.0 billion that will be allocated to pay investor incentives under PRA. çç $1.3 billion will be allocated to pay investor incentives under HPDP. çç $4.1 billion will be allocated to pay incentives in connection with foreclosure alternatives under HAFA, such as short sales or deeds-in-lieu of foreclosure. çç $132.6 million will be allocated to second-lien holders to modify or extinguish second liens under 2MP. çç $234.4 million will be allocated under Treasury FHA-HAMP. çç $17.8 million will be allocated under the USDA RHS’s Rural Development HAMP (“RD-HAMP”). çç $2.7 billion will be allocated to pay servicer and investor incentive payments to modify or extinguish second liens as part of FHA2LP. • Treasury and the U.S. Department of Housing and Urban Development (“HUD”) have announced that TARP will fund up to $8.1 billion to purchase a letter of credit providing up to $8.0 billion in potential loss coverage and pay an additional $117 million in fees under FHA Short Refinance.124 • Treasury has obligated a total of $7.6 billion in TARP funding for HFA HHF.125 Letter of Credit: Letter from a bank guaranteeing that a specified loan payment will be received on time and for the correct amount. In the event that the payment is not made, the issuing bank is required to cover the full or remaining amount of the obligation. 59 60 special inspector general I troubled asset relief program Table 2.9 TARP allocations by homeowner Support programs, AS OF 3/31/2011 ($ BILLIONS) HAMP 1st Lien (Standard Modification) $19.4 HAMP 1st Lien (PRA Modification) 2.0 HAMP 1st Lien (HPDP) 1.3 HAFA 4.1 UP —a 2MP 0.1 Treasury FHA-HAMP RD-HAMP 0.2 0.0b FHA2LP 2.7 FHA Short Refinance (Loss-Coverage) 8.1c HHF 7.6 Total Allocations $45.6 Note: Numbers may not total due to rounding. a Treasury does not allocate TARP funds to UP. b Treasury estimates that $17.8 million will be allocated to RD-HAMP. c This amount includes the up to $117 million in fees Treasury will incur for the availability and usage of the $8.0 billion letter of credit. Source: Treasury, response to SIGTARP data call, 4/13/2011. Table 2.9 shows the breakdown in estimated funding allocations for these programs. As of March 31, 2011, Treasury has maintained SPAs with 125 of the 145 servicers that originally agreed to participate in MHA and its related programs.126 According to Treasury, of the $29.9 billion obligated to participating servicers under their SPAs, as of March 31, 2011, $1.1 billion was spent on completing permanent modifications of first liens (266,454 of which remain active); $14.4 million on completing 1,125 full extinguishments, 1,013 partial extinguishments, and 19,091 permanent modifications of second liens under the 2MP; and $19.1 million on incentives for 5,253 short sales or deeds-in-lieu of foreclosure under HAFA.127 Of the combined amount of incentive payments, according to Treasury, approximately $486.0 million went to pay servicer incentives, $482.1 million went to pay investor incentives, and $168.9 million went to pay borrower incentives.128 According to Treasury, TARP has obligated $7.6 billion to state Housing Finance Agencies participating in HHF. As of March 31, 2011, Treasury has disbursed approximately $166.1 million of this amount to participating states, most of which has been allocated to administrative expenses.129 The remaining $8.1 billion has been obligated under FHA Short Refinance to purchase a letter of credit to provide up to $8.0 billion in first loss coverage and to pay $117 million in fees. According to Treasury, there have been no defaults on the 107 loans refinanced into FHA Short Refinance.130 Therefore, TARP has not incurred any losses under the program and the line of credit has not yet been accessed. quarterly report to congress I april 28, 2011 The breakdown of incentive payments for TARP (non-GSE) is shown in Table 2.10. Table 2.10 Breakdown of tarp (non-GSE) incentive payments, As of 3/31/2011 ($ MILLIONs) First-Lien Modification Incentives Non-GSEs Servicer Incentive Payment ($1,000) $293.0 Servicer Current Borrower Incentive Payment ($500) Annual Servicer Pay for Success Investor Current Borrower Incentive Payment ($1,500) 11.3 167.2 32.3 Investor Monthly Reduction Cost Sharea 328.7 HPDP 113.5 Annual Borrower Pay for Success 156.9 FHA2LP — PRA 1 Lien — PRA 2nd Lien — st RD-HAMP Treasury FHA HAMP Total —b 0.6 $1,103.5 Second-Lien Modification Incentives 2MP Servicer Incentive Payment 8.3 2MP Servicer Pay for Success — 2MP Borrower Pay for Success — 2MP Investor Cost Share 1.4 2MP Investor Full Extinguishment 4.2 2MP Investor Partial Extinguishment 0.5 Total $14.4 HAFA Incentives Servicer Incentive Payment Investor Reimbursement Borrower Relocation Total Notes: Numbers affected by rounding. a Investor Monthly Reduction Cost Share is considered an incentive payment. b Treasury could not provide SIGTARP with RD-HAMP incentive data as of 3/31/2011. Sources: Treasury, response to SIGTARP data call, 4/14/2011. 5.9 1.5 11.7 $19.1 61 62 special inspector general I troubled asset relief program HAMP According to Treasury, HAMP was intended “to help as many as three to four million financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now and sustainable over the long term.”131 The Administration envisioned a “shared partnership” between the Government and investors to bring distressed borrowers’ first-lien monthly payments down to an “affordable” level — defined as 31% of the borrower’s monthly gross income.132 Under the program, investors are responsible for all payment reductions necessary to bring a borrower’s monthly payment down to 38% of their monthly gross income. The additional reductions needed to bring the monthly payment down to a 31% ratio are shared between investors and the Government.133 Treasury will also compensate investors for reducing the principal on certain underwater mortgages.134 Borrowers may be solicited for participation by their servicers or they may request participation in HAMP by sending their servicers the following documents, referred to as the “Initial Package”:135 • a “request for modification and affidavit” (“RMA”) form • signed and completed requests for Federal tax return transcripts using IRS Forms 4506-T and 4506T-EZ (including all schedules and forms) • evidence of income (employment income, rental income, etc.) The RMA provides the servicer with the borrower’s financial information, including the cause of the borrower’s hardship, defined as any of the following:136 • • • • • reduction in or loss of income that was supporting the mortgage payment change in household financial circumstances recent or upcoming increase in the monthly mortgage payment increase in other expenses lack of sufficient cash reserves to maintain payment on the mortgage and cover basic living expenses • excessive monthly debt payments and overextension with creditors Trial Plan Evaluation Before offering the borrower a trial modification plan, the servicer must verify the accuracy of the borrower’s income and other eligibility criteria, including certification required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) that any person receiving assistance under MHA has not been convicted, in connection with a mortgage or real estate transaction, of fraud, money laundering, theft, tax evasion, or felony larceny within the preceding 10 years.137 Borrowers offered or enrolled in MHA trial period plans and permanent quarterly report to congress I april 28, 2011 modifications prior to September 21, 2010, are not affected by the Dodd-Frank Act certification requirement.138 A servicer is not required to send an initial package if, as a result of discussions with the borrower, the servicer determines that the borrower’s monthly first-lien mortgage obligation is less than 26% of the borrower’s monthly gross income.139 On February 17, 2011, Treasury clarified its guidance to servicers on verifying a borrower’s monthly gross income. Participating servicers will be required to develop and adhere to written policy and procedures (“Verification Policy”) by May 1, 2011. The Verification Policy must detail the methodology that the servicer will use to calculate and verify monthly gross income for the borrower and the borrower’s household. Treasury provided a sample HAMP Income Calculation worksheet that servicers can opt to use to document monthly gross income and to note any calculations or assumptions used by the servicer.140 The Verification Policy must also address how the servicer will treat income in such categories as seasonal or sporadic income, overtime, recent employment, and underemployment. The servicer must also describe in the Verification Policy how and when it will use alternative forms of income documentation if traditional forms such as recent pay stubs are not available.141 After verifying eligibility and income, the servicer follows the modification steps prescribed by HAMP guidelines to calculate a reduction in the borrower’s monthly mortgage payment to 31% of his or her gross monthly income.142 In the first step, the servicer capitalizes any unpaid interest and fees (i.e., adds them to the outstanding principal balance). Second, the servicer reduces the interest rate in incremental steps to as low as 2%. If the 31% threshold has still not been reached, in the third step the servicer extends the term of the mortgage to a maximum of 40 years from the modification date. If these steps are still insufficient to reach the 31% threshold, the servicer may forbear principal (defer its due date), subject to certain limits.143 The forbearance amount is not interest bearing and results in a lump-sum payment due upon the earliest of the sale date of the property, the payoff date of the interest-bearing mortgage balance, or the maturity date of the mortgage.144 Servicers are not required to forgive principal under HAMP. However, servicers may forgive principal in order to lower the borrower’s monthly payment to achieve the debt-to-income (“DTI”) ratio goal of 31% on a stand-alone basis or before any of the other HAMP modification steps described above.145 Finally, after engaging in the modification calculations, “all loans that meet HAMP eligibility criteria and are either deemed to be in imminent default or delinquent [by] two or more payments must be evaluated using a standardized NPV test that compares the NPV result for a modification to the NPV result for no modification.”146 The NPV test uses a series of inputs that compares the expected cash flow from a modified loan with the cash flow from the same loan with no modifications, based on certain assumptions. A Underemployment: The condition in which people in a labor force are employed at less than full-time or regular jobs or at jobs inadequate with respect to their training or economic needs. For more information on the borrower certification process required by the Dodd-Frank Act, see SIGTARP’s October 2010 Quarterly Report, page 83. Net Present Value (“NPV”) Test: Compares the money generated by modifying the terms of the mortgage with the amount an investor can reasonably expect to recover in a foreclosure sale. 63 64 special inspector general I troubled asset relief program Loan-to-Value (“LTV ”) Ratio: Lending risk assessment ratio that mortgage lenders examine before approving a mortgage; calculated by dividing the outstanding amount of the loan by the value of the collateral backing the loan. Loans with high LTV ratios are generally seen as higher risk because the borrower has less of an equity stake in the property. Trial Modification: Under HAMP, a period of at least three months during which a borrower is given a chance to establish that he or she can make lower monthly mortgage payments and qualify for a permanent modification. positive NPV test result indicates that a modified loan is more valuable to the investor than if the loan is not modified. In that case, under HAMP rules, the servicer must offer the borrower a mortgage modification. If the test generates a negative result, modification is optional.147 In reviewing a borrower’s application, servicers cannot refuse to evaluate a borrower for a modification simply because the outstanding loan currently has a low loan-to-value (“LTV”) ratio. (The lower the LTV ratio is, the higher the probability that a foreclosure will be more profitable to an investor than a modification, because of the proceeds that would be realized from a foreclosure sale.) The servicer is required to perform and document the evaluation in a manner consistent with program guidelines.148 With respect to loans owned or guaranteed by the GSEs, servicers are required to offer a trial modification if the NPV test results are equal to or greater than negative $5,000. In other words, even if the NPV test indicates that a modified mortgage would cost the GSE up to $5,000 more than foreclosure would, the servicer still must offer the modification.149 How Trial Modifications Work Treasury originally intended that HAMP trial period modifications would last three months; however, according to Treasury, as of March 31, 2011, of a combined total of 137,363 (non-GSE and GSE) active trials, 26,362, or 19.2%, had lasted more than six months.150 During a trial period, the borrower must make at least three modified payments.151 Under a “trial period plan” (“TPP”), borrowers may qualify for a permanent modification as long as they make all required payments on time, are eligible, and provide proper documentation, including a modification agreement.152 The terms of these permanent modifications remain fixed for at least five years.153 After five years, the loan’s interest rate can increase if the modified interest rate had been reduced below the current 30-year conforming fixed interest rate on the date of the initial modification. The interest rate can rise incrementally by up to 1% per year until it reaches that rate.154 Otherwise, the modified interest rate remains permanent. Beginning May 1, 2011, if a borrower is denied a permanent modification because of missed trial payments, the servicer must, within 30 days of the missed payment, re-calculate the borrower’s income using the original income documentation to ensure that the trial payment was correctly calculated. The servicer is not required to re-run the calculation if the borrower missed a trial payment because of a significant change in circumstances resulting in a reduction in income. To perform the re-calculation, the servicer must use an employee who was not involved in the original calculation. If the re-calculation shows that the borrower’s trial payment exceeded the proper payment by 10% or more, the servicer must offer the borrower a new trial period with the correct payment.155 quarterly report to congress I april 28, 2011 If the borrower misses a payment during the trial or is denied a permanent modification for any other reason, the borrower is, in effect, left with the original terms of the mortgage. The borrower is responsible for the difference between the original mortgage payment amount and the reduced trial payments that were made during the trial. In addition, the borrower may be liable for late fees that were generated during the trial. In other words, a borrower can be assessed late fees for failing to make the original pre-modification scheduled payments during the trial period, even though under the trial modification the borrower is not required to make these payments. Late fees are waived only for borrowers who receive a permanent modification.156 Modification Incentives Servicers receive a one-time payment of $1,000 for each permanent modification completed under HAMP. They receive additional compensation of $500 if the borrower was current but at imminent risk of default before enrolling in the trial plan. For borrowers whose monthly mortgage payment was reduced through HAMP by 6% or more, servicers also receive “pay for success” payments of up to $1,000 annually for three years if the borrower remains in good standing (defined as less than 90 days delinquent).157 Borrowers whose monthly mortgage payment is reduced through HAMP by 6% or more and who make monthly payments on time earn an annual “pay for performance” principal balance reduction.158 The annual reduction amount is up to $1,000. The servicer receives this payment and applies it toward reducing the interest-bearing mortgage loan balance. The principal balance reduction accrues monthly and is payable for each of the first five years as long as the borrower remains current on his or her monthly payments.159 An investor is entitled to compensation, for up to five years, equal to one-half of the dollar difference between the borrower’s monthly payment (principal and interest) under the modification, based on 31% of gross monthly income, and the lesser of (1) the borrower’s monthly principal and interest at 38% and (2) the borrower’s pre-modification monthly principal and interest payment.160 If applicable, investors also earn an extra one-time, up-front payment of $1,500 for modifying a loan that was current before the trial period (i.e., at risk of imminent default) and whose monthly payment was reduced by at least 6%.161 Investors are entitled to additional compensation through HPDP. HPDP is intended to address the fears of investors who may withhold their consent to loan modifications because of potential future declines in the value of the homes that secure the mortgages, should the modification fail and the loan go into foreclosure. In such a circumstance, the investor could suffer greater losses for offering modifications than under an immediate foreclosure. By providing incentive payments 65 66 special inspector general I troubled asset relief program Home Price Index: An index of price projections in 110 local housing markets that is used for all HPDP calculations related to home price. The projections are updated quarterly with new data and based on both long-term and short-term trends, adjusted for seasonal effects. to mitigate that potential loss for a 24-month period, Treasury hopes to encourage more lenders and investors to modify loans. Under HPDP, Treasury has published a standard formula, based on the unpaid principal balance (“UPB”) of the mortgage, the recent decline in area home prices, and the LTV ratio, that will determine the size of the incentive payment. The projected home price decline is determined by the change in surrounding-area home prices during the six months before the start of the HAMP modification.162 The HPDP incentive payments accrue monthly over a 24-month period and are paid out annually on the first and second anniversaries of the initial HAMP trial period mortgage payment. Accruals are discontinued if the borrower loses good standing under HAMP by missing three mortgage payments or if the mortgage loan is paid in full. If mortgage payments are discontinued, investors are entitled to receive all previously accrued but unpaid incentive payments.163 Under HPDP, whether a particular area suffers further declines in home prices is irrelevant. The amount of the incentive depends entirely on the estimated decline in home prices in the market over the next year, based on changes in the related home price index during the six months preceding the modification.164 As of March 31, 2011, according to Treasury, approximately $113.5 million in TARP funds had been paid to investors. Treasury was unable to identify the number of modifications for HPDP associated with this expenditure of funds.165 As of March 31, 2011, of the $29.9 billion in TARP funds allocated to the 125 servicers participating in HAMP SPAs, approximately 81% is allocated to only 10 servicers.166 Table 2.11 outlines these servicers’ relative progress in implementing the HAMP modification programs. Table 2.11 tarp (Non-GSE) INCENTIVE PAYMENTS BY 10 LARGEST SPA SERVICERS, AS OF 3/31/2011 Countrywide Home Loans Servicing LP SPA Cap Limit Incentive Payments to Borrowers Incentive Payments Incentive Payments to Investors to Servicers Total Incentive Payments $6,349,655,436 $20,250,620 $56,852,231 $54,663,143 Wells Fargo Bank, NA 5,138,750,914 14,314,746 57,004,340 53,200,035 $131,765,994 124,519,121 J.P. Morgan Chase Bank, NA 3,223,317,901 30,096,090 48,693,378 72,233,401 151,022,869 OneWest Bank 1,836,253,881 7,730,462 26,968,402 20,623,676 55,322,540 Bank of America, N.A. 1,555,136,337 2,385,888 9,359,162 7,779,094 19,524,144 GMAC Mortgage, Inc. 1,517,794,381 7,747,806 32,160,958 26,231,652 66,140,416 American Home Mortgage Servicing, Inc 1,305,487,935 8,579,747 39,336,123 31,984,506 79,900,376 Ocwen Financial Corporation, Inc. 1,144,150,606 11,825,475 34,276,406 30,818,265 76,920,146 CitiMortgage, Inc. 1,073,475,472 14,356,611 37,965,429 38,221,808 90,543,847 Litton Loan Servicing LP Total Note: Numbers may not total due to rounding. Source: Treasury, Transactions Report, 4/1/2011. 1,059,580,008 6,625,051 19,184,782 17,200,572 43,010,405 $24,203,602,871 $123,912,496 $361,801,212 $352,956,152 $838,669,860 quarterly report to congress I april 28, 2011 Table 2.12 HAMP SNAPSHOT, as of 3/31/2011 Number of HAMP Trials Started since Program Inception 1,559,023 Number of Trial Modifications Cancelled 751,474 Number of Permanent Modifications Cancelled 83,270 Source: Treasury, response to SIGTARP data call, 4/22/2011. Table 2.13 HAMP modification activity by GSE/TARP (Non-GSE), as of 3/31/2011 Trials Started Trials Cancelled Trials Active Trials Converted to Permanent Permanents Cancelled Permanents Active GSE 843,017 417,871 63,987 361,159 40,697 320,462 Non-GSE 716,006 333,603 73,376 309,027 42,573 266,454 1,559,023 751,474 137,363 670,186 83,270 586,916 Total Sources: Treasury, response to SIGTARP data call, 4/22/2011. Modification Statistics As of March 31, 2011, a total of 586,916 mortgages were in active permanent modifications and 137,363 were in active trial modifications. For borrowers receiving permanent modifications, 100% received an interest rate reduction, 59.5% received a term extension, 30.5% received principal forebearance, and 2.4% received principal forgiveness.167 A snapshot of HAMP modifications is shown in Table 2.12. HAMP modification activity, broken out by GSE and TARP (non-GSE) loans, is shown in Table 2.13. What Happens When a HAMP Modification Is Denied: Summary of Servicer Obligations and Borrower Rights Treasury has issued several directives governing both the obligations of servicers and the rights of borrowers in connection with the denial of loan modification requests. The most recent guidance, effective February 1, 2011, governs the actions of participating HAMP servicers of non-GSE mortgages and loans not insured by a Federal agency. The new guidance reviews and updates participating servicers’ obligations in addressing inquiries and disputes from prospective or participating borrowers. It also discusses the requirements for servicers concerning the content and timing of mandatory notices for borrowers applying to HAMP.168 As of March 31, 2011, the GSEs have not adopted any of the revisions with respect to borrower requests for reconsideration of loans that are guaranteed by the GSE servicers. GSE program updates in this area remain under consideration.169 67 68 special inspector general I troubled asset relief program Non-Approval Notices According to Treasury, if a borrower applying to HAMP is not approved for a modification, the servicer must send the borrower a Non-Approval Notice explaining the reasons for the decision in clear, non-technical language, with acronyms and industry terms explained in a manner that is easily understandable. The notice must contain a description of other foreclosure alternatives and the steps necessary for the borrower to be considered for such alternatives. If the servicer has already approved the borrower for a foreclosure alternative, the notice must also include information necessary for the borrower to participate in or complete the alternative.170 In cases where an NPV evaluation was performed, the Non-Approval Notice must also include the NPV input values used to evaluate the borrower’s eligibility.171 The servicer must provide the borrower with an opportunity to correct the NPV input values or any other information identified in the notice that the borrower believes is in error. The servicer may not conduct a foreclosure sale for 30 calendar days from the date of the Non-Approval Notice or a longer period, if required, to review supplemental material provided by the borrower in response to the notice, although the servicer may continue with all other steps in the foreclosure process short of an actual sale. This foreclosure sale prohibition does not apply when the non-approval is due to an ineligible mortgage or property, the borrower declines a HAMP modification, or the loan was previously modified under HAMP.172 The Non-Approval Notice must also contain a toll-free number, email address, and mailing address of a servicer representative to contact if the borrower wishes to dispute the reasons for non-approval. For larger servicers, the servicer representative listed in the notice must be independent from the servicing staff who made the underwriting decision.173 Additionally, the Non-Approval Notice must include a telephone number for the HOPE™ Hotline, a 24-hour telephone hotline that provides assistance to borrowers at no charge.174 The notice must specifically encourage borrowers to ask for MHA Help if they have any reason to dispute the contents of the Non-Approval Notice.175 The HOPE Hotline is operated by a non-profit group called the Homeownership Preservation Foundation (“HPF”), which was contracted by Fannie Mae in its capacity as HAMP administrator. The Foundation is largely an outgrowth of the mortgage servicers themselves. It started as an in-house entity within Residential Capital, LLC, a unit of Ally Financial Inc. (the former GMAC Inc.). Several of its board members have ties to Residential Capital, LLC, and the group is supported by donations from large servicers. In a December 2010 press interview, the HPF chairman suggested that HPF does not view itself as a homeowner advocate, stating “Because we’re supported by the industry, are we really working for the homeowner? Maintaining this neutral ground is hard to do, but we work very hard to keep our advice neutral.”176 Of the more than 2.1 million quarterly report to congress I april 28, 2011 borrowers who had called the HOPE Hotline as of March 31, 2011, 16,585, or nearly 0.8%, called claiming they had been wrongfully denied for an MHA program. Additionally, about 1.0 million callers had received free counseling.177 According to Treasury, the HOPE Hotline provides homeowners with free foreclosure prevention information and housing counseling referrals. It assists borrowers with a preliminary assessment of their eligibility for MHA programs. It also connects borrowers who have detailed questions about the program or a denial to MHA Help, “a team of specialists dedicated exclusively to working with borrowers and servicers to resolve escalated MHA cases. Treasury established a similar resolution resource, the HAMP Solution Center (“HSC”), to manage escalated cases received from housing counselors, Government offices, and other third parties acting on behalf of a borrower.”178 Beginning February 1, 2011, staff at both of these escalation offices were directed to re-run the HAMP NPV test upon request by the borrower, housing counselor, or other permissible third party, when the borrower believes that the inputs used by the servicers were inappropriate.179 Requests for Reconsideration or Re-Evaluation If a homeowner who applies to participate in HAMP is not approved for a loan modification because the servicer’s analysis indicates a negative result from the HAMP NPV test, the Non-Approval Notice sent to that borrower must include an explanation of the NPV analysis and the following list of NPV inputs for that borrower:180 • • • • • • • • • • • • • • unpaid principal balance on the loan interest rate months delinquent next reset date and interest rate (for adjustable rate mortgages) current principal and interest payment (before modification) monthly insurance payment monthly real estate taxes monthly homeowners’ association fees (if applicable) borrower’s monthly gross income borrower’s total monthly obligations borrower’s credit score co-borrower’s credit score (if applicable) zip code state Since February 1, 2011, the program has required the servicer to provide the borrower with additional inputs into the NPV calculation, including the following:181 69 70 special inspector general I troubled asset relief program • • • • • • • • • • • • • • • • • • • value of the property the servicer used in the NPV test type of property valuation data collection date imminent default status indicator investor code UPB at origination first payment date at origination mortgage type remaining term mortgage coverage insurance percentage date NPV evaluation was conducted UPB of the proposed HAMP modification (net of forbearance and principal reduction) interest rate of the proposed HAMP modification amortization term of the proposed HAMP modification principal and interest payment of the proposed HAMP modification principal forbearance amount of the proposed HAMP modification principal forgiveness amount of the proposed HAMP modification modification fees paid by the investor mortgage insurance partial claim amount According to Treasury, the purpose of providing this information is to allow the borrower the opportunity to correct values that may affect the analysis of his or her eligibility. If the borrower believes one or more NPV analysis inputs is incorrect, the borrower has 30 days from the date of the Non-Approval Notice to provide written evidence thereof to the servicer. If the borrower wishes to submit corrections for more than one input, the borrower must provide all such corrections at one time. Effective no later than June 1, 2011, if a borrower submits written evidence for some, but not all, of the NPV inputs that the borrower is disputing, the servicer must notify the borrower promptly that all of the necessary written evidence has not been received and that it must be received within the 30-day calendar period provided for borrower disputes of a Non-Approval Notice.182 However, the servicer is not required to perform an NPV re-evaluation if the borrower’s corrected income documentation shows that the borrower’s monthly mortgage payment is less than 31% of monthly gross income.183 HSC or MHA Help can provide borrowers and their advocates with assistance in evaluating disputed NPV inputs, including preliminary NPV re-evaluations that the borrower may provide the borrower’s servicer in requesting a formal re-evaluation.184 According to Treasury, if the evidence submitted by the borrower is “valid and material” (terms undefined by Treasury) to the outcome of the NPV analysis, the servicer must perform the NPV analysis again using the corrected inputs. If the quarterly report to congress I april 28, 2011 borrower identifies such “material inaccuracies” in the NPV input values, the servicer may proceed with intermediate steps in the foreclosure process but may not conduct a foreclosure sale until the inaccuracies are resolved. If the borrower’s corrected information is verified and the outcome of the new NPV analysis is positive, the servicer must offer a HAMP modification in accordance with the program guidelines.185 A borrower who has been evaluated for HAMP but deemed ineligible may request reconsideration for HAMP if the borrower experiences a change in circumstance. According to Treasury, examples of such changes in circumstance include illness, divorce, and material changes to the borrower’s income.186 Disputed Property Valuations Treasury guidance states that if the borrower believes the NPV test result is incorrect because the property valuation used by the servicer differed from the actual market value of the property as of the date the NPV test was run, the borrower may submit corrected valuation information and request an NPV re-evaluation. This process includes the following steps:187 • The borrower provides the servicer a recent estimate of the property value with a reasonable basis, such as a broker’s evaluation, sales prices of comparable homes from the newspaper, or a Web pricing service, within 30 days from the date of the Non-Approval Notice. • Upon receipt of the borrower’s request, the servicer performs a preliminary NPV re-evaluation using the borrower’s estimate (along with any other material disputed inputs). If the preliminary re-evaluation generates a positive NPV result, the servicer must offer the borrower an opportunity to request that the servicer arrange for an independent appraisal of the property, unless the servicer is willing to accept as accurate the property value estimate provided by the borrower. According to Treasury, the appraisal will establish the fair market value of the property as of the date the NPV test was run. • The new appraisal must be performed by an independent third party not affiliated with the servicer, in accordance with the Uniform Standards of Professional Appraisal Practice. A new appraisal is not required if the original NPV property value input was based on an appraisal conforming to these standards, but the servicer must provide a copy of that appraisal to the borrower. • Within 15 days of being notified of a positive NPV result from the servicer’s preliminary re-evaluation, the borrower must make a $200 deposit against the cost of the requested re-appraisal (if necessary), with any balance of the cost of the appraisal either added to the borrower’s outstanding amounts due under the mortgage or repaid in equal installments — regardless of whether the new appraisal results in an offer for a modification. 71 72 special inspector general I troubled asset relief program • The servicer performs a final NPV re-evaluation using the appraisal value. • The servicer provides the final NPV outcome and a list of input values to the borrower. If a borrower disputes one or more NPV inputs in addition to the property value input, servicers may choose to validate the other disputed inputs and perform the NPV re-evaluation using changes from those validated inputs while holding the original property values constant.188 If the re-evaluation leads to a positive NPV result, the servicer may approve the borrower for a trial period plan without using a new property value or obtaining a new appraisal. If the re-evaluation renders a negative NPV result, the servicer is required to use the borrower’s property value estimate.189 Escalated Case Management Treasury guidance requires participating MHA servicers to have written procedures and personnel in place to respond to borrower inquiries and disputes that constitute “escalated cases.” MHA Help and HSC manage such cases and assist borrowers or their advocates with making preliminary assessments of MHA program eligibility and resolving disputes with servicers. Examples of escalated cases include:190 • allegations that the servicer did not assess the borrower for the applicable MHA program(s) according to program guidelines • inquiries regarding inappropriate program denials • initiation or continuance of foreclosure actions in violation of program guidelines • cases referred to the servicer by the HSC and MHA Help Borrowers have three options for bringing escalated cases to a servicer’s attention. First, a borrower may go directly to a servicer. Second, a borrower may reach a servicer through MHA Help. Third, authorized advisors, Treasury, other Federal agencies, or elected officials may escalate a case to HSC on the borrower’s behalf.191 In guidance issued on March 30, 2011, Treasury provided that general inquiries about the content of a Non-Approval Notice or the status of a borrower’s evaluation in cases where the servicer is in compliance with program timelines should not be considered escalated cases.192 With respect to addressing escalated cases, servicers participating in MHA are subject to a number of requirements:193 • Servicers must have written procedures and personnel must be in place to respond to escalated cases, and escalated cases must be handled in accordance with the timeliness requirements discussed below. quarterly report to congress I april 28, 2011 • Staff must be accessible directly by telephone and email, have access to all relevant borrower documentation, be trained on the servicer’s case escalation procedures, be knowledgeable about MHA program guidelines, possess the necessary authority to resolve escalated cases, and be capable of sending and receiving documents and information in the servicing system and/or mortgage file to support their resolution. • For those servicers required to report weekly data to the MHA Program Administrator, all personnel handling escalated cases must be independent of those who made the initial MHA-eligibility determination. • They must report to HSC and MHA Help the status of referred escalated cases and, upon request, provide all information necessary to evaluate a borrower’s case. This information includes the following:194 çç debt and income inputs, assumptions, and calculations used to evaluate the borrower çç investor/guarantor name and loan pool identification code if the reason for denial is “investor/guarantor not participating,” subject to mortgage trust disclosure laws çç borrower or servicer correspondence about the applicable MHA program evaluation çç servicer-constructed timeline of events in the applicable MHA program evaluation • Effective no later than June 1, 2011, servicers must ensure they comply with applicable laws to protect the privacy of borrowers.195 When a servicer receives an escalated case, MHA’s “escalation resolution process” requires the servicer to review it against its own records and the data reported to HAMP in order to determine the merits of the inquiry and come to a resolution. As necessary, the servicer must review the steps taken to determine the HAMP modification payment and NPV testing. The timing of each review is subject to the following requirements:196 • Escalated cases must be date stamped upon receipt. • The servicer must acknowledge its receipt of the inquiry to the borrower in writing within five business days. • The servicer must provide the borrower a case reference name or number and a toll-free “escalation contact” phone number, as well as the date by which the servicer “will resolve the case.” This date may not exceed 30 calendar days from the later of the date the inquiry was received or the receipt of any required thirdparty authorizations. 73 74 special inspector general I troubled asset relief program • In the event the case is not resolved within 30 days, the servicer must send an updated status in writing via email, fax or mail at the end of the first 30 days and every 15 days thereafter until the case is resolved. There is no limit to the number of 15-day extensions the servicer may authorize. • The servicer may not conduct a scheduled foreclosure sale until the case is resolved in accordance with all MHA program guidelines, but it may proceed with all other steps in the foreclosure process. Escalated cases directed to a servicer are considered to be resolved when the inquiry has been reviewed in accordance with MHA guidelines and the servicer has taken the following actions:197 • determined in writing whether there should be any change in the original determination and identified a proposed resolution within one of the existing MHA program categories • documented both whether any change in the original determination is required and the proposed resolution in the servicing system and/or mortgage file, including the date upon which the servicer reached the proposed resolution and the basis of said resolution • within 10 business days of identifying the proposed resolution, communicated to the borrower, in writing, the determination of whether any change in the original determination is appropriate and the proposed resolution and next steps (e.g., trial period plan notice, modification agreement, short sale, or deed-in-lieu agreement) • initiated action to implement the resolution If the case was referred to the servicer by either HSC or MHA Help, the case may not be considered resolved unless HSC or MHA Help documents its concurrence with the proposed resolution or the confirmation of the original determination.198 Current HSC and MHA Help procedures state that they target a response within two business days. According to Treasury, effective February 1, 2011, if HSC or MHA Help do not concur with the servicers’ proposed resolution and the servicer declines to change its initial decision, the case is referred directly to an oncall Treasury staff person from the Office of Financial Stability’s Homeownership Preservation Office.199 The Treasury employee will review the case notes and, if appropriate, escalate the case to a more senior point of contact at the servicer for reconsideration. There is no further avenue of appeal; ultimately the decision remains within the discretion of the servicer. Although Treasury maintains an ability to deny or recapture incentives due or previously paid to servicers who violate program rules, as of March 31, 2011, Treasury had not done so as a result of disagreement with borrower denials.200 quarterly report to congress I april 28, 2011 Borrower NPV Calculator As required by the Dodd-Frank Act, Treasury has announced that it is developing a publicly available web-based NPV calculator based on the HAMP NPV model (the “Borrower NPV Calculator”). According to Treasury, the Borrower NPV Calculator will assist borrowers in evaluating their potential eligibility for HAMP before applying as well as in reviewing the servicer’s NPV evaluation after a denial. According to Treasury, the tool is scheduled to be available in spring 2011.201 As of March 31, 2011, it was not yet available. In the interim, borrowers or their advocates may request that MHA Help or HSC complete the NPV analysis on their behalf.202 Ensuring Effective Servicer Compliance with MHA Programs On February 17, 2011, Treasury provided new guidance related to servicers’ internal quality assurance (“QA”) processes. Servicers will be required by May 1, 2011, to develop, document, and execute an effective QA program that includes independent reviews of each MHA program in which the servicer participates. The purpose of these reviews is to ensure that the servicer is following the SPA and program guidelines.203 The servicer must establish a QA team that is independent of the servicer’s MHA management team.204 The QA team must be capable of assessing the impact and consequences of identified risks and weaknesses in the servicer’s implementation of MHA programs (e.g., non-approvals, foreclosures, broad-based exclusions, fraud identification). The QA review process must evaluate all components of the servicer’s participation in an applicable MHA program, including:205 • availability and responsiveness of servicing personnel to borrower inquiries, questions, and complaints • solicitation and outreach to potentially eligible borrowers • determination of borrower eligibility for any MHA program • pre-screening practices — verbal borrower evaluation based on income and/or known eligibility failures • tracking and retention of borrower documentation • documentation and application of servicer-specific HAFA and PRA policies • compliance with the requirements concerning Borrower Notices • reporting of reason codes for each loan that is evaluated and not offered a TPP • adherence to prohibitions on referral of loans to foreclosure and conducting of scheduled foreclosure sales • underwriting, including assessment of imminent default and hardship circumstances, and calculation of borrower income, debt and escrow analysis, property valuations, and modification waterfalls • assurance of the accuracy of NPV model inputs and outputs and use, management, and storage of NPV data 75 76 special inspector general I troubled asset relief program • conduct of TPPs, including documentation and application of payments, credit reporting, and conversion to permanent modifications • management of escalated cases • timely consideration of alternative loss mitigation options, including foreclosure alternatives • maintenance of documentation appropriate to support MHA requirements and decisions • timely and accurate reporting of MHA data, including data related to incentive payments • matching of the terms of second-lien modifications with the terms of the borrower’s first-lien modification The QA team must conduct reviews at least quarterly and distribute a report to senior management that includes recommendations for remediation actions.206 The QA plan must include a follow-up process that ensures that management takes necessary actions to address identified issues, including re-evaluating loans not properly considered for MHA programs, if appropriate. These reports must be retained by senior management and made available to Treasury’s compliance agent, MHA-C, upon request.207 Deficiency Judgment: Court order authorizing a lender to collect all or part of an unpaid and outstanding debt resulting from the borrower’s default on the mortgage note securing a debt. A deficiency judgment is rendered after the foreclosed or repossessed property is sold when the proceeds are insufficient to repay the full mortgage debt. HAFA According to Treasury, HAFA is intended to encourage servicers to provide borrowers with an alternative to foreclosure by offering financial incentives to servicers and borrowers utilizing a streamlined process for conducting short sales or deedsin-lieu of foreclosure as an alternative to foreclosure.208 Under HAFA, the servicer forfeits the ability to pursue a deficiency judgment against a borrower who uses a short sale or deed-in-lieu when the property is worth less than the outstanding amount on the mortgage.209 HAFA provides financial incentives and reimbursements for a successful short sale or deed-in-lieu of foreclosure, including a $3,000 “relocation” incentive payment to borrowers, a $1,500 incentive payment to servicers, and incentive payments to subordinate mortgage lien holders in exchange for a release of the lien and the borrower’s liability.210 The program was announced on November 30, 2009, and went into effect on April 5, 2010.211 On December 28, 2010, Treasury loosened the provisions requiring HAFA applicants to meet HAMP eligibility requirements related to monthly gross income limitations and that the borrower reside in the home as a primary residence.212 As a result, effective February 1, 2011, servicers are no longer required by Treasury to verify a borrower’s financial information or determine whether the borrower’s total monthly payment exceeds 31% of his or her gross monthly income, unless this verification is required by the investor. Under this program change, a borrower must still provide sufficient evidence of hardship by completing and executing a quarterly report to congress I april 28, 2011 Hardship Affidavit or RMA, and servicers must continue to independently verify a borrower’s hardship. Notwithstanding these updates, servicers retain the discretion to require borrowers to provide additional financial information or evidence of hardship.213 According to Treasury’s guidance issued on March 30, 2011, servicers must send written confirmation acknowledging a borrower’s request no later than 10 business days from the date of the request. As part of the confirmation, the servicer must include a decision timeline, which must be no later than 45 calendar days from the date of the request.214 Prior to February 1, 2011, HAFA required that the property be the borrower’s primary residence. Vacant properties were not eligible unless the borrower had vacated the property less than 90 days before seeking HAFA assistance and the borrower provided documentation that the borrower was required to relocate at least 100 miles from the property to accept new employment or was transferred by a current employer. To receive the $3,000 relocation incentive under the program, beginning February 1, 2011, a borrower is required only to provide documentation that the property was used as the primary residence at some point within the 12 months preceding the request for assistance.215 Servicers are required to obtain third-party verification that the property was the borrower’s primary residence at some point within the prior 12 months, and may not rely exclusively on an affidavit provided by the borrower. Each servicer is required to state in its HAFA policy the materials that it will accept to validate the residency requirement.216 The property can be vacant or even rented to a non-borrower. A borrower’s reason for relocation and the distance of that relocation from the property are no longer relevant.217 Also beginning February 1, 2011, borrowers no longer have to move out of their homes in order to receive the $3,000 “relocation” incentive payment. With these changes, after a borrower relinquishes title, the servicer can allow the borrower to remain in the home on a rental basis (referred to as a “deed-for-lease”) or to repurchase the property later without affecting the borrower’s right to receive the incentive payment.218 Servicers have the option to pay the incentive either upon successful surrender of the title or when the borrower vacates or repurchases the property.219 Effective February 1, 2011, Treasury removed the individual cap of 6% of the UPB of each subordinate lien that could be paid to subordinate lien holders; it retained the cap of $6,000 on the maximum allowable aggregate payoff to those lien holders.220 Investors will continue to receive a maximum of $2,000 for securing the release of subordinate liens. This reimbursement will be earned on a one-for-three matching basis. In other words, for every $3 in short sale or deed-in-lieu of foreclosure proceeds that an investor pays to secure the release of a subordinate lien, the investor will be entitled to receive $1 in reimbursement incentive payments, up to the maximum of $2,000 per lien.221 As of March 31, 2011, according to Treasury, approximately $19.1 million from TARP had been paid to investors, borrowers, and servicers in connection 77 78 special inspector general I troubled asset relief program with 5,253 short sales or deeds-in-lieu of foreclosure transfers completed under HAFA.222 As of March 31, 2011, Treasury reported that the eight largest servicers alone had completed 123,298 short sales and deeds-in-lieu outside HAMP for borrowers whose HAMP trial modifications had failed, borrowers who had chosen not to participate, or were ineligible for the program.223 The greater volume of activity outside HAMP may be explained, in part, by the fees and deficiency judgments that servicers are able to collect from the borrower in non-HAFA transactions, fees, and judgments that are not available within HAFA. 2MP According to Treasury, 2MP is designed to work in tandem with HAMP and to help provide relief for borrowers with second mortgages that are serviced by a participating 2MP servicer. The same servicer does not have to service both liens in order for the second lien to be eligible for modification under 2MP. Under the program, when a borrower’s first lien is modified under HAMP and the servicer of the second lien is a 2MP participant, that servicer must offer to modify the borrower’s second lien. The servicer modifies the borrower’s second lien according to “a defined protocol,” accepting a lump-sum payment from Treasury for full extinguishment of the second-lien principal or in exchange for a partial extinguishment and the modification of the remainder of the second lien.224 Lender Processing Services’ (“LPS”) Applied Analytics Division has been contracted by the participating servicers to match HAMP first liens with second liens.225 According to Treasury, recent enhancements to its data matching process will allow LPS to provide 2MP servicers with additional information regarding probable matches between HAMP-modified first liens and second liens. 2MP servicers are responsible for reviewing the probable match data to determine whether a true match exists, and if so, confirm the match to LPS via the “confirmed lien match” process.226 Under this process, a 2MP servicer can direct LPS to match a second lien using the probable lien matches provided by LPS or sources independent of LPS (e.g., from the 2MP servicer itself when it services both the first and second liens, information provided by the borrower, or direct communications with the HAMP first lien servicer).227 2MP relies on existing first-lien data and any additional information obtained from HAMP’s administrator. Second-lien servicers are not required to verify any of the borrower’s financial information and do not perform a separate NPV analysis in order to modify the second lien. Effective no later than June 1, 2011, 2MP servicers cannot offer a 2MP trial period, permanent modification, or extinguishment without verifying that the borrower has completed and submitted the Dodd-Frank Act certification, as previously discussed.228 To be eligible for a 2MP modification or partial extinguishment, the second lien must have a UPB of at least $5,000 and a pre-modification mortgage payment of at least $100 as of the date of its initial evaluation for the program.229 For 79 quarterly report to congress I april 28, 2011 a second-lien modification under 2MP, the servicer first capitalizes any accrued interest and servicing advances, then reduces the interest rate, which is determined by the nature of the loan. The interest rate for amortizing second liens (those that require payments of both interest and principal) decreases to 1% for the first five years of the loan. If the loan is interest-only (non-amortizing), the servicer can either convert the interest-only payment to an interest-bearing equivalent at 1% or retain the interest-only schedule and reduce the rate to 2% for the first five years. In both cases, after the five-year period the rate increases to match the rate on the HAMP-modified first lien. When modifying the second lien, the servicer must, at a minimum, extend the term to match the term of the first lien but can extend the term up to a maximum of 40 years. To the extent that there is forbearance or principal reduction for the modified first lien, the second-lien holder must forbear or forgive at least the same percentage on the second lien.230 The servicer receives a $500 incentive payment upon modification of a second lien. If a borrower’s monthly second-lien payment is reduced by 6% or more, the servicer is eligible for an annual “pay for success” incentive payment of $250 per year for up to three years, and the borrower is eligible for an annual “pay for performance” principal balance reduction payment of up to $250 per year for up to five years.231 Investors receive modification incentive payments equal to an annualized amount of 1.6% of the unmodified UPB, paid on a monthly basis for up to five years. If the borrower misses three consecutive payments on the modified second lien or if the associated first lien is no longer in good standing, no further incentive payments are typically made to the servicer or the borrower.232 However, according to Treasury guidance issued on March 30, 2011, the incentives can be paid under certain conditions.233 If the second lien is fully or partially extinguished, the investor receives a payment of a percentage of the amount extinguished, using the schedule shown in Table 2.14. This schedule applies only to loans that have been six months delinquent or less within the previous year. For loans that have been more than six months delinquent within the previous 12 months, investors are paid $0.06 per dollar of the UPB of second liens being extinguished, regardless of the combined LTV ratio.234 As of March 31, 2011, according to Treasury, approximately $14.4 million in TARP funds had been paid to servicers and investors in connection with 21,229 loan extinguishments and modifications under 2MP.235 Agency-Insured Loan Programs Some mortgage loans insured or guaranteed by Federal Government agencies (FHA, VA, and RHS) are eligible for modification. Similar to HAMP, Treasury FHA-HAMP and RD-HAMP reduce borrowers’ monthly mortgage payments to 31% of their gross monthly income and require borrowers to complete trial payment plans before their loans are permanently modified. Subject to meeting Treasury’s eligibility criteria, borrowers are eligible to receive a maximum $1,000 Servicing Advances: If borrowers’ payments are not made promptly and in full, servicers are contractually obligated to advance the required monthly payment amount in full to the investor. Once a borrower becomes current or the property is sold or acquired through foreclosure, the servicer is repaid all advanced funds. Table 2.14 2mp compensation per dollar of loan principal extinguished Combined Loan-to-Value < 115% Ratio (“CLTV”) a Range 115% to 140% > 140% Incentive Amounts $0.15 $0.10 $0.21 Notes: Loans less than or equal to six months past due. For loans that were more than six months delinquent within the previous year, investors receive $0.06 per dollar of UPB extinguished in compensation, regardless of the CLTV ratio. a The CLTV is the ratio of the sum of the current total UPB of the HAMP-modified first lien and the unmodified second lien divided by the property value determined in making the permanent HAMP modification. Source: Treasury, “Making Home Affordable Program Handbook for Servicer of Non-GSE Mortgages, Version 3.0,” 12/2/2010, https://www.hmpadmin.com/portal/programs/docs/hamp_ servicer/mhahandbook_30.pdf, accessed 12/6/2010. 80 special inspector general I troubled asset relief program pay-for-performance compensation incentive and servicers are eligible to receive a maximum $1,000 pay-for-success compensation incentive from Treasury on mortgages in which the monthly payment was reduced by at least 6%.236 Incentive payments to servicers are paid annually for the first three years after the first anniversary of the first trial payment due date, as long as the loan remains in good standing and has not been fully repaid at the time the incentive is paid. Incentive payments to borrowers are paid over five years.237 Unlike HAMP, no payments are made to investors because they already have the benefit of a Government loan guarantee.238 In order to participate in these programs, servicers that previously executed a SPA were required to execute — by October 3, 2010 — an Amended and Restated SPA or an additional Service Schedule that includes Treasury FHA-HAMP or RDHAMP.239 As of March 31, 2011, according to Treasury, approximately $585,418 in TARP funds had been paid to servicers and borrowers in connection with 2,174 permanent FHA-HAMP modifications. Treasury stated that it could not provide SIGTARP with the amount of incentive payments and modifications completed under RD-HAMP.240 VA-HAMP follows the typical HAMP modification procedure, aiming to reduce monthly mortgage payments to 31% of a borrower’s gross monthly income.241 However, VA-HAMP modifications do not have a trial period. The modification agreement immediately changes the installment amount of the mortgage payment.242 Treasury does not provide incentive compensation related to VA-HAMP.243 VA-HAMP also does not require servicers to sign a SPA.244 Home Affordable Unemployment Program (“UP”) UP, which was announced on March 26, 2010, provides temporary assistance to borrowers whose hardship is related to unemployment.245 Under the program, borrowers who meet certain qualifications can receive unemployment forbearance for a portion of their mortgage payments for at least three months, unless they find work. According to Treasury, “[s]ervicers may extend the minimum forbearance period in increments at the servicer’s discretion, in accordance with investor and regulatory guidelines.”246 As of March 31, 2011, according to Treasury, 7,397 borrowers were actively participating in UP.247 Who Is Eligible HAMP servicers are required to offer an UP forbearance plan of at least three months to a borrower who meets minimum eligibility criteria for HAMP. In addition, a borrower must:248 • have a mortgage secured by a one- to four-unit property, one unit of which must be the borrower’s principal residence • have a first-lien mortgage originated on or before January 1, 2009 quarterly report to congress I april 28, 2011 • have a UPB for a one-unit property that is equal to or less than $729,750 (multi-unit limits are higher) • have a mortgage that was not permanently modified under HAMP • have not received a previous UP forbearance • have requested an UP forbearance plan before the first-lien mortgage loan was seriously delinquent; i.e., three months or more overdue • have received unemployment benefits for up to three months before the forbearance period begins, if required by investor or regulatory guidelines (servicers may extend the minimum period in increments at their discretion, according to investor or regulatory guidelines) • be unemployed and receive unemployment benefits in the month the UP forbearance period becomes effective Borrowers enrolled in HAMP trials who lose their jobs may seek consideration under UP if their mortgage loan was not seriously delinquent (i.e., before three monthly payments are due and unpaid on the last day of the third month) as of the due date for the first trial period payment. If an unemployed borrower in bankruptcy proceedings requests consideration for HAMP, the servicer must first evaluate the borrower for UP, subject to any required bankruptcy court approvals.249 Servicers are required to send the borrower a notice listing all the documentation required for consideration for UP. Borrowers must have at least two weeks from the date on the notice to return the documentation. Upon receipt of the documentation, the servicer must complete the evaluation within 30 days.250 If the borrower becomes eligible for the UP forbearance plan and accepts the plan offer, the servicer must cancel the HAMP trial period plan. Eligible borrowers may request a new HAMP trial period plan after the UP forbearance plan is completed. A borrower who has been determined to be ineligible for HAMP may request assessment for an UP forbearance plan if he or she meets all the eligibility criteria.251 If a borrower who is eligible for UP declines an offer for an UP forbearance plan, the servicer is not required to offer the borrower a modification under HAMP or 2MP while the borrower remains eligible for an UP forbearance plan.252 How UP Works For qualifying homeowners, the mortgage payments during the forbearance period are lowered to no more than 31% of gross monthly income, which includes unemployment benefits.253 According to Treasury, “[a]t the discretion of the servicer, the borrower’s monthly mortgage payments may be suspended in full.”254 The UP forbearance plan is required to last a minimum of three months, unless the borrower becomes employed within that time.255 If the borrower regains employment but because of reduced income still has a hardship, the borrower must be considered for HAMP. If the borrower is eligible, 81 82 special inspector general I troubled asset relief program any payments missed prior to and during the period of the UP forbearance plan are capitalized as part of the normal HAMP modification process.256 If the UP forbearance period expires and the borrower is ineligible for HAMP, the borrower may be eligible for HAMP foreclosure alternatives, such as HAFA.257 PRA On June 3, 2010, Treasury announced that it would implement a program intended to provide investors with incentive payments to encourage them to forgive principal for significantly underwater mortgages. Although PRA did not officially take effect until October 1, 2010, servicers were permitted to begin offering PRA assistance immediately.258 PRA is applicable only to non-GSE loans and therefore does not cover loans owned, guaranteed, or insured by Freddie Mac or Fannie Mae, which have refused to participate in the program.259 Treasury reported to SIGTARP that it was unable to report any information about homeowner participation in PRA as of March 31, 2011, and that it anticipates releasing validated homeowner participation totals beginning this summer.260 Before PRA started, servicers were allowed to forgive principal to achieve the DTI ratio goal of 31% on a stand-alone basis or before any of the other HAMP modification steps but did not receive additional incentive payments for doing so.261 PRA gave servicers new flexibility in applying waterfall steps if they forgave at least 5% of a borrower’s UPB in conjunction with a PRA modification and added incentives for investors.262 In contrast to other HAMP programs, PRA does not require servicers to forgive principal under any circumstances, even when doing so is deemed to offer greater financial benefit to the investor.263 Who Is Eligible Borrowers who meet all HAMP eligibility requirements and who owe more than 115% of their home’s value are eligible for PRA.264 According to Treasury, servicers may but are not required to evaluate for PRA assistance those existing HAMP borrowers who were in HAMP permanent modifications or existing second-lien mortgage loans modified through 2MP retroactively.265 Servicers that choose to do so must develop written policies and procedures to identify existing loans that are eligible and treat them in a consistent manner.266 If a servicer chose to consider existing HAMP borrowers for retroactive application of PRA, it had to evaluate those loans by January 31, 2011.267 How PRA Works Principal forbearance divides a mortgage loan into two segments, one interestbearing and the other not. The borrower continues to make regular principal and interest payments on the interest-bearing segment, but no monthly payments are due on the non-interest-bearing segment. Rather, that segment, which represents 83 quarterly report to congress I april 28, 2011 the principal forbearance amount, is due as an additional lump-sum or “balloon” payment at the earlier of the sale of the property or the maturity date of the mortgage. Under PRA, if the borrower remains in good standing on the first, second, and third anniversaries of the modification, the servicer reduces the principal balance in the separate forbearance account on each anniversary in installments equal to one-third of the initial PRA forbearance amount.268 Participating servicers must evaluate for PRA assistance every HAMP-eligible loan that has an outstanding LTV greater than 115%. A servicer does so by running two NPV tests — one with and one without principal forgiveness — using methodologies prescribed by Treasury.269 If the standard waterfall produces a positive NPV result, the servicer must modify the loan.270 However, servicers are not required to offer principal reduction, even when the NPV result under the alternative waterfall using principal forgiveness is positive and exceeds the NPV result under the standard waterfall; they are required simply to consider PRA-eligible borrowers for such assistance.271 The two versions of the NPV test differ in the following manner. The original NPV test calculates investor return if the mortgage is modified according to the standard HAMP procedures: reducing the mortgage interest rate, extending the term of the loan, and forbearing principal. The alternative NPV test begins by reducing the outstanding principal balance to 115% of the property’s value; if that alone is insufficient to bring the monthly payment to 31% of the borrower’s monthly income, then the NPV test continues with the standard HAMP modification steps.272 This NPV test then uses the reduced outstanding principal balance to calculate the return to investors, taking into account incentive payments and the annual PRA principal reductions.273 Servicers that forgive at least 5% of the borrower’s UPB have additional discretion in setting the terms of the modification because they are permitted to extend the loan’s maturity date before reducing the interest rate when determining the modified payment.274 Who Gets Paid According to Treasury, in addition to the other incentives paid for first-lien modifications, investors are entitled to receive a percentage of each dollar of principal forgiven under PRA. Incentive payments are received on the first, second, and third anniversaries of the modification date and are paid at the same time that the previously forborne principal is forgiven.275 According to Treasury, as of March 31, 2011, there have been no expenditures of PRA incentives because no homeowners have reached the incentive payment anniversary timeline.276 Table 2.15 shows the schedule under which investors are compensated for forgiving principal. The incentive payments range from $0.06 to $0.21 per dollar of UPB forgiven, depending on the level to which the outstanding LTV ratio was reduced and the period of delinquency.277 Table 2.15 PRA incentives to investors per dollar of loan principal reduced Mark-to-Market 105% Loan-to-Value Ratio to (“LTV”) Rangea 115% 115% to 140% > 140% Incentive Amounts $0.15 $0.10 $0.21 Notes: Loans less than or equal to six months past due. For loans that were more than six months delinquent within the previous year, investors receive $0.06 per dollar of UPB forgiven in compensation, regardless of the LTV ratio. a The mark-to-market LTV is based on the pre-modified UPB of the first-lien mortgage divided by the value of the property. Source: Treasury, “Modification of Loan with Principal Reduction Alternative,” 6/3/2010, https://www.hmpadmin.com/[portal/ docs/hamp_servicer/sd1005.pdf, accessed 7/2/2010. 84 special inspector general I troubled asset relief program Equity Share Agreement: Agreement that a homeowner will share future increases in home value with a mortgage investor or other party. In the context of mortgage loan modifications, the investor may reduce the borrower’s UPB in return for the right to share in a portion of any future rise in the home’s value. An equity share agreement thus may provide the mortgage investor with a prospect of recovering its full investment, even if it provides a principal reduction to the borrower. The agreement may also provide an immediate benefit to an “underwater” borrower, yet still offer that borrower some prospect of benefiting from future home price appreciation. For example, Dick and Jane have a mortgage loan UPB of $115,000 on a home that is currently worth $100,000. Dick and Jane enter into an equity share agreement with their mortgage investor that reduces the UPB on their mortgage loan by $10,000, to $105,000. The investor receives a principal reduction incentive of $2,100. A few years later, Dick and Jane sell their home for $120,000, which represents $15,000 over the balance from the equity share agreement. If the agreement calls for an equal division of home price gains between borrower and investor, the investor would receive half that amount, less the $2,100 in compensation already received ($7,500 – $2,100 = $5,400). Dick and Jane would receive the balance, or $9,600. The schedule provides increasing incentive payments for the additional amount by which investors are willing to reduce a mortgage’s UPB compared with the property’s value. This schedule is applicable only to those loans that have been delinquent for six months or less within the previous year. For loans that have been delinquent for longer than that period, investors are paid $0.06 per dollar of principal reduction, regardless of the LTV ratio.278 Treasury states that although servicers may reduce the mortgage principal balance below the floor of a 105% LTV ratio, no PRA incentives will be paid for that portion of the principal reduction amount.279 As an additional incentive, an investor may agree to reduce a borrower’s UPB as part of an equity share agreement under which the borrower and investor agree to share in the increase of the value of the property, under certain conditions. These include:280 • The agreement may not require the borrower to make any equity share payments until the loan is fully satisfied. Thus, even if the home increases in value, the borrower need not make any payments to the investor based on that increase in the home’s value until the mortgage loan is repaid. • The agreement may not include a prepayment penalty, meaning that the borrower may not be assessed fees for repaying the loan ahead of its scheduled maturity. • The agreement must include reasonable provisions permitting the borrower to recoup costs from improvements (for example, renovations) that increase the home’s value. • The investor may not receive more than 50% of any increase in property value (after credit for improvements made by the borrower) between the date of the permanent modification and the date when the loan is fully satisfied. In addition, the investor may not recover more than the amount of principal reduction minus the PRA investor incentive. Thus, the investor may not recover more than half of any future increase in the value of the home, subject to a cap equal to the initial reduction in UPB minus incentives received by the investor through PRA. • The agreement must incorporate a method for independently assessing the value of the property when the loan is fully satisfied that is acceptable to both the investor and the borrower. In addition, the assessment of the property value at the time of the permanent modification must be that obtained as part of the borrower’s evaluation for a HAMP modification. Thus, the initial property valuation must be the same as that used for the borrower’s HAMP evaluation, and there must be an independent method, acceptable to both the borrower and the investor, to determine any increase in the home’s value when the loan is repaid. quarterly report to congress I april 28, 2011 FHA Short Refinance/FHA2LP On March 26, 2010, Treasury and HUD announced the FHA Short Refinance program, which gives borrowers the option of refinancing an underwater, non-FHAinsured mortgage into an FHA-insured mortgage at 97.75% of the home’s value. The original program announcement estimated TARP support for the program at up to $14 billion.281 This amount has been revised downward to an estimate of $10.8 billion. This amount consists of (1) up to $8.0 billion to provide loss protection to FHA on the refinanced first liens through the purchase of a letter of credit; (2) up to $117 million in fees Treasury will incur for the availability and use of the letter of credit; and (3) an estimated allocation of $2.7 billion to make incentive payments to servicers and holders of existing second liens for full or partial principal extinguishments under the related FHA2LP.282 FHA Short Refinance is voluntary for servicers; therefore, not all underwater borrowers who qualify may be able to participate in the program.283 The program was launched on September 7, 2010; FHA2LP went into effect on September 27, 2010.284 As of March 31, 2011, according to Treasury and HUD, 17 servicers had agreed to participate in FHA Short Refinance and 107 loans had been refinanced under the program.285 As of that date, there had not been any defaults on loans refinanced into FHA Short Refinance, and therefore, no losses had been incurred and the line of credit had not been accessed.286 According to Treasury, it had not made incentive payments and no second liens had been extinguished under FHA2LP through March 31, 2011.287 Who Is Eligible To be eligible for FHA Short Refinance, a homeowner must meet the following criteria:288 • • • • be current on the existing first-lien mortgage be in a negative equity position occupy the home as a primary residence qualify for the new loan under standard FHA underwriting requirements and have a FICO credit score of at least 500 • have an existing loan that is not insured by FHA • fully document his or her income According to HUD, applications are evaluated using FHA’s TOTAL Scorecard (“TOTAL”). TOTAL evaluates the credit risk of FHA loans that are submitted to an automated underwriting system. It is FHA’s policy that no borrower be denied an FHA-insured mortgage solely on the basis of a risk assessment generated by TOTAL. The lender must conduct a manual underwriting review under FHA FICO Credit Score: Used by lenders to assess an applicant’s credit risk and whether to extend a loan. It is determined by the Fair Isaac Corporation (“FICO”) using mathematical models based on an applicant’s payment history, level of indebtedness, types of credit used, length of credit history, and newly extended credit. 85 86 special inspector general I troubled asset relief program requirements for all loan applications that receive a “Refer” rating, to assess whether the borrower can be approved. If the loan information is submitted to TOTAL and scored “Refer,” the loan must be manually underwritten and the borrower must meet the following additional conditions:289 • have a total DTI, including all recurring debt, of less than 50% • have a DTI for all housing-related debt (including second liens) of less than 31% after refinancing The FHA-refinanced loan has the following characteristics:290 • The aggregate FHA insurance and TARP-supported loss coverage for the refinanced loan is a maximum of 97.75% of the current value of the home. • The borrower’s combined mortgage debt (including all liens) is written down to a maximum of 115% of the current value of the home. • The existing first-lien holder must write off at least 10% of the borrower’s UPB. • The existing first-lien investor has the option of converting any amount of the original mortgage that is greater than 97.75% of the value of the home to a subordinated second lien for up to 115% of the current value of the home. The balance of the mortgage above 115% is extinguished. If a second lien exists, the total combined mortgage amount after the refinance does not exceed 115% of the home’s value. Additionally, to be eligible under FHA2LP, second liens must meet the following conditions:291 • • • • • have originated on or before January 1, 2009 be immediately subordinate to the first lien before the FHA refinance require the borrower to make a monthly payment not be GSE owned or guaranteed have a UPB of $2,500 or more on the day before the FHA refinance closing date How FHA Short Refinance Works Servicers must first determine the current value of the home pursuant to FHA underwriting standards, which require a third-party appraisal by a HUD-approved appraiser. The borrower is then reviewed through TOTAL and, if necessary, referred for a manual underwriting review to confirm that the borrower’s total monthly mortgage payment (including all payments on subordinate liens) after the 87 quarterly report to congress I april 28, 2011 refinance is not greater than 31% of the borrower’s gross monthly income and the total debt service, including all forms of household debt, is not greater than 50%.292 Next, the lien holders must forgive principal that is more than 115% of the value of the home. Although the first-lien investors must recognize a loss as a result of the mortgage write-down, they receive a cash payment for 97.75% of the current home value from the proceeds of the refinance and may maintain a subordinate second lien for up to 17.25% of that value (for a total balance of 115% of the home’s value).293 The 115% cap applies to all liens on the property. Under FHA2LP, existing second-lien holders may receive incentive payments to extinguish their debts in accordance with the schedule set forth in Table 2.16, or they may negotiate with the first-lien holder for a portion of the new subordinate lien loan.294 Regardless of which choice second-lien holders make, the total of all liens cannot exceed the 115% cap. By obtaining a new FHA-guaranteed loan for an amount that is closer to the current home value than their previous loan, homeowners receive the benefits of a lower monthly mortgage payment and reduction in the principal balance, improving their opportunity to achieve positive equity in their homes.295 If a borrower defaults on a loan refinanced under FHA Short Refinance and submits a claim, the letter of credit purchased by TARP compensates the refinancing investor for a first percentage (originally announced as 7.75%, but currently approximately 13.4%) of losses on each defaulted mortgage, up to the maximum amount specified by the program guidelines.296 This percentage varies from year to year and is set according to a formula derived by the Office of Management and Budget.297 FHA thus is potentially responsible for the remaining approximately 86.6% of potential losses on each mortgage, until the earlier of either (1) the time that the $8.0 billion letter of credit posted by Treasury is exhausted, or (2) 10 years from the issuance of the letter of credit (October 2020), at which point FHA will bear all of the remaining losses.298 TARP has also made an estimated allocation of $2.7 billion under its existing servicer caps to make incentive payments, subject to certain limitations, to (1) investors for pre-existing second-lien balances that are partially or fully extinguished under FHA2LP and (2) servicers, in the amount of $500 for each second-lien mortgage placed into the program.299 HFA HHF On February 19, 2010, the Administration announced a new housing support program, HHF, which was intended to promote “innovative” measures to protect home values, preserve homeownership, and promote jobs and economic growth in the states that have been hit the hardest by the housing crisis.300 The first round of HHF was allocated $1.5 billion of the amount designated for MHA initiatives. Table 2.16 treasury fha2lp compensation per dollar of loan principal extinguished Combined Loanto-Value Ratio (“CLTV”) Rangea 105% to 115% 115% to 140% > 140% Incentive Amounts $0.21 $0.15 $0.10 Notes: Loans less than or equal to six months past due. For loans that were more than six months delinquent within the previous year, investors will receive $0.06 per dollar of loan principal extinguished in compensation, regardless of the CLTV ratio. a The CLTV is the ratio of all mortgage debt to the current FHAappraised value of the property. Source: Treasury, “Supplemental Directive 10-08: Making Home Affordable Program Treasury/FHA Second Lien Program (FHA2LP) to Support FHA Refinance of Borrowers in Negative Equity Positions,” 8/6/2010, www.hmpadmin.com/[portal/ docs/hamp_servicer /sd1008.pdf, accessed 8/20/2010. 88 special inspector general I troubled asset relief program According to Treasury, these funds were designated for five states where the average home price, determined using the FHFA Purchase Only Seasonally Adjusted Index, had decreased more than 20% from its peak. The five states were Arizona, California, Florida, Michigan, and Nevada.301 Plans to use these funds were approved on June 23, 2010.302 On March 29, 2010, Treasury expanded HHF to include five additional states and increased the program’s potential funding by $600 million, bringing total funding to $2.1 billion. The additional $600 million was designated for North Carolina, Ohio, Oregon, Rhode Island, and South Carolina. Treasury indicated that these states were selected because of their high concentrations of people living in economically distressed areas, defined as counties in which the unemployment rate exceeded 12%, on average, in 2009.303 Plans to use these funds were approved on August 3, 2010.304 On August 11, 2010, the Government pledged a third round of HHF funding of $2 billion in additional assistance to state HFA programs that focus on unemployed homeowners who are struggling to make their payments.305 According to Treasury, the third funding round was limited to states that have experienced unemployment rates at or above the national average during the preceding 12 months.306 The states designated to receive funding were Alabama, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, and Tennessee. Washington, D.C. will also receive funding.307 States already covered by the first two HHF rounds of funding may use the additional resources “to support the unemployment programs previously approved by Treasury or they may opt to implement a new unemployment program.”308 States seeking to tap HHF for the first time were required to submit need-specific proposals that met program guidelines to Treasury by September 1, 2010.309 Plans to use to these funds were approved on September 23, 2010.310 Finally, on September 29, 2010, an additional $3.5 billion was made available to existing HHF participants, weighted by population, to be used in previously announced programs.311 Table 2.17 shows the obligation of funds and funds drawn for states participating in the four rounds of HHF as of March 31, 2011. As of that date, the states had drawn down $166.1 million under the program. According to Treasury, the states had only spent a small portion of that amount, the majority of which has been for permitted expenses and costs associated with setting up their programs, not only assistance to borrowers.312 quarterly report to congress I april 28, 2011 Table 2.17 HHF Funding Allocations by State, as of 3/31/2011 Recipient Alabama Arizona Amount Obligated Amount Drawn $162,521,345 $8,000,000 267,766,006 6,255,000 California 1,975,334,096 17,490,000 Florida 1,057,839,136 10,450,000 Georgia 339,255,819 8,500,000 Illinois 445,603,557 11,500,000 Indiana 221,694,139 22,000,000 Kentucky 148,901,875 4,000,000 Michigan 498,605,738 7,725,000 Mississippi 101,888,323 —a Nevada 194,026,240 2,600,000 New Jersey 300,548,144 7,513,704 North Carolina 482,781,786 15,000,000 Ohio 570,395,099 11,600,000 Oregon 220,042,786 15,501,070 79,351,573 3,000,000 Rhode Island South Carolina 295,431,547 7,500,000 Tennessee 217,315,593 6,315,593 Washington, D.C. Total Note: a Mississippi had not drawn upon HHF funds as of March 31, 2011. Source: Treasury, response to SIGTARP data call, 4/6/2011. 20,697,198 1,117,430 $7,600,000,000 $166,067,797 89 90 special inspector general I troubled asset relief program The HFAs of the eligible 18 states and Washington, D.C. each submitted proposals to Treasury. The purpose of these proposals, according to Treasury, was to “meet the unique challenges facing struggling homeowners in their respective housing markets.”313 Treasury required each state to estimate in its proposal the number of borrowers to be helped. According to Treasury, each state’s HFA will report program results (i.e., number of applications approved or denied and assistance provided) on a quarterly basis and post the reports on its website. Some states will initiate pilot programs to assess program performance before full implementation. Treasury indicated that states can reallocate funds between programs and modify existing programs as needed, with Treasury approval, until funds are expended or returned to Treasury after December 31, 2017. Since December 16, 2010, several states have reallocated funds and modified existing programs with Treasury approval. Treasury informed SIGTARP that it was unable to report on the number of homeowners assisted under this program or the number of applications approved or denied as of March 31, 2011, because Treasury did not require the states to report this data until April 30, 2011.314 HHF program specifics and funding details for the participating states and the District of Columbia are shown in the following tables. HHF – State-by-State Description alabama Description Number of Borrowers to Be Helped As Estimated Allocation in State Proposal Alabama’s HFA will administer HHF funds to subsidize 100% of an eligible unemployed or underemployed homeowner’s current mortgage payments and all other mortgage-related expenses up to a total of 12 consecutive months or $15,000 per household. Alabama’s HHF will provide a payment (not to exceed the lesser of six monthly payments or $7,500) to a participating homeowner’s servicer to bring the homeowner current on his or her delinquent mortgage. Eligibility will be based upon homeowner recertification and residence in the home on a monthly basis as well as continued eligibility to receive unemployment compensation. Assistance will cease two months after the homeowner returns to work or the property ceases to be the homeowner’s primary residence. Assistance will be in the form of a zero-interest loan that will be forgiven in equal annual increments based on the term of the loan. $135,497,105 9,033–13,500 Administrative Costs $27,024,240 N/A $162,521,345 9,033–13,500 Total Source: Treasury, “Fourth Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 3/31/2011, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/4th%20Amendment%20Alabama%20Redacted.pdf, accessed 4/6/2011. 91 quarterly report to congress I april 28, 2011 Arizona Description The Permanent Modification Component is designed to help homeowners avoid foreclosure by permanently modifying a borrower’s primary mortgage to achieve a monthly payment that does not exceed 3132% of the borrower’s monthly income. Loan modifications may include principal reduction (the amount of any principal reduction provided by HHF funds must be matched by a borrower’s lender/servicer and will be limited to homeowners whose UPB exceeds 120% of the present market value of the property), interest rate reduction, and/or term extension. Depending on the agreement with the servicer, principal reduction may occur using a five-year forgivable loan up to $50,000 or up to $50,000 in assistance may be provided in equal installments over a three-year period. The Permanent Modification Component aspires to achieve a 90% success rate in modifying loans with the borrowers’ lenders/servicers. Number of Borrowers to Be Helped As Estimated Allocation in State Proposal $204,800,000 4,336–7,227 The Second Mortgage Assistance Component is designed to help homeowners avoid foreclosure by eliminating a second mortgage if necessary to modify the terms of the primary loan, and to reduce the likelihood that a borrower will re-default under the primary loan as a result of the burden of a second mortgage. Assistance will be limited to a maximum of $5,000 in the form of a forgivable five-year secondlien loan. The amount of any principal reduction must be matched by a borrower’s lender/servicer. $7,500,000 1,500–1,875 The Unemployment Mortgage Assistance Component is designed to provide temporary mortgage relief for qualified unemployed borrowers. Borrowers will receive assistance for a set amount of time while the borrower searches for work or obtains job training. The funds will bring the first mortgage due by curing all past-due payments. Additional benefits will be used to pay the full monthly mortgage payment on the first lien for any amount above 31% of household monthly gross income. Assistance will be subject to a per household cap of $50,000 or until the borrower can obtain sufficient income to resume making payments. Funds available under the Unemployment Mortgage Assistance Component may also be applied to extinguish a second mortgage. Assistance will be provided in a forgivable, non-interest bearing five-year loan. $36,000,000 1,440 $19,466,006 N/A $267,766,006 7,276–10,542 Administrative Costs Total Source: Treasury, “Fifth Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 3/31/2011, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/5th%20Amendment%20Arizona%20Redacted.pdf, accessed 4/6/2011. california Description Number of Borrowers to Be Helped As Estimated Allocation in State Proposal The Unemployment Mortgage Assistance Program is designed to help homeowners remain in their homes and prevent avoidable foreclosures despite loss of income due to unemployment. The program subsidizes mortgage payments for up to six months, paying 100% of the monthly payment up to $3,000. The program is designed to assist borrowers who are currently eligible to receive unemployment benefits. The funds will minimize past due payments and provide a borrower with additional time to find alternate employment and replace income needed to make their mortgage payment. The program also complements other loss mitigation programs, including increasing a borrower’s eligibility for an extended written forbearance plan and/or loan modification. $874,995,915 60,531 The Mortgage Reinstatement Assistance Program pays past-due first mortgage amounts up to $15,000. Assistance will be provided as a non-interest subordinate loan secured by a junior lien against the property to be released after three years. $129,400,000 9,211 The Principal Reduction Program pays up to $50,000 on a one-time only basis to reduce principal owed on qualifying properties with negative equity. The goal of the program is for the applicable lender/servicer to match the funds. $790,488,124 25,135 $32,300,000 6,460 The Transition Assistance Program funds would be available on a one-time-only basis up to $5,000 per household and could be used or layered with other CalHFA Mortgage Assistance Corporation HHF programs. All funds will be sent to the servicer, subject to servicer/investor approval of short sale or deed-in-lieu of foreclosure. Funds are intended to help the borrower pay the costs of securing new housing (e.g., rent, moving expenses, and security deposits) and will be available for transition assistance counseling services. Administrative Costs Total $148,150,057 N/A $1,975,334,096 101,337 Source: Treasury, “Fourth Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 3/31/2011, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/4th%20Amendment%20California%20Redacted.pdf, accessed 4/6/2011. 92 special inspector general I troubled asset relief program florida Description Number of Borrowers to Be Helped As Estimated Allocation in State Proposal The Unemployment Mortgage Assistance Program focuses on the creation of a sustainable solution to keep unemployed or underemployed Florida homeowners in their current homes by helping those who are struggling to make their current mortgage payments because of hardships sustained since purchasing their homes. Florida Housing will use HHF funds to pay up to six months of a portion of the mortgage payments on behalf of a qualified homeowner based on the criteria and requirements of each servicer. Homeowners will be required to pay 25% (or a minimum of $70) of their monthly income toward their mortgage payment. This partnership will potentially extend the time period for homeowners to become re-employed at a salary that is sufficient to allow them either to resume making full mortgage payments or to qualify for a mortgage modification that will lower the payments and terms of the mortgage to an affordable level. Assistance will be provided in the form of a zero-interest loan forgiven in equal increments over a five-year period. $634,938,257 53,000 The Mortgage Loan Reinstatement Program (“MLRP”) focuses on the creation of a sustainable solution to keep Florida homeowners in their current homes by helping those who are behind on their mortgage payments because of financial hardship sustained since purchasing the home, such as unemployment, substantial underemployment, death, divorce, or disability. HHF funds will only be used to pay, directly to the first mortgage loan servicer, up to 180 days of arrearage payments, to include principal and interest plus any required escrow payments (such as taxes and insurance), late fees, and insufficient fund fees. The borrower must be able to resume current payments or qualify for a mortgage modification that will lower the payments and terms of the mortgage to an affordable level, based upon the current income. $317,469,129 53,000 $105,431,750 N/A $1,057,839,136 106,000 Administrative Costs Total Source: Treasury, “Fourth Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 3/31/2011, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/4th%20Amendment%20Florida%20Redacted.pdf, accessed 4/6/2011. georgia Description Number of Borrowers to Be Helped As Estimated Allocation in State Proposal The Mortgage Payment Assistance (“MPA”) Program will provide loans to unemployed and substantially underemployed homeowners to help them remain in their homes and avoid preventable foreclosures, despite loss of income due to involuntary job loss. Loan proceeds will be used to pay mortgage payments to assist unemployed and underemployed homeowners while they look for new jobs or complete training for new careers as well as provide a one-time payment to homeowners who have found new jobs in order to bring them current on their mortgage. Assistance will be in the form of zero-interest, nonrecourse, deferred-payment subordinate loans that will be forgiven 20% per year over the five-year loan. Assistance will last the lesser of 18 months or two months beyond the date on which the homeowner secures adequate employment. $311,972,813 18,300 Administrative Costs $27,283,006 N/A $339,255,819 18,300 Total Source: Treasury, “Second Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 12/16/2010, www.treasury.gov/initiatives/financial-stability/housing-programs/ hhf/DocumentsContracts_Agreements/Georgia%202nd%20Amendment.pdf, accessed 4/7/2011. 93 quarterly report to congress I april 28, 2011 illinois Description The Homeowner Emergency Loan Program (“HELP”) will assist unemployed or substantially underemployed homeowners by paying their mortgages for up to 18 months while they search for employment and/or participate in job training. Homeowners must pay the Illinois Housing Development Authority at least 31% of household income to remain eligible. Assistance is limited to 18 months or until one month after borrowers regain employment, whichever is sooner. This assistance will be in the form of a zerointerest, non-recourse, non-amortizing 10-year loan. Total assistance per homeowner will be capped at $25,000 in hardest-hit counties and $20,000 in all others. Administrative Costs Total Number of Borrowers to Be Helped As Estimated Allocation in State Proposal $381,396,200 16,000–27,000 $64,207,357 N/A $445,603,557 16,000–27,000 Source: Treasury, “Second Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 12/16/2010, www.treasury.gov/initiatives/financial-stability/housing-programs/ hhf/DocumentsContracts_Agreements/Illinois%202nd%20Amendment.pdf, accessed 4/7/2011. indiana Description The Unemployment Bridge Program (“UBP”) will provide a monthly benefit to cover a portion of first-mortgage payments for homeowners who are unemployed through no fault or neglect of their own, while they seek new employment. The program will also provide assistance to homeowners who became delinquent while unemployed and still cannot bring their mortgage current with income from their new jobs. Program assistance will be capped at 18 months in hardest-hit counties and 12 months in all others. Assistance will be provided in the form of a forgivable, non-recourse, non-amortizing loan, secured by a junior lien on the property. The loan will be forgiven at a rate of 20% per year in years 6 through 10 of the loan. Administrative Costs Total Number of Borrowers to Be Helped As Estimated Allocation in State Proposal $182,652,552 16,257 $39,041,587 N/A $221,694,139 16,257 Source: Treasury, “Second Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 3/9/2011, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/Redacted%20-%202nd%20Amendment%20to%20HPA%20-%20Indiana.pdf, accessed 3/30/2011. Kentucky Description The Kentucky Unemployment Bridge Program (“UBP”) will provide funds to lenders and servicers on behalf of qualified homeowners who are delinquent on their mortgages or anticipate default due to unemployment or substantial underemployment. Funds will be used to make 100% of the homeowner’s monthly mortgage payment up to a limit of 12 months or $20,000. Homeowners can use the funds for 100 percent of the monthly payment and up to $7,500 to bring the mortgage current. Assistance will be structured as a zero-interest, non-recourse, non-amortizing loan that will be forgiven 20% each year over five years. Administrative Costs Total Number of Borrowers to Be Helped As Estimated Allocation in State Proposal $133,550,000 6,250–13,000 $15,351,875 N/A $148,901,875 6,250–13,000 Source: Treasury, “Third Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 3/31/2011, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/3rd%20Amendment%20Kentucky%20Redacted.pdf, accessed 4/6/2011. 94 special inspector general I troubled asset relief program michigan Description Number of Borrowers to Be Helped As Estimated Allocation in State Proposal The Principal Curtailment Program will provide a one-time matching fund of up to $10,000 to homeowners seeking to modify their loans. The lender/servicer must agree to provide matching forgiveness of principal overhang and to modify the reduced loan balance. Borrowers can receive HAMP assistance prior to or after receiving program assistance. $30,400,000 3,044 The Loan Rescue Program will provide up to $5,000 in assistance to households who can now sustain homeownership, catch up on delinquent payments and avoid foreclosure. The program will provide a onetime award that will be paid directly to the lender/servicer. $108,800,000 21,760 The Unemployment Mortgage Subsidy Program will assist the eligible borrower in retaining homeownership by subsidizing the lesser of 100% or $1,500 of the first mortgage payment due after the borrower is approved for the program, and the lesser of 50% or $750 of the subsequent 11 mortgage payments. The assistance will not exceed a total of 12 consecutive months or $9,750. Homeowners will continue to be responsible for the remaining unsubsidized portion of their monthly payment. Borrowers will also be eligible for up to an additional $3,000 in assistance to correct a mortgage delinquency that accumulated during a period of unemployment prior to receiving monthly mortgage assistance. $313,874,464 24,618 Administrative Costs $45,531,274 N/A $498,605,738 49,422 Total Source: Treasury, “Third Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 12/16/2010, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/Michigan%203rd%20Amendment%20(Redacted)%20v2.pdf, accessed 1/20/2011. MISSISSIPPI Description The Home Saver Program is offered to borrowers who are unemployed or substantially underemployed. The program will pay 100% of the monthly mortgage payment for up to 12 months and up to an additional 12 months contingent upon the borrower entering an educational program at his or her own expense that leads to a certification or degree from one of the state’s community colleges or a four-year institution if the program can be completed within 24 months. Borrowers in designated distressed counties will receive support for up to six additional months to find a job after completing their educational training. Assistance may also be provided to pay up to six months of arrears accumulated during a period of unemployment or substantial underemployment. Total assistance per borrower will be limited to $44,000. Borrowers with income that is 120% or more of the state’s average income and mortgages above $271,000 will not be eligible for the program. Administrative Costs Total Number of Borrowers to Be Helped As Estimated Allocation in State Proposal $89,123,115 3,800 $12,765,208 N/A $101,888,323 3,800 Source: Treasury, “Second Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 12/16/2010, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/Mississippi%202nd%20Amendment.pdf, accessed 4/7/2011. 95 quarterly report to congress I april 28, 2011 nevAda Description Number of Borrowers to Be Helped As Estimated Allocation in State Proposal The goal of the First Mortgage Principal Reduction Program is to reduce first-mortgage principal balances throughout the state of Nevada such that the loan-to-value ratios are reduced to 115% or less and, correspondingly, the Principal, Interest, Taxes, and Insurance (“PITI”) payment is reduced to 31% or less of the homeowner’s gross income. The program will provide a principal reduction of up to $25,000, with a 1:1 match from the note holder if possible. The First Mortgage Principal Reduction Program will assist the underemployed and income-restricted homeowner candidates. $75,412,387 3,016–5,000 The Second Mortgage Reduction Program is aimed at assisting borrowers with removing the impediment of a second lien on their property such that either a refinancing or first-mortgage modification can be carried out, thus preventing foreclosure. The maximum amount of the program will be $16,500 per dwelling and will be a one-time payment. $36,552,962 2,200 The Short Sale Acceleration Program is aimed at assisting borrowers who are beginning or need to initiate the short-sale process to relieve themselves of unsustainable mortgage burdens — even with a material loan principal reduction. The program is expected to last for up to 24 months and will pay out a maximum of $8,025 to a qualified family. The candidates for the Short Sale Acceleration program will have been through a HAMP or similar private or GSE loan modification process and “failed” by a sufficiently material level to not even qualify for Nevada’s Principal Reduction Program for first mortgages. $6,175,464 1,371 The Mortgage Assistance Program (“MAP”) is designed to keep first mortgages current for families with an unemployed or underemployed wage earner. The program will provide up to the lesser of one-third of the principal and interest payments or a $500 supplement to the family’s monthly principal and interest payments on the first-lien mortgage. For qualifying families, MAP payments may extend up to six months or up to two months after employment. The payments are intended to serve as a financial bridge to unemployed or underemployed homeowners while they attempt to upgrade their work skills. All MAP assistance will be structured as a zero-interest, forgivable nonrecourse loan. Borrowers who sustain homeownership for 60 successive months following the end of the MAP payments will have their payment amounts forgiven. $50,906,871 16,969 $24,978,556 N/A $194,026,240 23,556–25,540 Administrative Costs Total Source: Treasury, “Fourth Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 4/5/2011, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/4th%20Amendment%20Nevada%20Redacted.pdf, accessed 4/7/2011. NEW JERSEY Description Number of Borrowers to Be Helped As Estimated Allocation in State Proposal The New Jersey HomeKeeper Program will provide zero-interest mortgage loans to unemployed and substantially underemployed homeowners unable to make their mortgage payments and in danger of losing their homes through no fault of their own. Loan proceeds will be used to cover mortgage arrearages and/or portions of monthly mortgage payments while the homeowner looks for work or trains for a new career. The maximum loan is $48,000 and may be available for up to 24 months. Assistance will be a zero-interest, deferred-payment, nonrecourse loan forgivable at a rate of 20% per year after the 5th year and in full at the end of the 10th year. $261,933,144 6,900 Administrative Costs $38,615,000 N/A $300,548,144 6,900 Total Source: Treasury, “Second Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 12/16/2010, www.treasury.gov/initiatives/financial-stability/housing-programs/ hhf/DocumentsContracts_Agreements/New%20Jersey%202nd%20Amendment.pdf, accessed 4/7/2011. 96 special inspector general I troubled asset relief program NORTH CAROLINA Description The Mortgage Payment Program (“MPP-1”) will provide zero-interest, nonrecourse, deferred-payment subordinate loans that will be forgiven after 10 years to homeowners who are unemployed or dealing with a temporary program-eligible hardship. Loan proceeds will be used to pay monthly mortgage and mortgage-related expenses while homeowners seek or train for new jobs. Homeowners in hardest-hit counties will receive up to $36,000 (not to exceed 36 months of assistance). Homeowners in other counties will receive up to $24,000 (not to exceed 24 months of assistance). Number of Borrowers to Be Helped As Estimated Allocation in State Proposal $99,400,000 5,750 The Mortgage Payment Program (“MPP-2”) will provide zero-interest, nonrecourse, deferred-payment, subordinate loans that will be forgiven after 10 years to homeowners who are unemployed or substantially underemployed, or in danger of losing their homes to foreclosure. Loan proceeds will be used to pay mortgage and mortgage-related expenses until the homeowner secures employment or completes training for a new career. Homeowners in counties where the unemployment rate is higher than 11.3% will receive up to $36,000 (not to exceed 36 months of assistance). Homeowners in other counties will receive up to $24,000 (not to exceed 24 months of assistance). $297,381,786 14,090 The Second Mortgage Refinance Program (“SMRP”) will provide zero-interest, nonrecourse, deferredpayment subordinate loans that will be forgiven after 10 years to homeowners who can no longer afford their second mortgages because of recent unemployment, reduction in income, or other demonstrated financial hardships. The program will be offered only in hardest-hit counties. $15,000,000 1,000 The Permanent Loan Modification Program (“PMLP”) will provide zero-interest, nonrecourse, deferredpayment subordinate loans that will be forgiven after 10 years. The goal of the program is to streamline methods of modifying homeowners’ loans whose mortgages have become unsustainable as a result of a program-eligible hardship. The program will provide for a principal reduction with the added option of a rate decrease and/or term extension by the lender to achieve a monthly mortgage payment of not more than 31% of the homeowner’s monthly gross income. $8,800,000 440 $62,200,000 N/A $482,781,786 21,280 Administrative Costs Total Source: Treasury, “Third Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 12/16/2010, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/North%20Carolina%203rd%20Amendment.pdf, accessed 4/7/2011. 97 quarterly report to congress I april 28, 2011 OHIO Description Number of Borrowers to Be Helped As Estimated Allocation in State Proposal The Rescue Payment Assistance Program will provide funds to lenders/servicers on behalf of homeowners who are delinquent on their mortgage payments due to a delay in receiving unemployment benefits, insufficient income, or other unforeseen circumstances, by bringing them current on delinquent mortgage obligations. The program will be available to eligible unemployed low- and moderate-income homeowners throughout Ohio, up to $15,000. Rescue Payment Assistance will be structured as a zero-interest, nonrecourse, non-amortizing five-year loan secured by the property and repayable only from equity proceeds of a refinance or sale. Twenty percent of the loan balance will be forgiven each year on the anniversary of the closing, and any remaining balance will be forgiven on December 31, 2017. $106,904,903 17,835 The Partial Mortgage Payment Assistance Program supports unemployed homeowners by assisting them with their mortgage payments for up to 15 months while they search for a job and/or participate in job training. To remain eligible for the program, homeowners must pay the greater of 20% of current household income or 25% of the homeowner’s monthly mortgage Principal, Interest, Taxes, and Insurance (“PITI”) payment. The program will be available to eligible unemployed low- and moderate-income homeowners throughout Ohio, for up to $15,000. Assistance will be a zero-interest, non-recourse, nonamortizing five-year loan secured by the property and repayable only from equity proceeds of a refinance or sale. Twenty percent of the loan balance will be forgiven each year on the anniversary of the closing, and any remaining balance will be forgiven on December 31, 2017. $299,540,000 31,900 The Mortgage Modification with Principal Reduction Program will provide assistance to homeowners who do not qualify for existing loan modification programs due to severe negative equity. Funds will be used to incentivize servicers/lenders to reduce a participating underwater homeowner’s mortgage principal to the level necessary to achieve a target of a 115% LTV ratio or less and to achieve an affordable monthly payment equal to 31% or less of household income. Servicers will provide principal forbearance or forgiveness equal to or greater than the program payment. Assistance will be a five-year loan secured by the property and repayable only from equity proceeds of a refinance or sale. Twenty percent of the loan balance will be forgiven each year on the anniversary of the closing, and any remaining balance will be forgiven on December 31, 2017. The program will be available to eligible low and moderate income homeowners, up to a maximum benefit amount of $15,000 per household. $22,717,635 2,350 The Transition Assistance Program will assist homeowners whose mortgage payment exceeds the Affordable Monthly Payment, and/or must relocate to gain meaningful employment. The program requires lenders/servicers to consider a short sale or deed-in-lieu of foreclosure option. Borrowers willing to relocate while leaving the property in sellable condition can receive a stipend. The program will be available to eligible low- and moderate-income homeowners throughout Ohio, for up to the maximum benefit of $15,000. $18,013,462 4,900 The Short Refinance Program will provide up to $15,000 in funds to lenders/servicers on behalf of homeowners who wish to refinance to a new mortgage loan in order to lower their monthly payment. Funds will be used to reduce the principal balance of the homeowner’s mortgage, which will incentivize lenders/servicers to match the program payment in the form of principal forgiveness to, in the aggregate, reduce the homeowner’s mortgage principal balance to the level necessary to qualify for a refinance, with a target of 95% to 100% combined LTV ratio. The program will be available to eligible low- and moderate-income homeowners throughout Ohio, for up to the maximum benefit of $15,000. $50,000,000 6,500 Administrative Costs Total $73,219,099 N/A $570,395,099 63,485 Source: Treasury, “Fourth Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 3/31/2011, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/4th%20Amendment%20Ohio%20Redacted.pdf, accessed 4/6/2011. 98 special inspector general I troubled asset relief program OREGON Description Number of Borrowers to Be Helped As Estimated Allocation in State Proposal The Loan Modification Assistance Program will provide funds to assist financially distressed borrowers who are in the process of modifying their home loans. A one-time payment will be made to lenders/servicers to fill a financial gap limiting the homeowner’s eligibility for a loan modification. Funds may be used to reduce outstanding principal, pay delinquent escrow, or strategically apply resources to ensure an NPV test is positive. Modification must result in a LTV ratio of not more than 125%, a total debt-to-income ratio of up to 50%, and a mortgage payment of no more than 31% including principal, interest, taxes, and insurance. Program assistance will be a zero-interest, non-recourse, non-amortizing five-year loan in which a second lien is recorded on the property. Twenty percent of the loan will be forgiven each year it is outstanding. The maximum benefit per homeowner is $10,000. $26,000,000 2,600 The Mortgage Payment Assistance Program will provide up to 12 months or $20,000 of mortgage payment assistance, whichever is used first, for unemployed or substantially underemployed homeowners. The program aims to assist borrowers until they can obtain sufficient income to resume scheduled mortgage payments, or qualify for a modified mortgage payment. Program assistance will be a zero-interest, non-recourse, non-amortizing five-year loan in which a second lien is recorded on the property. Twenty percent of the loan will be forgiven each year it is outstanding. The program will provide a maximum benefit of $20,000 per borrower. $100,000,000 5,000 The Loan Preservation Assistance Program will benefit homeowners who have regained employment or recovered from financial distress to ensure their loans become, or remain, affordable. Program assistance may be used to ensure successful loan modification, pay arrearages, bring a delinquent borrower current, cure delinquent escrow, or pay other fees. Recipients may receive up to $20,000. Lenders/servicers will receive a one-time payment on behalf of the borrower and will waive administrative fees. $57,000,000 2,850 The Transition Assistance Program will be offered to homeowners at imminent risk of foreclosure. This program will be an alternative exit point for Mortgage Payment Subsidy Program participants who do not get new jobs or recover from financial distress to the extent that they would benefit from loan preservation assistance. This program will work with lender/servicer short sale and deed-in-lieu of foreclosure programs to help homeowners transition to affordable housing. Funds will be available on a one-time basis up to $3,000. $7,552,038 2,515 The Loan Refinancing Assistance Pilot Program will purchase loans on behalf of homeowners with negative equity mortgages, who have recovered from unemployment, underemployment or financial distress and show the capability to pay a mortgage payment based on a principal balance reflecting the market value of the property. All loans will be purchased at or below the appraised value of the home and at least 10% below the current UPB. After the loan purchase, these mortgages will be refinanced at the home’s current appraised value. $10,000,000 330 Administrative Costs Total $19,490,748 N/A $220,042,786 13,295 Source: Treasury, “Fourth Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 3/31/2011, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/4th%20Amendment%20Oregon%20Redacted.pdf, accessed 4/6/2011. 99 quarterly report to congress I april 28, 2011 RHODE ISLAND Description Number of Borrowers to Be Helped As Estimated Allocation in State Proposal The Loan Modification Assistance for HAMP Customers (“LMA-HAMP”) will provide up to $6,000 to allow homeowners to qualify for HAMP modifications. Lenders/servicers must first exhaust all steps required under the HAMP waterfall process and still not be able to modify the mortgage. Borrowers must have monthly mortgage payments greater than 31% of their gross monthly income and must be able to document financial hardship putting them at risk of foreclosure. Program assistance will be a zero-interest fiveyear loan secured by the property and forgivable at 20% per year over five years. Lenders must agree to provide a one-to-one match and a HAMP modification agreement must be signed by the borrower and lender. In addition, up to $30,000 in total assistance may be available through the Temporary and Immediate Homeowner Assistance (“TIHA”) Program for targeted homeowners at risk of foreclosure. $10,000,000 1,750 The Loan Modification Assistance for non-HAMP Customers (“LMA Non-HAMP”) will provide up to $6,000 to allow homeowners to qualify for a modification. All borrowers must be able to document their financial hardship. Program assistance will be a zero-interest five-year loan secured by the property and forgivable at 20% per year over five years. In addition, up to $30,000 in total assistance may be available through the TIHA Program for targeted homeowners who are at risk of foreclosure. $10,000,000 1,750 The Temporary and Immediate Homeowner Assistance Program (“TIHA”) aims to help homeowners who can document financial hardship caused by uncontrollable increases in housing expenses or uncontrollable decreases in incomes that put them at risk of foreclosure. To qualify, these income changes must meet a specified percentage on a sliding income scale. Assistance is capped at $6,000 from TIHA per household and limits assistance to $12,000 when combined with LMA-HAMP or LMA-Non-HAMP. In special circumstances, up to $30,000 in aid may be available to targeted homeowners who are at risk of foreclosure. $10,000,000 2,750 The Moving Forward Assistance Program (“MFA”) will offer eligible homeowners a one-time payment, up to $4,000, to help them stay in their homes and to facilitate a short sale or deed-in-lieu of foreclosure and/ or to assist the homeowner with relocation. In special circumstances, up to $30,000 may be available through TIHA to facilitate a short sale or deed-in-lieu of foreclosure for homeowners of targeted affordable properties that are at risk of foreclosure. $3,500,000 875 The Mortgage Payment Assistance–Unemployment Program will provide up to $6,000 to help unemployed homeowners make partial mortgage payments while they search for a new job or participate in a job-training program. Homeowners will be required to contribute the greater of $250 or 31% of their total gross monthly household income toward their mortgage obligation. Homeowners can receive up to two months of assistance after securing a job as long as the household limit has not been reached. Program assistance will be a zero-interest loan secured by the property and forgivable at 20% per year over five years. When used in combination with LMA programs and TIHA, household assistance will be capped at $14,500. When combined with MFA, household assistance is capped at $10,000. $34,282,743 6,000 Administrative Costs $11,568,830 N/A Total $79,351,573 13,125 Source: Treasury, “Third Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 12/16/2010, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/Rhode%20Island%203rd%20Amendment.pdf, accessed 4/7/2011. 100 special inspector general I troubled asset relief program SOUTH CAROLINA Description Number of Borrowers to Be Helped As Estimated Allocation in State Proposal The Monthly Payment Assistance Program will help eligible homeowners make all of their monthly mortgage payments. The goal of the program is to bridge borrowers across a gap in employment, thus giving them time to become self-sustaining and avoid delinquency or foreclosure. Program assistance will be capped at 24 months or $36,000, depending on the unemployment rate in the county in which the property is located. Assistance will be a zero-interest loan forgiven over five years at a rate of 20% per year. $157,305,000 8,500–13,000 The Direct Loan Assistance Program will assist homeowners who may have fallen behind on their mortgage payments, but later regained the ability to make their full payments. In many cases, arrears may have accrued that — until paid — place a hardship on the borrower because of the accumulation of late fees and other charges. This program aims to make these mortgages current, through a one-time payment, so the homeowner can avoid delinquency or foreclosure. Assistance is a one-time payment and will be capped at $10,000 per household, depending on county unemployment. $49,980,000 7,000–11,000 The HAMP Assistance Program provides funding to homeowners applying for HAMP modifications, but falling just short of qualifying. Program assistance will bridge the gap so that homeowners can modify their mortgages to affordable levels, thus helping them avoid foreclosure. The goal of this program is to help borrowers become eligible for HAMP. Assistance is a one-time payment per borrower household and will be capped at $5,000. $5,000,000 1,000–1,500 The Second Mortgage Assistance Program offers incentives to investors or, in some cases, funding to acquire second liens from investors unable or unwilling to modify these liens so that homeowners can qualify for HAMP. Assistance is a one-time payment per borrower household and will be capped at $10,000, depending on the county’s rate of unemployment. $11,140,563 1,600–2,600 The Property Disposition Assistance Program is intended to facilitate short sales and deeds-in-lieu of foreclosure for homeowners who are unable to stay in their homes. Funds will also be used to transition families from homeownership to renting. Assistance is a one-time payment per borrower household and will be capped at $5,000. $18,000,000 3,000–6,000 $54,005,984 N/A $295,431,547 21,100–34,100 Administrative Costs Total Source: Treasury, “Third Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 12/16/2010, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/South%20Carolina%203rd%20Amendment.pdf, accessed 4/7/2011. TENNESSEE Description The Hardest Hit Fund Program will provide loans to unemployed or substantially underemployed homeowners who are unable to make their payments and in danger of losing their homes to foreclosure. Homeowners may receive assistance for up to a maximum of 12 or18 months (depending on county). Loans will be provided to homeowners until they secure employment or while they complete job training for a new career. Assistance will be capped at $20,000 for up to 18 months in targeted areas and $15,000 for up to 12 months in standard benefit counties. Administrative Costs Total Number of Borrowers to Be Helped As Estimated Allocation in State Proposal $191,827,012 11,211 $25,488,581 N/A $217,315,593 11,211 Source: Treasury, “Second Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 12/16/2010, www.treasury.gov/initiatives/financial-stability/housing-programs/ hhf/DocumentsContracts_Agreements/Tennessee%202nd%20Amendment.pdf, accessed 4/7/2011. 101 quarterly report to congress I april 28, 2011 WASHINGTON, D.C. Description The HomeSaver Program will offer lump-sum or ongoing monthly payments to Unemployment Insurance (“UI”) claimants or those who have received UI payments in the last six months. Assistance is capped at 15 months. The Lifeline component will offer a one-time payment of up to three months’ worth of mortgage payments to make the mortgage current. The Mortgage Assistance component will offer up to 15 months’ worth of mortgage payments. The Restore component will be available for participants needing a one-time “catch up” payment. This will be capped at six months’ worth of mortgage payments. Maximum assistance is capped at $32,385 per household. Administrative Costs Total Number of Borrowers to Be Helped As Estimated Allocation in State Proposal $17,316,704 540–1,000 $3,380,494 N/A $20,697,198 540–1,000 Source: Treasury, “Third Amendment to Commitment to Purchase Financial Instrument and HFA Participation Agreement,” 3/31/2011, www.treasury.gov/initiatives/financial-stability/housing-programs/hhf/ DocumentsContracts_Agreements/3rd%20Amendment%20Washington%20DC%20Redacted.pdf, accessed 4/6/2011. 102 special inspector general I troubled asset relief program FINANCIAL INSTITUTION SUPPORT PROGRAMS Treasury created six TARP programs through which it made capital investments or asset guarantees in exchange for equity in participating financial institutions. Three of the programs, the Capital Purchase Program (“CPP”), the Community Development Capital Initiative (“CDCI”), and the Capital Assistance Program (“CAP”), were open to all qualifying financial institutions (“QFIs”). The other three, the Systemically Significant Failing Institutions (“SSFI”) program, the Targeted Investment Program (“TIP”), and the Asset Guarantee Program (“AGP”), were available on a case-by-case basis to institutions that needed assistance beyond that available through CPP. With the expiration of TARP funding authorization, no new investments can be made through CPP, CAP, TIP, AGP, and CDCI, but dollars that are already obligated may still be expended through SSFI. To help improve the capital structure of some struggling TARP recipients, Treasury has agreed to modify its investment by converting the preferred stock it originally received into other forms of equity, such as common stock or mandatorily convertible preferred stock.315 CPP Treasury’s stated goal for CPP was to invest in “healthy, viable institutions” as a way to promote financial stability, maintain confidence in the financial system, and enable lenders to meet the nation’s credit needs.316 CPP was a voluntary program open to all QFIs through an application process. QFIs included U.S.-controlled banks, savings associations, and certain bank and savings and loan holding companies.317 Under CPP, Treasury used TARP funds predominantly to purchase preferred equity interests in QFIs. The QFIs issued Treasury senior preferred shares that pay a 5% annual dividend for the first five years and a 9% annual dividend thereafter. In addition to the senior preferred shares, publicly traded QFIs issued Treasury warrants to purchase common stock with an aggregate market price equal to 15% of the senior preferred share investment. Privately held QFIs issued Treasury warrants to purchase additional senior preferred stock worth 5% of Treasury’s initial preferred stock investment.318 In total, Treasury invested $204.9 billion of TARP funds in 707 QFIs through CPP.319 quarterly report to congress I april 28, 2011 According to Treasury, through March 31, 2011, CPP recipients had repaid $179.1 billion of the principal (or 87.4%) leaving $25.9 billion outstanding. In addition, Treasury had received from CPP recipients approximately $10.7 billion in interest and dividends. Treasury also had received $7.4 billion through the sale of CPP warrants that were obtained from TARP recipients.320 For a snapshot of CPP funds outstanding and associated repayments, see Figure 2.3. Status of Funds Through CPP, Treasury purchased $204.9 billion in preferred stock and subordinated debentures from 707 QFIs in 48 states, the District of Columbia, and Puerto Rico. Although the 10 largest investments accounted for $142.6 billion of the program, CPP made many smaller investments: 331 of 707 recipients received $10.0 million or less.321 Table 2.18 and Table 2.19 show the distribution of investments by amount. Figure 2.3 SNAPSHOT OF CPP FUNDS OUTSTANDING AND REPAID, BY QUARTER ($ BILLIONS) 198.8 0.4 203.2 204.6 204.9 204.9 204.9 204.9 204.9 204.9 70.1 70.7 121.9 135.8 146.9 152.8 167.9 179.1 177.5 198.4 177.5 $200 150 115.0 100 115.0 133.1 133.9 83.0 50 0 69.1 58.0 52.1 37.0 25.9 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 CPP Funds Outstanding at Quarter’s End CPP Funds Repaid at Quarter’s End Note: Numbers affected by rounding. Source: Treasury, Transactions Report, 3/31/2011. 103 104 special inspector general I troubled asset relief program Table 2.18 CPP investment summary BY TRANSACTION Total Investment Originala Currentb $204.9 billion $25.9 billion Largest Capital Investment 25 billion 3.5 billion Smallest Capital Investment 301 thousand 301 thousand Average Capital Investment 277.3 million 43.5 million Median Capital Investment $10.3 million $9.0 million Notes: Numbers affected by rounding. Data as of 3/31/2011. a These numbers are based on total Treasury CPP investment since 10/28/2008. b Amount does not include those investments that have already been repaid or are related to institutions that filed for bankruptcy protection, and is based on total investments outstanding. Treasury does not include in the number of banks with outstanding CPP investments those institutions that have repaid their CPP principal but still have warrants outstanding. Source: Treasury, Transactions Report, 3/31/2011. Table 2.19 CPP investment size by institution $10 billion or more Originala Outstandingb 6 0 $1 billion to $10 billion 19 4 $100 million to $1 billion 57 33 Less than $100 million 625 529 Total 707 566 Notes: Data as of 3/31/2011. Data is based on the institutions’ total CPP investments. There are more than 30 institutions that have received multiple investments through CPP. a These numbers are based on total Treasury CPP investment since 10/28/2008. b Amount does not include those investments that have already been repaid or are related to institutions that filed for bankruptcy protection, and is based on total investments outstanding. Treasury does not include in the number of banks with outstanding CPP investments those institutions that have repaid their CPP principal but still have warrants outstanding. Source: Treasury, Transactions Report, 3/31/2011. 105 quarterly report to congress I april 28, 2011 Repayment of Funds Through March 31, 2011, 141 banks — including 10 with the largest CPP investments — had fully repaid CPP by repurchasing all of the banks’ preferred shares. In addition, 17 banks have partially repaid by purchasing from Treasury some of the banks’ preferred shares.322 As of that date, Treasury had received approximately $179.1 billion in principal repayments, leaving approximately $25.9 billion outstanding.323 Of the repaid amount, $363.3 million was converted from CPP investments into CDCI and therefore still represents outstanding obligations to TARP.324 For a complete list of CPP share repurchases, see Appendix D: “Transaction Detail.” Program Administration Although Treasury’s investment authority for CPP has ended, Treasury still has significant responsibilities for managing the existing CPP portfolio, including the following: • • • • collecting dividends and interest payments on outstanding investments monitoring the performance of outstanding investments disposing of warrants as investments are repaid selling or restructuring Treasury’s investment in some troubled financial institutions • selecting observers for recipients that have missed five quarterly dividend payments • potentially selecting directors for recipients that have missed six or more quarterly dividend payments Dividends and Interest As of March 31, 2011, Treasury had received $10.7 billion in dividends and interest on its CPP investments.325 However, as of that date, 173 QFIs had unpaid dividend or interest payments to Treasury totaling approximately $277.3 million, an increase from the 155 QFIs that had unpaid dividend (or interest) payments totaling approximately $276.4 million as of December 31, 2010. Approximately $11.6 million of the unpaid amounts are non-cumulative, meaning that the institution has no legal obligation to pay Treasury unless the institution declares a dividend.326 Table 2.20 shows the number of QFIs and total unpaid amount of dividend and interest payments by quarter from September 30, 2009, to March 31, 2011. Table 2.20 Missed dividend/interest payments by qfis, 9/30/2009 to 3/31/2011 ($ millions) Number of QFIs Value of Unpaid Amountsa,b,c 9/30/2009 38 75.7 12/31/2009 43 137.4 3/31/2010 67 182.0 Quarter End 6/30/2010 109 209.7 9/30/2010 137 211.3 12/31/2010 155 276.4 3/31/2011 173 277.3 d Notes: a Includes unpaid cumulative dividends, non-cumulative dividends, and Subchapter S interest payments but does not include interest accrued on unpaid cumulative dividends. b Excludes institutions that missed payments but (i) had fully “caught up” on missed payments at the end of the quarter reported in column 1, or (ii) had repaid their investment amounts and exited CPP. c Includes institutions that missed payments and (i) entered into a recapitalization or restructuring plan with Treasury; (ii) Treasury sold the CPP investment to a third party, or otherwise disposed of the investment to facilitate the sale of the institution to a third party without receiving full repayment of unpaid dividends; (iii) filed for bankruptcy relief; or (iv) had a subsidiary bank fail. d Includes four QFIs and their missed payments not reported in Treasury’s “Capital Purchase Program Missed Dividends & Interest Payments” as of 6/30/2010 but reported in Treasury’s “Cumulative Dividends, Interest and Distributions Report” as of the same date. The four QFIs are CIT, Pacific Coast National Bancorp, UCBH Holdings, Inc., and Midwest Banc Holdings, Inc. Sources: Treasury, “Capital Purchase Program Missed Dividends & Interest Payments,” 12/31/2010; Treasury, “Cumulative Dividends, Interest and Distributions Report,” 6/30/2010; Treasury, responses to SIGTARP data call, 10/7/2009, 1/12/2010, 4/8/2010, and 6/30/2010; SIGTARP, January 2010 Quarterly Report, 1/30/2010; SIGTARP, April 2010 Quarterly Report, 4/20/2010; SIGTARP, July 2010 Quarterly Report, 7/21/2010; SIGTARP, October 2010 Quarterly Report, 10/26/2010; Treasury, “Capital Purchase Program Missed Dividends & Interest Payments,” 3/31/2011. 106 special inspector general I troubled asset relief program Treasury’s Policy on Missed Dividend and Interest Payments According to Treasury, it “evaluates its CPP investments on an ongoing basis with the help of outside advisors, including external asset managers. The external asset managers provide a valuation for each CPP investment” that results in Treasury assigning the institution a credit score.327 For those that have unfavorable credit scores, including any institution that has missed more than three dividend (or interest) payments, Treasury has stated that the “asset manager dedicates more resources to monitoring the institution and may talk to the institution on a more frequent basis.”328 Under the terms of the preferred shares or subordinated debentures held by Treasury as a result of its CPP investments, in certain circumstances, such as when a participant misses six dividend (or interest) payments, Treasury has the right to appoint up to two additional members to the institution’s board of directors.329 Treasury has stated that it will prioritize the institutions for which it appoints directors based on “the size of its investment, Treasury’s assessment of the extent to which new directors may make a contribution and Treasury’s ability to find appropriate directors for a given institution.”330 These directors will not represent Treasury but have the same fiduciary duties to shareholders as all other directors. They will be compensated by the institution in a manner similar to other directors.331 Treasury has engaged an executive search firm to identify suitable candidates for board of directors positions and has begun interviewing such candidates.332 According to Treasury, it continues to prioritize institutions for nominating directors in part based on whether its investment exceeds $25 million. When Treasury’s right to nominate a new board member becomes effective, it evaluates the institution’s condition and health and the functioning of its board, including the information gathered by observers, to determine whether additional directors are necessary.333 As of March 31, 2011, Treasury had not yet appointed board members to any CPP institution’s board of directors.334 For institutions that miss five or more dividend payments, Treasury has stated that it would seek consent from such institutions to send observers to the institutions’ board meetings.335 According to Treasury, the observers would be selected from the Office of Financial Stability (“OFS”) and assigned to “gain a better understanding of the institution’s condition and challenges and to observe how the board is addressing the situation.”336 Their participation would be limited to inquiring about distributed materials, presentations, and actions proposed or taken during quarterly report to congress I april 28, 2011 the meetings, as well as addressing any questions concerning their role.337 As of March 31, 2011, Treasury had sent observers to 38 CPP recipients.338 SIGTARP and Treasury do not use the same methodology to report unpaid dividend and interest payments. For example, Treasury generally excludes institutions from its “non-current” reporting: (i) that have completed a recapitalization, restructuring, or exchange with Treasury (though Treasury does report such institutions as non-current during the pendency of negotiations); (ii) for which Treasury sold the CPP investment to a third party, or otherwise disposed of the investment to facilitate the sale of the institution to a third party; (iii) that filed for bankruptcy relief; or (iv) that had a subsidiary bank fail.339 SIGTARP generally includes such activity in Table 2.21 under “Value of Unpaid Amounts” with the value set as of the date of the bankruptcy, restructuring, or other event that relieves the institution of the legal obligation to continue to make dividend and interest payments. If a completed transaction resulted in payment to Treasury for all unpaid dividends and interest, SIGTARP does not include the institution’s obligations under unpaid amounts. SIGTARP, unlike Treasury, does not include in its table institutions that have “caught up” by making previously missed dividend and interest payments.340 According to Treasury, as of March 31, 2011, 33 QFIs had missed at least six dividend payments (up from 19 last quarter) and 27 banks had missed five dividend (or interest) payments totaling $137.7 million.341 Table 2.21 lists CPP recipients that had unpaid dividend (or interest) payments as of March 31, 2011. For a complete list of CPP recipients and institutions making dividend or interest payments, see Appendix D: “Transaction Detail.” 107 108 special inspector general I troubled asset relief program 108 Table 2.21 CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 3/31/2011 (Continued) Institution Name Dividend or Payment Type Number of Payments Saigon National Bank Non-Cumulative 9 Anchor BanCorp Wisconsin, Inc. Cumulative 8 Blue Valley Ban Corp Cumulative 8 Lone Star Bank Non-Cumulative 8 OneUnited Bank Non-Cumulative 8 Seacoast Banking Corporation of Florida Cumulative 8 United American Bank Non-Cumulative 8 Centrue Financial Corporation Cumulative 7 Citizens Bancorp Cumulative 7 Dickinson Financial Corporation II Cumulative 7 First Banks, Inc. Cumulative 7 Georgia Primary Bank Non-Cumulative 7 Grand Mountain Bancshares, Inc. Cumulative 7 Idaho Bancorp Cumulative 7 One Georgia Bank Non-Cumulative 7 Pacific City Financial Corporation Cumulative 7 Premier Service Bank Non-Cumulative 7 Royal Bancshares of Pennsylvania, Inc. Cumulative 7 Cascade Financial Corporation Cumulative 6 Citizens Commerce Bancshares, Inc. Cumulative 6 FC Holdings, Inc. Cumulative 6 Heritage Commerce Corp Cumulative 6 Integra Bank Corporation Cumulative 6 Northern States Financial Corporation Cumulative 6 Omega Capital Corp. Cumulative 6 Pathway Bancorp Cumulative 6 Premierwest Bancorp Cumulative 6 Ridgestone Financial Services, Inc. Cumulative 6 Rising Sun Bancorp Cumulative 6 Rogers Bancshares, Inc. Cumulative 6 Observer Assigned to Board of Directors1 ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü ü Value of Missed Payments2 Value of Unpaid Amounts2, 3, 4 $180,948 $180,948 11,229,167 11,229,167 2,175,000 2,175,000 339,107 339,107 1,206,300 1,206,300 5,000,000 5,000,000 941,715 941,715 2,858,450 2,858,450 991,900 991,900 13,929,860 13,929,860 28,173,775 28,173,775 438,725 438,725 286,885 286,885 658,088 658,088 530,391 530,391 1,545,075 1,545,075 378,472 378,472 2,660,613 2,660,613 2,922,750 2,922,750 515,025 515,025 1,720,170 1,720,170 3,000,000 3,000,000 6,268,950 6,268,950 1,290,825 1,290,825 230,235 230,235 304,635 304,635 3,105,000 3,105,000 891,075 891,075 489,090 489,090 2,043,750 2,043,750 Syringa Bancorp Cumulative 6 654,000 654,000 The Freeport State Bank Non-Cumulative 6 24,600 24,600 Alliance Financial Services, Inc.* Interest 5 1,006,800 1,006,800 BNCCORP, Inc. Cumulative 5 1,368,875 1,368,875 Cecil Bancorp, Inc. Cumulative 5 722,500 722,500 Central Virginia Bankshares, Inc. Cumulative 5 711,563 711,563 Citizens Bancshares Co. (MO) Cumulative 5 1,702,500 1,702,500 Citizens Bank & Trust Company Non-Cumulative 5 163,500 163,500 Citizens Republic Bancorp, Inc. Cumulative 5 18,750,000 18,750,000 ü ü ü Continued on next page. 109 quarterly report to congress I april 28, 2011 CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 3/31/2011 (Continued) Value of Missed Payments2 Value of Unpaid Amounts2, 3, 4 Institution Name Dividend or Payment Type City National Bancshares Corporation Cumulative 5 $589,938 $589,938 Commonwealth Business Bank Non-Cumulative 5 524,625 524,625 Community 1st Bank Non-Cumulative 5 150,219 150,219 Congaree Bancshares, Inc.** Cumulative 5 268,515 223,763 Duke Financial Group, Inc.* Interest 5 1,258,500 1,258,500 Fidelity Federal Bancorp Cumulative 5 440,512 440,512 First Federal Bancshares of Arkansas, Inc. Cumulative 5 1,031,250 1,031,250 First Security Group, Inc. Cumulative 5 2,062,500 2,062,500 First Sound Bank Non-Cumulative 5 462,500 462,500 First Southwest Bancorporation, Inc. Cumulative 5 374,688 374,688 FPB Bancorp, Inc. (FL) Cumulative 5 362,500 362,500 Intermountain Community Bancorp Cumulative 5 1,687,500 1,687,500 Intervest Bancshares Corporation Cumulative 5 1,562,500 1,562,500 Investors Financial Corporation of Pettis County, Inc.* Interest 5 419,500 419,500 Monarch Community Bancorp, Inc. Cumulative 5 424,063 424,063 Pacific International Bancorp Inc Cumulative 5 406,250 406,250 Presidio Bank Non-Cumulative 5 703,656 703,656 Tennessee Valley Financial Holdings, Inc. Cumulative 5 204,375 204,375 U.S. Century Bank Non-Cumulative 5 3,422,350 3,422,350 Bankers’ Bank of the West Bancorp, Inc. Cumulative 4 688,830 688,830 Bridgeview Bancorp, Inc. Cumulative 4 2,071,000 2,071,000 First Community Bancshares, Inc (KS) Cumulative 4 806,600 806,600 First Trust Corporation* Interest 4 1,507,537 1,507,537 FNB United Corp. Cumulative 4 2,575,000 2,575,000 Gold Canyon Bank Non-Cumulative 4 84,670 84,670 Goldwater Bank, N.A. Non-Cumulative 4 209,880 139,920 Gregg Bancshares, Inc. Cumulative 4 44,940 44,940 Heritage Oaks Bancorp Cumulative 4 1,050,000 1,050,000 Madison Financial Corporation Cumulative 4 183,710 183,710 Maryland Financial Bank Non-Cumulative 4 92,650 92,650 Midtown Bank & Trust Company** Non-Cumulative 4 355,738 284,590 Midwest Banc Holdings, Inc. **** Cumulative 4 4,239,200 4,239,200 Cumulative 4 494,588 395,670 Millennium Bancorp, Inc.** ,5 Number of Payments Observer Assigned to Board of Directors1 ü ü ü ü ü Continued on next page. 109 110 special inspector general I troubled asset relief program 110 CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 3/31/2011 (Continued) Number of Payments Observer Assigned to Board of Directors1 Value of Missed Payments2 Value of Unpaid Amounts2, 3, 4 Institution Name Dividend or Payment Type Northwest Bancorporation, Inc. Cumulative 4 $572,250 $572,250 Patapsco Bancorp, Inc. Cumulative 4 327,000 327,000 Patterson Bancshares, Inc Cumulative 4 201,150 201,150 Pierce County Bancorp**** Cumulative 4 370,600 370,600 Plumas Bancorp Cumulative 4 597,450 597,450 Prairie Star Bancshares, Inc. Cumulative 4 152,600 152,600 Premier Bank Holding Company Cumulative 4 517,750 517,750 Santa Clara Valley Bank, N.A. Non-Cumulative 4 158,050 158,050 Stonebridge Financial Corp. Cumulative 4 598,060 598,060 TCB Holding Company Cumulative 4 639,330 639,330 The Bank of Currituck***** Non-Cumulative 4 219,140 219,140 Timberland Bancorp, Inc. Cumulative 4 832,050 832,050 Valley Financial Corporation Cumulative 4 800,950 800,950 Non-Cumulative 4 72,549 72,549 TIB Financial Corp*****,7 Cumulative 4 1,850,000 1,850,000 1st FS Corporation Cumulative 3 613,838 613,838 Berkshire Bancorp, Inc. Cumulative 3 118,238 118,238 BNB Financial Services Corporation Cumulative 3 306,563 306,563 Boscobel Bancorp, Inc* Interest 3 351,468 351,468 Broadway Financial Corporation Cumulative 3 562,500 562,500 Capital Commerce Bancorp, Inc. Cumulative 3 208,463 208,463 Community Bank of the Bay 6 CBS Banc-Corp Cumulative 3 993,263 993,263 Community Bankers Trust Corporation Cumulative 3 663,000 663,000 Covenant Financial Corporation Cumulative 3 204,375 204,375 First Community Bank Corporation of America***** Cumulative 3 400,688 400,688 Harbor Bankshares Corporation** Cumulative 3 425,000 255,000 HomeTown Bankshares Corporation Cumulative 3 400,245 400,245 Legacy Bancorp, Inc.**** Cumulative 3 206,175 206,175 Market Bancorporation, Inc. Cumulative 3 84,203 84,203 Mercantile Bank Corporation Cumulative 3 787,500 787,500 MS Financial, Inc. Cumulative 3 315,662 315,662 Pinnacle Bank Holding Company Cumulative 3 179,370 179,370 Premier Financial Corp* Interest 3 399,464 399,464 Provident Community Bancshares, Inc. Cumulative 3 347,475 347,475 Sonoma Valley Bancorp**** Cumulative 3 353,715 353,715 The Connecticut Bank and Trust Company Non-Cumulative 3 178,573 178,573 The Queensborough Company Cumulative 3 490,500 490,500 Continued on next page. 111 quarterly report to congress I april 28, 2011 CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 3/31/2011 (Continued) Value of Missed Payments2 Value of Unpaid Amounts2, 3, 4 Institution Name Dividend or Payment Type Treaty Oak Bancorp, Inc.***** Cumulative 3 $135,340 $135,340 Trinity Capital Corporation Cumulative 3 1,452,660 1,452,660 Cumulative 3 298,013 298,013 Cumulative 3 13,012,500 13,012,500 Blue Ridge Bancshares, Inc. Cumulative 2 327,000 327,000 Cadence Financial Corporation***** Cumulative 2 1,650,000 1,650,000 CalWest Bancorp Cumulative 2 126,885 126,885 CB Holding Corp. Cumulative 2 112,120 112,120 Central Federal Corporation Cumulative 2 180,625 180,625 CIT Group Inc. **** Cumulative 2 29,125,000 29,125,000 Colonial American Bank Non-Cumulative 2 15,655 15,655 CSRA Bank Corp. Cumulative 2 65,400 65,400 FBHC Holding Company*, ***** Interest 2 123,127 123,127 First Financial Service Corporation Cumulative 2 500,000 500,000 First United Corporation Cumulative 2 750,000 750,000 Florida Bank Group, Inc. Cumulative 2 557,855 557,855 Fort Lee Federal Savings Bank Non-Cumulative 2 35,425 35,425 Fresno First Bank Non-Cumulative 2 33,357 33,357 Great River Holding Company* Interest 2 352,380 352,380 Green Bankshares, Inc. Cumulative 2 1,806,950 1,806,950 Liberty Shares, Inc. Cumulative 2 470,880 470,880 Western Community Bancshares, Inc. The South Financial Group, Inc.***** ,8 ,7 Number of Payments Observer Assigned to Board of Directors1 Marine Bank & Trust Company Non-Cumulative 2 81,750 81,750 Old Second Bancorp, Inc. Cumulative 2 1,825,000 1,825,000 Pacific Coast National Bancorp**** Cumulative 2 112,270 112,270 Pacific Commerce Bank** Non-Cumulative 2 142,596 87,279 Premier Financial Bancorp, Inc. Cumulative 2 556,300 556,300 Regent Bancorp, Inc** Cumulative 2 408,008 272,005 Santa Lucia Bancorp Cumulative 2 100,000 100,000 Spirit BankCorp, Inc. Cumulative 2 817,500 817,500 Tidelands Bancshares, Inc Cumulative 2 361,200 361,200 Alpine Banks of Colorado Cumulative 1 953,750 953,750 Bank of the Carolinas Corporation Cumulative 1 164,738 164,738 Carolina Bank Holdings, Inc. Cumulative 1 200,000 200,000 Clover Community Bankshares, Inc. Cumulative 1 40,875 40,875 Coastal Banking Company, Inc. Cumulative 1 124,375 124,375 Community Financial Shares, Inc. Cumulative 1 94,978 94,978 Continued on next page. 111 112 special inspector general I troubled asset relief program CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 3/31/2011 (Continued) Number of Payments Observer Assigned to Board of Directors1 Value of Missed Payments2 Value of Unpaid Amounts2, 3, 4 Institution Name Dividend or Payment Type Crescent Financial Corporation Cumulative 1 $311,250 $311,250 Eastern Virginia Bankshares, Inc. Cumulative 1 300,000 300,000 Exchange Bank Non-Cumulative 1 585,875 585,875 Greer Bancshares Incorporated Cumulative 1 136,163 136,163 HCSB Financial Corporation Cumulative 1 161,188 161,188 Highlands Independent Bancshares, Inc. Cumulative 1 91,288 91,288 HMN Financial, Inc. Cumulative 1 325,000 325,000 MetroCorp Bancshares, Inc.** Cumulative 1 2,250,000 562,500 Monadnock Bancorp, Inc. Cumulative 1 24,995 24,995 Naples Bancorp, Inc. Cumulative 1 54,500 54,500 National Bancshares, Inc. Cumulative 1 336,043 336,043 Ojai Community Bank Non-Cumulative 1 28,340 28,340 Patriot Bancshares, Inc. Cumulative 1 354,770 354,770 Princeton National Bancorp, Inc. Cumulative 1 313,538 313,538 Private Bancorporation, Inc. Cumulative 1 108,335 108,335 Reliance Bancshares, Inc. Cumulative 1 545,000 545,000 Security State Bank Holding-Company*, ** Interest 1 901,994 225,499 SouthCrest Financial Group, Inc. Cumulative 1 175,763 175,763 Southern Community Financial Corp. Cumulative 1 534,375 534,375 Tifton Banking Company**** Non-Cumulative 1 51,775 51,775 UCBH Holdings, Inc.**** Cumulative 1 3,734,213 3,734,213 United Community Banks, Inc. Cumulative 1 2,250,000 2,250,000 White River Bancshares Company Cumulative 1 228,900 228,900 Central Pacific Financial Corp.***,9 Cumulative 6 10,125,000 Pacific Capital Bancorp***,9 Cumulative 5 Sterling Financial Corporation (WA) ***,9 Cumulative 4 18,937,500 18,937,500 Hampton Roads Bankshares, Inc.***,9 Cumulative 4 4,017,350 4,017,350 Independent Bank Corporation***, ** Cumulative 4 4,890,746 3,090,746 First BanCorp (PR)**, *** Cumulative 3 32,077,176 12,077,176 Superior Bancorp Inc.*** Cumulative 3 2,587,500 2,587,500 $325,770,431 $277,287,787 Exchanges Total ü ü 13,547,550 Continued on next page. quarterly report to congress I april 28, 2011 CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 3/31/2011 (Continued) Observer Assigned to Value of Dividend or Number of Board of Missed CPP-RELATED MISSED DIVIDEND AND INTEREST PAYMENTS, AS OF 3/31/2011 (Continued) Institution Name Payment Type Payments Directors1 Payments2 Value of Unpaid Amounts2, 3, 4 Notes: Numbers may not total due to rounding. Approximately $11.6 million of the $277.3 million in unpaid CPP dividend/interest payments are non-cumulative, and Treasury has no legal right to missed dividends that are non-cumulative. * Missed interest payments occur when a Subchapter S recipient fails to pay Treasury interest on a subordinated debenture in a timely manner. ** Partial payments made after the due date. *** Completed an exchange with Treasury. For an exchange of mandatorily convertible preferred stock or trust preferred securities, dividend payments normally continue to accrue. For an exchange of mandatorily preferred stock for common stock, no additional preferred dividend payments will accrue. **** Filed for bankruptcy or subsidiary bank failed. For completed bankruptcy proceedings, Treasury’s investment was extinguished and no additional dividend payments will accrue. For bank failures, Treasury may elect to file claims with bank receivers to collect current and/or future unpaid dividends. ***** Treasury sold or is selling its CPP investment to the institution or a third party. No additional preferred dividend payments will accrue after a sale, absent an agreement to the contrary. For First BanCorp and Pacific Capital Bancorp, Treasury had a contractual right to assign an observer to the board of directors. For the remainder, Treasury obtained consent from the institution to assign an observer to the board of directors. Includes unpaid cumulative dividends, non-cumulative dividends, and Subchapter S interest payments but does not include interest accrued on unpaid cumulative dividends. 3 Excludes institutions that missed payments but (i) have fully caught up or exchanged new securities for missed payments, or (ii) have repaid their investment amounts and exited the Capital Purchase Program. 4 Includes institutions that missed payments and (i) completed an exchange with Treasury for new securities, (ii) purchased their CPP investment from Treasury, or saw a third party purchase its CPP investment from Treasury, or (iii) are in, or have completed, bankruptcy proceedings or its subsidiary bank failed. 5 For Midwest Banc Holdings, Inc., the number of missed payments is the number last reported from SIGTARP Quarterly Report to Congress 4/20/2010, prior to bankruptcy filing; missed payment amounts are from Treasury’s response to SIGTARP data call, 10/13/2010. 6 Treasury reported four missed payments by Community Bank of the Bay before it was allowed to transfer from CPP to CDCI. Upon transfer, Treasury reset the number of missed payments to zero. 7 For South Financial Group, Inc. and TIB Financial Corp, the number of missed payments and unpaid amounts reflect figures Treasury reported prior to the sale. 8 For CIT Group Inc., the number of missed payments is from the number last reported from SIGTARP Quarterly Report to Congress 1/30/2010, shortly after the bankruptcy filing; missed payment amounts are from Treasury’s response to SIGTARP data call, 10/13/2010. 9 Completed exchanges: - The exchange between Treasury and Hampton Roads, and the exchange between Treasury and Sterling Financial, did not account for unpaid dividends. The number of missed payments and unpaid amounts reflect the figures Treasury reported prior to the exchange. - The exchange between Treasury and Central Pacific Financial Corp., and the exchange between Treasury and Pacific Capital Bancorp, did account for unpaid dividends, thereby eliminating any unpaid amounts. The number of missed payments reflects the amount Treasury reported prior to the exchange. 1 2 Sources: Treasury, “Capital Purchase Program Missed Dividends & Interest Payments,” 3/31/2011; Treasury, responses to SIGTARP data call, 1/7/2011 and 4/6/2011; SIGTARP Quarterly Report to Congress 1/30/2010; SIGTARP Quarterly Report to Congress 4/20/2010. Warrant Disposition As required by EESA, Treasury receives warrants when it invests in troubled assets from financial institutions, with an exception for certain small institutions. With respect to financial institutions with publicly traded securities, these warrants give Treasury the right, but not the obligation, to purchase a certain number of shares of common stock at a predetermined price.342 Because the warrants rise in value as a company’s share price rises, they permit Treasury (and the taxpayer) to benefit from a firm’s potential recovery.343 For publicly traded institutions, the warrants received by Treasury under CPP allowed Treasury to purchase additional shares of common stock in a number equal to 15% of the value of the original CPP investment at a specified exercise price.344 Treasury’s warrants constitute assets with a fair market value that Treasury estimates using relevant market quotes, financial models, and/ or third-party valuations.345 For publicly traded participants, Treasury received warrants to purchase common stock that expire 10 years from the date of the CPP investment. As of March 31, 2011, Treasury had not exercised any of these warrants.346 For privately held institutions, Treasury received warrants to purchase additional preferred stock or debt in an amount equal to 5% of the CPP investment. Treasury exercised these warrants immediately.347 Exercise Price: Preset price at which a warrant holder may purchase each share. For warrants in publicly traded institutions issued through CPP, this was based on the average stock price during the 20 days before the date that Treasury granted preliminary CPP participation approval. For more information on warrant disposition, see SIGTARP’s audit report of May 10, 2010, “Assessing Treasury’s Process to Sell Warrants Received from TARP Recipients.” 113 114 special inspector general I troubled asset relief program 114 Repurchase of Warrants by Financial Institutions Upon repaying its CPP investment, a recipient may seek to negotiate with Treasury to buy back its warrants. As of March 31, 2011, 57 publicly traded institutions had bought back $3.6 billion worth of warrants, of which $439.4 million was purchased this quarter. As of that same date, 35 privately held institutions, the warrants of which had been immediately exercised, bought back the resulting additional preferred shares for a total of $14.3 million, of which $1.6 million was bought back this quarter.348 Table 2.22 lists publicly traded institutions that have repaid TARP and repurchased warrants as of March 31, 2011. Table 2.23 lists privately held institutions that had done so as of the same date.349 Table 2.22 CPP WARRANT SALES AND REPURCHASES (PUBLIC), AS OF 3/31/2011 Number of Warrants Repurchased Amount of Repurchase ($ Thousands) Repurchase Date Institution 7/22/2009 The Goldman Sachs Group, Inc. 12,205,045 $1,100,000.0 8/12/2009 Morgan Stanley 65,245,759 950,000.0 7/29/2009 American Express Company 24,264,129 340,000.0 3/16/2011 Fifth Third Bancorp 43,617,747 280,025.9 7/7/2010 Discover Financial Services 20,500,413 172,000.0 7/15/2009 U.S. Bancorp 32,679,102 139,000.0 14,516,129 136,000.0 3,824,624 87,000.0 8/5/2009 BNYM 8/26/2009 Northern Trust Corporation 3/9/2011 First Horizon National Corporation 14,842,321 79,700.0 13,902,573 67,010.4 2,788,104 60,000.0 23,562,994 49,100.0 7/22/2009 BB&T Corp. 7/8/2009 State Street Corporationa 1/19/2011 Huntington Bancshares 4/7/2010 City National Corporation 1,128,668 18,500.0 1/26/2011 East West Bancorp, Inc. 1,517,555 14,500.0 9/8/2010 Fulton Financial Corporation 5,509,756 10,800.0 1,647,931 10,000.0 354,058 6,820.0 3,028,264 5,269.2 12/30/2009 Trustmark Corporation 6/16/2010 SVB Financial Group 1/19/2011 Susquehanna Bancshares, Inc. 5/27/2009 FirstMerit Corporation 952,260 5,025.0 9/8/2010 The Bancorp, Inc. 980,203 4,754.0 3/31/2010 Umpqua Holdings Corp. 1,110,898 4,500.0 2/23/2011 Sandy Spring Bancorp, Inc. 651,547 4,450.0 3/9/2011 1st Source Corporation 837,947 3,750.0 9/1/2010 Columbia Banking System, Inc. 398,023 3,301.6 Continued on next page. 115 quarterly report to congress I april 28, 2011 CPP WARRANT SALES AND REPURCHASES (PUBLIC), AS OF 3/31/2011 (continued) Number of Warrants Repurchased Amount of Repurchase ($ Thousands) Repurchase Date Institution 6/24/2009 First Niagara Financial Group 953,096 $2,700.0 11/24/2009 Bank of the Ozarks, Inc. 379,811 2,650.0 5/27/2009 Independent Bank Corp. 5/27/2009 Sun Bancorp, Inc. 3/2/2011 481,664 2,200.0 1,620,545 2,100.0 Washington Banking Company 246,082 1,625.0 4/7/2010 First Litchfield Financial Corporation 199,203 1,488.0 9/30/2009 Bancorp Rhode Island, Inc. 303,083 1,400.0 6/24/2009 SCBT Financial Corporation 192,967 1,400.0 10/28/2009 CVB Financial Corp 834,761 1,307.0 5/20/2009 Iberiabank Corporation 813,008 1,200.0 5/08/2009 Old National Bancorp 138,490 1,200.0 6/24/2009 Berkshire Hills Bancorp, Inc. 226,330 1,040.0 1/5/2011 First PacTrust Bancorp, Inc. 280,795 1,003.2 12/23/2009 WesBanco, Inc. 439,282 950.0 6/17/2009 Alliance Financial Corporation 173,069 900.0 12/30/2009 Flushing Financial Corporation 375,806 900.0 6/30/2009 HF Financial Corp., Sioux Falls 302,419 650.0 12/16/2009 Wainwright Bank & Trust Company 390,071 568.7 12/16/2009 LSB Corporation 209,497 560.0 12/23/2009 Union First Market Bankshares Corporation (Union Bankshares Corporation) 211,318 450.0 2/3/2010 OceanFirst Financial Corp. 190,427 430.8 9/1/2010 Citizens & Northern Corporation 194,794 400.0 9/30/2010 South Financial Group Inc.b 10,106,796 400.0 12/1/2010 Central Jersey Bancorp 268,621 319.7 6/24/2009 Somerset Hills Bancorp 163,065 275.0 2/10/2010 Monarch Financial Holdings, Inc. 132,353 260.0 7/28/2010 Bar Harbor Bankshares 52,455 250.0 9/2/2009 Old Line Bancshares, Inc. 141,892 225.0 10/28/2009 Centerstate Banks of Florida Inc. 125,413 212.0 10/14/2009 Manhattan Bancorp 29,480 63.4 9/30/2010 TIB Financialb 1,106,389 40.0 3/4/2011 Cadence Financial Corporationc 1,145,833 — 1/28/2011 Capital Bank Corporation Total c 749,619 — 313,244,484 $3,580,673.9 Notes: Numbers may not total due to rounding. This table represents warrants for common stock issued to Treasury by publicly traded TARP recipients. Treasury may hold one warrant for millions of underlying shares rather than millions of warrants of an individual financial institution. a State Street Corporation reduced its original amount of warrants issued through a qualified equity offering. b Warrant sales to third parties. c Treasury sold its TARP investment to a third party and assigned a value of zero to the warrant portion. Sources: Treasury, Transactions Report, 1/4/2011 and 3/31/2011; Treasury, responses to SIGTARP data call, 1/4/2011, 1/7/2011, and 4/6/2011. 115 116 special inspector general I troubled asset relief program 116 Table 2.23 CPP REPURCHASES OF PREFERRED SHARES RESULTING FROM IMMEDIATE EXERCISE OF WARRANTS (PRIVATE), AS OF 3/31/2011 Number of Warrants Repurchased Amount of Repurchase ($ Thousands) Community Bancshares of Mississippi, Inc.a 2,600,000 $2,600.0 9/29/2010 BancPlus Corporation 2,400,000 2,400.0 3/16/2011 Stockmens Financial Corporation 778,000 778.0 9/29/2010 State Capital Corporation 750,000 750.0 Repurchase Date Institution 9/29/2010 a a 4/15/2009 Centra Financial Holdings, Inc. 750,000 750.0 5/27/2009 First Manitowoc Bancorp, Inc. 600,000 600.0 6/16/2010 First Southern Bancorp, Inc. 545,000 545.0 9/29/2010 Security Capital Corporationa 522,000 522.0 12/23/2009 Midland States Bancorp, Inc. 509,000 509.0 11/18/2009 1st United Bancorp, Inc. 500,000 500.0 9/29/2010 PSB Financial Corporationa 464,000 464.0 2/16/2011 Georgia Commerce Bancshares, Inc. 435,000 435.0 9/17/2010 First Eagle Bancshares, Inc.a, b 375,000 375.0 11/24/2010 Leader Bancorp, Inc. 292,000 292.0 4/22/2009 First ULB Corp. 245,000 245.0 9/29/2010 First Vemon Bankshares, Inc.a 245,000 245.0 12/23/2008 Capital Bancorp, Inc. 235,000 235.0 2/6/2009 The Bank of Currituckc 201,000 201.0 4/21/2010 Hilltop Community Bancorp, Inc. 200,000 200.0 5/19/2010 Texas National Bancorporation 199,000 199.0 1/23/2009 California Oaks State Bank 165,000 165.0 2/15/2011 Treaty Oak Bancorp, Inc. 163,000 163.0 6/16/2010 FPB Financial Corp. 162,000 162.0 10/6/2010 Frontier Bancshares, Inc.b 150,000 150.0 9/24/2010 First Choice Bank 110,000 110.0 12/29/2009 Surrey Bancorp/ Surrey Bank & Trust 100,000 100.0 12/11/2009 Nationwide Bankshares, Inc.b 100,000 100.0 9/29/2010 Lafayettea 100,000 100.0 3/9/2011 FBHC Holding Company 91,000 91.0 a b 1/26/2011 American Premier Bancorp 90,000 90.0 6/26/2009 Signature Bancshares, Inc.b 85,000 85.0 4/14/2010 First State Bank of Mobeetie 37,000 37.0 11/10/2009 Midwest Regional Bancorp, Inc. 35,000 35.0 7/14/2010 Green City Bancshares, Inc. 33,000 33.0 3/13/2009 Haviland Bancshares, Inc. 21,000 21.0 14,287.000 $14,287.0 Total Notes: Numbers may not total due to rounding. This table represents the preferred shares held by Treasury as a result of the exercise of warrants issued by non-publicly traded TARP recipients. These warrants were exercised immediately upon the transaction date. Treasury may hold one warrant for millions of underlying shares rather than millions of warrants of an individual financial institution. a Transferred to CDCI. b S-Corporation Institution: issued subordinated debt instead of preferred stock. c For The Bank of Currituck, the Transaction Report listed “N/A” for the final disposition date, description, and proceeds. Sources: Treasury, Transactions Report, 1/4/2011 and 3/31/2011; Treasury, responses to SIGTARP data call, 1/4/2011, 1/7/2011, and 4/6/2011. 117 quarterly report to congress I april 28, 2011 117 Treasury Warrant Auctions If Treasury and the repaying QFI cannot agree upon the price for the institution to repurchase its warrants, Treasury may conduct a public offering to auction the warrants.350 In November 2009, Treasury began using a “modified Dutch auction” to sell the warrants publicly.351 On the announced auction date, potential investors (which may include the CPP recipient) submit bids to the auction agent that manages the sale (for CPP-related warrants, Deutsche Bank) at specified increments above a minimum price set by Treasury.352 Once the auction agent receives all bids, it determines the final price and distributes the warrants to the winning bidders.353 Treasury conducted four warrant auctions this quarter, two for Citigroup and one each for Boston Private Financial Holdings, Inc., and Wintrust Financial Corporation, raising $257.6 million, $54.6 million, $6.4 million, and $26.0 million, respectively, for total gross proceeds of $344.6 million.354 The auction of Citigroup A warrants was for the warrants Treasury received for its investment in Citigroup under TIP and its asset guarantee under AGP, and the B warrant auction was for the warrants it received under CPP.355 Through March 31, 2011, Treasury had held 20 public auctions for warrants it received under CPP, TIP, and AGP, raising a total of approximately $5.4 billion.356 Final closing information for all auctions is shown in Table 2.24. Restructurings, Recapitalizations, Exchanges, and Sales of CPP Investments Certain CPP institutions continue to experience high losses and financial difficulties, resulting in inadequate capital or liquidity. To avoid insolvency or improve the quality of capital, these institutions may ask Treasury to convert its CPP preferred shares into a more junior form of equity or accept a lower valuation, resulting in Treasury taking a discount or loss. If a CPP institution is undercapitalized and/ or in danger of becoming insolvent, it may propose to Treasury a restructuring (or recapitalization) plan to avoid failure (or to attract private capital) and to “attempt to preserve value” for Treasury’s investment.357 Treasury may also sell its investment in a troubled institution to a third party at a discount in order to facilitate that party’s acquisition of a troubled institution. Treasury has explained to SIGTARP that although it may incur partial losses on its investment in the course of these transactions, such an outcome may be deemed necessary to avoid the total loss of Treasury’s investment that would occur if the institution failed.358 Under these circumstances, the CPP participant asks Treasury for a formal review of its proposal. The proposal details the institution’s recapitalization plan and may estimate how much capital the institution plans to raise from private investors and whether Treasury and other preferred shareholders will convert their preferred stock to common stock. The proposal may also involve a proposed discount on the conversion to common stock, although Treasury would not realize any loss until it disposes of the stock.359 In other words, Treasury would not know whether a loss Dutch Auction: For a Treasury warrant auction (which has multiple bidders bidding for different quantities of the asset) the accepted price is set at the lowest bid of the group of high bidders whose collective bids fulfill the amount of shares offered by Treasury. As an example, three investors place bids to own a portion of 100 shares offered by the issuer: Bidder A wants 50 shares at $4/share. Bidder B wants 50 shares at $3/share. Bidder C wants 50 shares at $2/share. The seller selects Bidders A and B as the two highest bidders, and their collective bids consume the 100 shares offered. The winning price is $3, which is what both bidders pay per share. Bidder C’s bid is not filled. Auction Agent: Firm (such as an investment bank) that buys a series of securities from an institution for resale. Undercapitalized: Condition in which a financial institution does not meet its regulator’s requirements for sufficient capital to operate under a defined level of adverse conditions. 118 special inspector general I troubled asset relief program 118 Table 2.24 treasury warrant auctions, as of 3/31/2011 Auction Date 3/3/2010 Number of Warrants Offered Minimum Bid Price Selling Price Proceeds to Treasury ($ Millions) Bank of America A Auction (TIP)a 150,375,940 $7.00 $8.35 $1,255.6 Bank of America B Auction (CPP)a 121,792,790 1.50 2.55 310.6 88,401,697 8.00 10.75 950.3 Institution 12/10/2009 JPMorgan Chase 5/20/2010 Wells Fargo and Company 9/21/2010 Hartford Financial Services Group 4/29/2010 PNC Financial Service Group, Inc. 1/25/2011 110,261,688 6.50 7.70 849.0 52,093,973 10.50 13.70 713.7 16,885,192 15.00 19.20 324.2 Citigroup A Auction (TIP & AGP)a 255,033,142 0.60 1.01 257.6 Citigroup B Auction (CPP) 210,084,034 0.15 0.26 54.6 9/16/2010 Lincoln National Corporation 13,049,451 13.50 16.60 216.6 5/6/2010 Comerica Inc. 11,479,592 15.00 16.00 183.7 12/3/2009 Capital One 12,657,960 7.50 11.75 148.7 2/8/2011 Wintrust Financial Corporation 1,643,295 13.50 15.80 26.0 3/9/2010 Washington Federal, Inc. 1,707,456 5.00 5.00 15.6 3/10/2010 Signature Bank 595,829 16.00 19.00 11.3 a 12/15/2009 TCF Financial 3/11/2010 Texas Capital Bancshares, Inc. 3,199,988 1.50 3.00 9.6 758,086 6.50 6.50 6.7 2/1/2011 Boston Private Financial Holdings, Inc. 2,887,500 1.40 2.20 6.4 5/18/2010 Valley National Bancorp 2,532,542 1.70 2.20 5.6 6/2/2010 First Financial Bancorp 6/9/2010 Sterling Bancshares Inc. TOTAL 465,117 4.00 6.70 3.1 2,615,557 0.85 1.15 3.0 1,058,520,829 $5,351.9 Note: Numbers affected by rounding. a Treasury held two auctions each for the sale of Bank of America and Citigroup warrants. Sources: The PNC Financial Services Group, Inc., “Final Prospectus Supplement,” 4/29/2010, www.sec.gov/Archives/edgar/data/713676/000119312510101032/d424b5.htm, accessed 6/30/2010; Valley National Bancorp, “Final Prospectus Supplement,” 5/18/2010, www.sec.gov/Archives/edgar/data/714310/000119312510123896/d424b5.htm, accessed 6/30/2010; Comerica Incorporated, “Final Prospectus Supplement,” 5/6/2010, www.sec.gov/Archives/edgar/data/28412/000119312510112107/d424b5.htm, accessed 6/30/2010; Wells Fargo and Company, “Definitive Prospectus Supplement,” 5/20/2010, www.sec.gov/Archives/edgar/data/72971/000119312510126208/d424b5.htm, accessed 6/30/2010; First Financial Bancorp, “Prospectus Supplement,” 6/2/2010, www.sec.gov/Archives/edgar/data/708955/000114420410031630/v187278_424b5.htm, accessed 6/30/2010; Sterling Bancshares, Inc., “Prospectus Supplement,” 6/9/2010, www.sec.gov/Archives/edgar/data/891098/000119312510137258/d424b5.htm, accessed 6/30/2010; Signature Bank, “Prospectus Supplement,” 3/10/2010, http://files.shareholder.com/downloads/SBNY/865263367x0x358381/E87182B5-A552-43DD-9499-8B56F79AEFD0/8-K__Reg_FD_Offering_Circular.pdf, accessed 3/11/2010; Texas Capital Bancshares, Inc., “Prospectus Supplement,” 3/11/2010, www.sec.gov/Archives/edgar/data/1077428/000095012310023800/d71405ae424b5.htm, accessed 3/12/2010; Bank of America, “Form 8-K,” 3/3/2010, www.sec.gov/Archives/edgar/ data/70858/000119312510051260/d8k.htm, accessed 3/4/2010; Bank of America, “Prospectus Supplement,” 3/1/2010, www.sec.gov/Archives/edgar/data/70858/000119312510044940/d424b7. htm, accessed 3/4/2010; Bank of America, “Prospectus Supplement,” 3/1/2010, www.sec.gov/Archives/edgar/data/70858/000119312510044945/d424b7.htm, accessed 3/4/2010; Washington Federal, Inc., “Prospectus Supplement,” 3/9/2010, www.sec.gov/Archives/edgar/data/936528/000119312510052062/d424b5.htm, accessed 3/10/2010; TCF Financial, “Prospectus Supplement,” 12/16/2009, www.sec.gov/Archives/edgar/data/814184/000104746909010786/a2195869z424b5.htm, accessed 12/29/2009; JPMorgan Chase, “Prospectus Supplement,” 12/11/2009, www.sec.gov/Archives/edgar/data/19617/000119312509251466/d424b5.htm, accessed 12/29/2009; Capital One Financial, “Prospectus Supplement,” 12/3/2009, www.sec.gov/Archives/edgar/data/927628/000119312509247252/d424b5.htm, accessed 12/4/2009; Treasury, Transactions Report, 6/30/2010; Hartford Financial Services Group, Prospectus Supplement to Prospectus filed with the SEC 8/4/2010, www.sec.gov/Archives/edgar/data/874766/000095012310087985/y86606b5e424b5.htm, accessed 10/7/2010; Hartford Financial Services Group, 8-K, 9/27/2010, www.sec.gov/Archives/edgar/data/874766/000095012310089083/y86713e8vk.htm, accessed 10/7/2010; Hartford Financial Services Group, Underwriting Agreement, 8/21/2010, www.sec.gov/Archives/edgar/data/874766/000095012310089083/y86713exv1w1.htm, accessed 10/7/2010; Treasury, Transactions Report, 9/27/2010; Treasury, “Treasury Announces Pricing of Public Offering to Purchase Common Stock of The Hartford Financial Services Group, Inc.,” 9/22/2010, www.financialstability.gov/latest/pr_09222010.html, accessed 9/22/2010; Lincoln National Corporation, Prospectus Supplement to Prospectus filed with SEC 3/10/2009, www.sec.gov/Archives/edgar/data/59558/000119312510211941/d424b5.htm, accessed 10/7/2010; Lincoln National Corporation, 8-K, 9/22/2010, www.sec.gov/Archives/edgar/data/59558/000119312510214540/d8k.htm, accessed 10/7/2010; Treasury, Transactions Report, 2/8/2010; Treasury, Section 105(a) Report, 1/31/2011; Treasury, “Treasury Announces Public Offerings of Warrants to Purchase Common Stock of Citigroup Inc.,” 1/24/2011, www.treasury.gov/ press-center/press-releases/Pages/tg1033.aspx, accessed 2/15/2011; Citigroup, Prospectus, 1/24/2011, www.sec.gov/Archives/edgar/data/831001/000095012311004666/y89178b7e424b7. htm, accessed 3/22/2011; Citigroup, Prospectus, 1/24/2011, www.sec.gov/Archives/edgar/data/831001/000095012311004665/y89177b7e424b7.htm, accessed 3/22/2011; Boston Private Financial Holdings, Inc., Prospectus, 1/28/2011, www.sec.gov/Archives/edgar/data/821127/000119312511021392/d424b5.htm, accessed 3/22/2011; Boston Private Financial Holdings, Inc. 8-K, 2/7/2011, www.sec.gov/Archives/edgar/data/821127/000144530511000189/tarpwarrant020711.htm, accessed 3/22/2011; Wintrust Financial Corporation, Prospectus, 2/8/2011, www. sec.gov/Archives/edgar/data/1015328/000095012311011007/c62806b5e424b5.htm, accessed 3/22/2011; Wintrust Financial Corporation, 8-K, 2/8/2011, www.sec.gov/Archives/edgar/ data/1015328/000095012311013436/c62955e8vk.htm, accessed 3/22/2011; Treasury, Transactions Report, 2/8/2011; Treasury, Section 105(a) Report, 1/31/2011; Treasury, “Treasury Announces Public Offerings of Warrants to Purchase Common Stock of Citigroup Inc.,” 1/24/2011, www.treasury.gov/press-center/press-releases/Pages/tg1033.aspx, accessed 1/15/2011; Treasury, Citigroup Preliminary Prospectus – CPP Warrants, 1/24/2011, www.sec.gov/Archives/edgar/data/831001/000095012311004666/y89178b7e424b7.htm, accessed 3/3/2011; Citigroup, Preliminary Prospectus – TIP & AGP Warrants, 1/24/2011, www.sec.gov/Archives/edgar/data/831001/000095012311004665/y89177b7e424b7.htm, accessed 3/3/2011. Treasury, response to SIGTARP data call, 4/6/2011. quarterly report to congress I april 28, 2011 will occur, or the extent of such a loss, until it sells the common stock it receives as part of such an exchange. According to Treasury, when it receives such a request, it asks one of the external asset managers that it has hired to analyze the proposal and perform due diligence on the institution.360 The external asset manager interviews the institution’s managers, gathers non-public information, and conducts loan-loss estimates and capital structure analysis. The manager submits its evaluation to Treasury, which then decides whether to restructure its CPP investment.361 Table 2.25 shows all restructurings, recapitalizations, exchanges, and sales of CPP investments through March 31, 2011. Due Diligence: Appropriate level of attention or care a reasonable person should take before entering into an agreement or a transaction with another party. In finance, it often refers to the process of conducting an audit or review of the institution before initiating a transaction. Citigroup Update On October 28, 2008, Treasury made a $25.0 billion investment in preferred shares of Citigroup Inc. (“Citigroup”) under CPP.362 On June 9, 2009, at the request of Citigroup, Treasury agreed to an exchange in which Treasury converted its preferred shares to 7.7 billion shares of Citigroup common stock, with a market price of $3.25 per share.363 On March 16, 2010, Treasury announced that it would sell the Citigroup common stock it held as a result of its CPP investment.364 On March 29, 2010, Treasury stated that, under a prearranged written trading plan, it would sell its Citigroup common shares in an “orderly and measured fashion” over the course of 2010, subject to market conditions.365 From April 26, 2010, through December 10, 2010, Treasury sold all of its 7.7 billion shares of Citigroup common stock for approximately $31.85 billion, which represents a gain of $6.85 billion.366 As of December 31, 2010, Treasury no longer owned Citigroup common stock but did hold 465.1 million warrants to purchase Citigroup common stock that it received from Citigroup’s participation in CPP, TIP, and AGP.367 On January 25, 2011, Treasury held two public auctions of its Citigroup warrants and received gross proceeds of $312.2 million.368 According to Treasury, it has realized a gain of approximately $12.3 billion over the course of Citigroup’s participation in CPP, AGP, and TIP, including amounts received from interest, dividends, other income, and warrant sales.369 Recent Exchanges and Sales Metropolitan Bank Group, Inc. and NC Bancorp, Inc. On June 26, 2009, Treasury invested $71.5 million in Metropolitan Bank Group, Inc., Chicago, Illinois (“Metropolitan”) and $6.9 million in NC Bancorp, Inc., Chicago, Illinois (“NC Bancorp”), respectively, through CPP in return for preferred stock and a warrant to purchase additional shares of preferred stocks in each institution, which Treasury exercised immediately.370 On March 30, 2011, Treasury exchanged its preferred stock in Metropolitan and NC Bancorp plus the right to $3.5 million of unpaid dividends, for $81.9 million For a discussion of the basis of the decision to provide Federal assistance to Citigroup, see SIGTARP’s audit “Extraordinary Financial Assistance Provided to Citigroup, Inc.,” dated January 13, 2011. 119 120 special inspector general I troubled asset relief program 120 Table 2.25 Treasury Restructurings, Recapitalizations, exchanges, & Sales, as of 3/31/2011 ($ millions) Institution Date of Investment Original Investment ($ Millions) Combined Investment ($ Millions) Investment Status Citigroup Inc. 10/28/2008 $25,000.0 Popular, Inc. 12/5/2008 935.0 Exchanged for trust preferred securities First BanCorp 1/6/2009 400.0 Exchanged for mandatorily convertible preferred stock South Financial Group, Inc. 12/5/2008 347.0 Sold Sterling Financial Corporation 12/5/2008 303.0 Exchanged for common stock Pacific Capital Bancorp 11/21/2008 180.6 Exchanged for common stock Central Pacific Financial Corp 1/9/2009 135.0 Exchanged for common stock First Merchants 2/20/2009 116.0 Exchanged for trust preferred securities and preferred stock Hampton Roads Bankshares 12/31/2008 80.3 Metropolitan Bank Group Inc. NC Bank Group, Inc. 6/26/2009 71.5 6/26/2009 6.9 Independent Bank Corporation 12/12/2008 72.0 Exchanged for mandatorily convertible preferred stock Superior Bancorp, Inc. 12/5/2008 69.0 Exchanged for trust preferred securities Cadence Financial Corporation 1/9/2009 44.0 Sold Capital Bank Corporation 12/12/2008 41.3 Sold TIB Financial Corp. 12/5/2008 37.0 Sold First Community Bank Corporation of America 12/23/2008 10.7 Sale Pending Bank of Currituck 2/6/2009 4.0 Sold Treaty Oak Bancorp, Inc. 1/16/2009 3.3 Sold FBHC Holding Company 12/29/2009 3.0 Sold Fidelity Resources Company 6/26/2009 3.0 Exchanged for preferred stock in Veritex Holding Exchanged for common stock/warrants and sold Exchanged for common stock 81.9 a Exchanged for new preferred stock in Metropolitan Bank Group, Inc. upon Metropolitan’s acquisition of NC Bank Group. Note: a The new investment amount of $81.9 million includes the original investment amount in Metropolitan Bank Group, Inc. or $71.5 million plus the original investment amount in NC Bank Group, Inc. or $6.9 million plus unpaid dividends of $3.5 million. Sources: Treasury, Transactions Report, 12/31/2010; Treasury response to SIGTARP data call, 10/14/2010; SIGTARP, October Quarterly Report, 10/26/2010; Treasury, Section 105(a) Report, 9/30/2010; Treasury Press Release, “Taxpayers Receive $10.5 Billion in Proceeds Today from Final Sale of Treasury Department Citigroup Common Stock,” www.Treasury.gov/press-center/ press-releases/Pages/tg1000.aspx, 12/10/2010; Treasury Press Release, “Treasury Announces Pricing of Citigroup Common Stock Offering,” www.Treasury.gov/press-center/press-releases/ Pages/tg995.aspx, 12/6/2010; Treasury, Transactions Report, 12/31/2010; Treasury, Section 105(a) Report, 1/31/2011; Treasury Press Release, “Treasury Announces Intent to Sell Warrant Positions in Public Dutch Auctions,” www.Treasury.gov/press-center/press-releases/Pages/tg1023.aspx, 1/14/2011; Treasury, Transactions Report, 3/2/2011; Broadway Financial Corporation, 8-K, 2/17/2011, www.sec.gov/Archives/edgar/data/1001171/000119312511039152/d8k.htm, accessed 2/25/2011; FDIC and Texas Department of Banking, In the Matter of Treaty Oak Bank, Consent Order, 2/5/2010, www.fdic.gov/bank/individual/enforcement/2010-02-34.pdf, accessed 2/24/2011; Fort Worth Business Press, “Shareholders Approve Sale of Treaty Bank to Fort Worth Investors,” www.timesleader.com/FwBp/news/breaking/Shareholders-approve-sale-of-Treaty-Oak-bank-to-Fort-Worth-investors.html, accessed 2/23/2011; Central Pacific Financial Corp., 8-K, 11/4/2010, www.sec.gov/Archives/edgar/data/701347/000070134710000055/form8-k.htm, accessed 12/21/2010; Central Pacific Financial Corp., 8-K, 2/17/2011, www. sec.gov/Archives/edgar/data/701347/000110465911008879/a11-6350_18k.htm, accessed 2/22/2011; Central Pacific Financial Corp., 8-K, 2/22/2011, www.sec.gov/Archives/edgar/ data/701347/000110465911008879/a11-6350_18k.htm, accessed 2/22/2011; Scottrade, Central Pacific Financial Corp., 2/18/2011, http://research.scottrade.com/qnr/Public/Stocks/ Snapshot?symbol=cpf, accessed 2/22/2011; Cadence Financial Corporation, 8-K, 3/4/2011, www.sec.gov/Archives/edgar/data/742054/000089882211000148/kbody.htm, accessed 3/8/2011; Treasury, Transactions Report, 3/2/2011; Federal Reserve, “Actions Taken By the Federal Reserve Bank of Dallas Under Delegated Authority,” 3/7/2011, www.federalreserve.gov/ infoletters/list.cfm?whichdistrict=11&whichyear=2011, accessed 3/28/2011; Treasury, Transactions Report, 3/24/2011; Treasury, Transactions Report, 3/24/2011; Treasury, Transactions Report, 3/30/2011; Treasury, Transactions Report, 4/4/2011; Federal Reserve, Institutions Acquired by Metropolitan Bank Group, Inc., www.ffiec.gov/nicpubweb/nicweb/AcquisitionForm.aspx?parID_ RSSD=1204627&parDT_END=99991231[4/4/2011 12:14:10 PM], accessed 4/4/2011; Treasury, Transactions Report, 3/31/2011; Federal Reserve, “Actions Taken By the Federal Reserve Bank of Atlanta Under Delegated Authority,” 1/13/2011, www.federalreserve.gov/Releases/H2/20110115/delactions.htm, accessed 4/8/2011. quarterly report to congress I april 28, 2011 of a new series preferred stock in Metropolitan.371 On March 31, 2011, NC Bancorp was acquired by Metropolitan.372 Fidelity Resources Company On June 26, 2009, Treasury invested $3 million in Fidelity Resources Company, Plano, Texas (“Fidelity”) through CPP in return for preferred stock and a warrant to purchase additional shares of preferred stocks, which Treasury exercised immediately.373 On March 7, 2011, the Federal Reserve approved the acquisition of Fidelity by Veritex Holdings, Dallas, Texas (“Veritex”).374 On March 23, 2011, Treasury exchanged its TARP investment for “a like amount of securities” issued by Veritex.375 First Community Bank Corporation of America On December 23, 2008, Treasury invested $10.7 million in First Community Bank Corporation of America, Pinellas Park, Florida (“FCBA”) through CPP in return for preferred stock and warrants.376 According to an SEC filing on January 6, 2011, the Office of Thrift Supervision proposed a cease and desist to FCBA based on its subsidiary bank, First Community Bank of America, Pinellas Park, Florida (“FCB”), operating “with an inadequate level of capital.”377 On February 10, 2011, FCBA agreed to merge FCB with Community Bank of Manatee, Bradenton, Florida (“Community Bank”).378 On March 11, 2011, Treasury agreed to sell its TARP investment to FCBA for $7.2 million plus the right to receive additional funds. The agreement was contingent upon the merger of FCB with Community Bank, and FCBA entering into definitive documentation that is acceptable to Treasury.379 FBHC Holding Company On December 29, 2009, Treasury invested $3 million in FBHC Holding Company, Boulder, Colorado (“FBHC”) through CPP in return for subordinated debentures and a warrant to purchase additional debentures, which Treasury exercised immediately.380 On August 19, 2010, the Colorado State Banking Board suspended FBHC’s chairman, Mark Yost, from participating in the affairs of an FBHC subsidiary, Flatirons Bank, Boulder, Colorado (“Flatirons”), and, on September 8, 2010, a complaint was filed in Colorado state court alleging that Mr. Yost had committed fraud in connection with investment activity funded in part by loans arranged through Flatirons.381 On March 9, 2011, Treasury sold all of its FBHC debentures to FBHC for $650,000.382 This resulted in a loss to Treasury of approximately $2.4 million. 121 122 special inspector general I troubled asset relief program For more information on CDFIs, see “Small-Business Lending Initiatives” in this section. Broadway Financial Corporation On November 14, 2008, and December 4, 2009, Treasury invested a total of $15 million in Broadway Financial Corporation, Los Angeles, California (“Broadway”) through CPP in return for preferred stock and warrants.383 On November 24, 2009, Treasury canceled the warrants because Broadway’s subsidiary, Broadway Federal Bank, F.S.B., Los Angeles, California (“Broadway Bank”), was designated a Community Development Financial Institution (“CDFI”) and Treasury does not require warrants for investments in a certified CDFI of $50 million or less.384 On February 16, 2011, Broadway announced in an SEC form 8-K filing that Treasury had consented to exchange its entire CPP investment ($15 million) for common stock at 50% of the preferred equity’s par value and to exchange the amount of accumulated, unpaid dividends for common stock at 100% of the accrued amount. However, according to Broadway, before it receives final approval for the exchange from Treasury it needs to meet certain conditions, which include raising at least $5 million in new common shares, exchanging the series B preferred stock held by a private investor to common stock at 50% of par value, and entering into definitive documentation that is acceptable to Treasury.385 As of the drafting of this report, Treasury has made no public disclosure of the arrangement. Treaty Oak Bancorp, Inc. On January 16, 2009, Treasury invested $3.3 million in Treaty Oak Bancorp, Inc., Austin, Texas (“Treaty Oak”) through CPP in return for preferred stock and a warrant to purchase 163 additional shares of preferred stock, which Treasury exercised immediately.386 On February 5, 2010, the Federal Deposit Insurance Corporation (“FDIC”) and the Texas Department of Banking issued a consent order to Treaty Oak’s subsidiary bank, Treaty Oak Bank, Austin, Texas (“Treaty Oak Bank”), regarding the bank’s management, board participation, capital, asset quality, loan concentration, liquidity, lending and collection policies, and violations of law.387 On February 10, 2011, Treaty Oak Bank was acquired by Carlile Bancshares Inc., Fort Worth, Texas (“Carlile”).388 On February 15, 2011, pursuant to an agreement with Treaty Oak, Treasury sold all of its Treaty Oak preferred stock to Treaty Oak for (1) $500,000, (2) the right to receive up to $150,000 in principal payments on a note payable by Carlile in favor of Treaty Oak, and (3) newly issued warrants to purchase approximately 3.1 million shares of Treaty Oak common stock.389 The final gain or loss on Treasury’s TARP investment will depend on the amount of proceeds Treasury recovers from these non-cash assets. quarterly report to congress I april 28, 2011 Capital Bank Corporation On December 12, 2008, Treasury invested $41.3 million in Capital Bank Corporation, Raleigh, North Carolina (“Capital Bank”) through CPP in return for preferred stock and warrants.390 On January 13, 2011, the Federal Reserve approved the acquisition of Capital Bank by North American Financial Holdings, Inc., Charlotte, North Carolina (“North American”).391 On January 28, 2011, Treasury sold its TARP investment to North American for $41.3 million, which resulted in no gain or loss to Treasury.392 Update on Previously Announced Exchanges Cadence Financial Corporation On January 9, 2009, Treasury invested $44 million in Cadence Financial Corporation, Starkville, Mississippi (“Cadence”) through CPP in return for preferred stock and warrants.393 Cadence agreed to be acquired by Community Bancorp LLC, Houston, Texas (“Community”), pursuant to a merger agreement dated October 6, 2010.394 In connection with the merger agreement, Community signed an agreement with Treasury dated October 29, 2010, to purchase its preferred stock and warrants. On March 4, 2011, pursuant to the agreement, Treasury sold all of its Cadence preferred stock and warrants to Community for approximately $39 million. This resulted in a loss to Treasury of approximately $5 million.395 Central Pacific Financial Corp. On January 9, 2009, Treasury invested $135 million in Central Pacific Financial Corp., Honolulu, Hawaii (“Central Pacific”) through CPP in return for preferred stock and warrants.396 On November 4, 2010, Central Pacific entered into two separate investment agreements with an affiliate of the Carlyle Group and an affiliate of Anchorage Capital Group, L.L.C., pursuant to which each affiliate would invest approximately $98 million in common stock. Both investment commitments were subject to certain conditions, including the exchange of Treasury’s preferred stock for common stock at a discount, plus 100% of the amount of unpaid dividends. The investment agreements are part of an overall plan to raise at least $325 million of new capital.397 123 124 special inspector general I troubled asset relief program On February 17, 2011, Treasury agreed to exchange its preferred stock and unpaid dividends for newly issued common shares in Central Pacific and amended warrants. On February 18, 2011, Central Pacific announced it had successfully raised $325 million in new capital in a direct private placement and, on the same date, Treasury exchanged its preferred stock in Central Pacific and unpaid dividends for approximately 5.6 million common shares and amended warrants.398 The final loss or gain from this exchange will depend on the market price of the common stock at the time Treasury disposes of its interests. CPP Recipients: Bankrupt or with Failed Subsidiary Banks Despite Treasury’s stated goal of limiting CPP investments to “healthy and viable institutions,” a number of CPP participants went bankrupt or had a subsidiary bank fail, as indicated in Table 2.26.399 Closure of Legacy Bank On January 30, 2009, Treasury invested $5.5 million in Legacy Bancorp, Inc., Milwaukee, Wisconsin (“Legacy”) through CPP in return for preferred stock. Treasury does not require warrants for investments in a certified CDFI of $50 million or less; therefore no warrants were received.400 On April 27, 2010, Legacy and its subsidiary bank (Legacy Bank) agreed in writing with federal and state regulators to strengthen credit risk management practices, comply with laws and regulations, and improve capital and liquidity.401 On November 16, 2010, the Federal Reserve issued a “prompt corrective action directive” to Legacy Bank because the bank was significantly undercapitalized.402 On March 11, 2011, the State of Wisconsin Department of Financial Institutions closed Legacy Bank and the FDIC was named receiver.403 The FDIC entered into a purchase and assumption agreement with Seaway Bank and Trust Company, Chicago, Illinois, to assume all the deposits of Legacy Bank.404 The FDIC estimates that the cost to the Deposit Insurance Fund will be $43.5 million.405 While the amount of Treasury’s recovery is not clear, all of Treasury’s TARP investment in Legacy may be lost.406 125 quarterly report to congress I april 28, 2011 Table 2.26 CPP recipients: Bankrupt oR with failed subsidiary banks Initial Invested Amount ($ Millions) Bankruptcy/ Failure Datea Subsidiary Bank Bankruptcy proceedings completed with no recov12/31/2008 ery of Treasury’s investment; subsidiary bank remains active 11/1/2009 CIT Bank, Salt Lake City, UT 11/14/2008 In bankruptcy; subsidiary bank failed 11/6/2009 United Commercial Bank, San Francisco, CA 4.1 1/16/2009 Bankruptcy proceedings completed with no recovery to Treasury’s investment; subsidiary bank failed 11/13/2009 Pacific Coast National Bank, San Clemente, CA 89.4 b 12/5/2008 In bankruptcy; subsidiary bank failed Sonoma Valley Bancorp, Sonoma, CA 8.7 2/20/2009 Winding down operations; subsidiary bank failed 8/20/2010 Sonoma Valley Bank, Sonoma, CA Pierce County Bancorp, Tacoma, WA 6.8 1/23/2009 Subsidiary bank failed 11/5/2010 Pierce Commercial Bank, Tacoma, WA Tifton Banking Company, Tifton, GA 3.8 4/17/2009 Failed 11/12/2010 N/A Legacy Bancorp, Inc. Milwaukee, WI 5.5 1/30/2009 Subsidiary bank failed 3/11/2011 Legacy Bank Milwaukee, WI Institution Name CIT Group Inc., New York, NY $2,330.0 UCBH Holdings Inc., San Francisco, CA 298.7 Pacific Coast National Bancorp, San Clemente, CA Midwest Banc Holdings, Inc., Melrose Park, IL TOTAL Investment Date Status 5/14/2010 Midwest Bank and Trust Company, Elmwood Park, IL $2,747.0 Notes: Numbers may not total due to rounding. a Date is the earlier of the bankruptcy filing by holding company or the failure of subsidiary bank. b The amount of Treasury’s investment prior to bankruptcy was $89,874,000. On 3/8/2010, Treasury exchanged its $84,784,000 of preferred stock in Midwest Banc Holdings, Inc. (MBHI) for $89,388,000 of MCP, which is equivalent to the initial investment amount of $84,784,000, plus $4,604,000 of capitalized previously accrued and unpaid dividends. Sources: Treasury, Transactions Report, 12/31/2010; FDIC, “Failed Bank List,” no date, www.fdic.gov/bank/individual/failed/banklist.html, accessed 9/15/2010; FDIC, “Institution Directory,” no date, www2.fdic.gov/idasp/main.asp, accessed 9/15/2010; CIT, “CIT Board of Directors Approves Proceeding with Prepackaged Plan of Reorganization with Overwhelming Support of Debtholders,” 11/1/2009, www.cit.com/media-room/press-releases/index.htm, accessed 12/10/2009; Pacific Coast National Bancorp, 8-K, 12/17/2009, www.sec.gov/Archives/edgar/data/1302502/000092708909000240/pcnb-8k122209.htm, accessed 9/15/2010; Sonoma Valley Bancorp, 8-K, 8/20/2010, www.sec.gov/Archives/edgar/data/1120427/000112042710000040/form8k_receivership.htm, accessed 9/15/2010; Midwest Banc Holdings, Inc., 8-K, 8/20/2010, www.sec.gov/Archives/edgar/data/1051379/000095012310081020/c60029e8vk. htm, accessed 9/22/2010; UCBH Holdings, Inc., 8-K, 11/6/2009, www.sec.gov/Archives/edgar/data/1061580/000095012309062531/f54084e8vk.htm, accessed 9/15/2010; FDIC Press Release, “Heritage Bank, Olympia, Washington, Assumes All of the Deposits of Pierce Commercial Bank, Tacoma, Washington,” 11/5/2010, www.fdic.gov/news/news/press/2010/pr10244.html, accessed 11/20/2010; FDIC Press Release, “Ameris Bank, Moultrie, Georgia, Acquires All of the Deposits of Two Georgia Institutions,” 11/12/2010, www.fdic.gov/news/news/press/2010/pr10249.html, accessed 11/21/2010; Treasury, Transactions Report, 3/11/2011; Federal Reserve Board Press Release, 5/10/2010, www.federalreserve.gov/newsevents/press/enforcement/20100505b.htm, accessed 3/14/2011; Board of Governors of the Federal Reserve System, Written Agreement by and among Legacy Bancorp, Inc., Legacy Bank, Federal Reserve Bank of Chicago, and State of Wisconsin Department of Financial Institutions, Madison, Wisconsin, www.federalreserve.gov/newsevents/press/enforcement/ enf20100505b1.pdf, accessed 3/14/2011; FDIC Press Release, “Seaway Bank and Trust Company, Chicago, Illinois Assumes All of the Deposits of Legacy Bank, Milwaukee, Wisconsin,” 3/11/2011, www.fdic.gov/news/news/press/2011/pr11055.htm, accessed 3/14/2011. 125 126 special inspector general I troubled asset relief program Small-Business Lending Initiatives Subordinated Debt: Loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Qualifying Financial Institutions (“QFIs”): Private and public U.S.-controlled banks, savings associations, bank holding companies, certain savings and loan companies, and mutual organizations. Community Development Financial Institutions (“CDFIs”): Financial institutions eligible for Treasury funding to serve urban and rural low-income communities through the CDFI Fund. CDFIs were created in 1994 by the Riegle Community Development and Regulatory Improvement Act. These entities must be certified by Treasury; certification confirms they target at least 60% of their lending and other economic development activities to areas underserved by traditional financial institutions. Risk-Weighted Assets: Risk-based measure of total assets held by a financial institution. Assets are assigned broad risk categories. The amount in each risk category is multiplied by a risk factor associated with that category. The sum of the resulting weighted values from each of the risk categories is the bank’s total risk-weighted assets. Subchapter S Corporations (“S Corporations”): Corporate form that passes corporate income, losses, deductions, and credit through to shareholders for Federal tax purposes. Shareholders of an S corporation report the flowthrough of income and losses on their personal tax returns and are taxed at their individual income tax rates. Treasury has taken steps to launch two programs that it describes as small-business lending initiatives. Both are similar to TARP’s CPP in that they involve Treasury purchases of preferred shares or subordinated debt in certain qualifying financial institutions (“QFIs”). The first, CDCI, uses TARP money. The second, a Small Business Lending Fund (“SBLF”), authorized by statute on September 27, 2010, operates outside TARP but will likely involve many current TARP recipients.407 On December 20, 2010, Treasury released SBLF terms for insured depository institutions, bank holding companies, and savings and loan holding companies. The terms include additional requirements for those institutions seeking to refinance existing TARP investments under CPP and CDCI into SBLF.408 CDCI The Administration announced CDCI on October 21, 2009. According to Treasury, it was intended to help small businesses obtain credit.409 Under CDCI, TARP made capital investments in the preferred stock or subordinated debt of eligible banks, bank holding companies, thrifts, and credit unions certified as Community Development Financial Institutions (“CDFIs”) by Treasury. According to Treasury, these lower-cost capital investments were intended to strengthen the capital base of CDFIs and enable them to make more loans in low and moderate-income communities.410 CDCI was open to certified, qualifying CDFIs or financial institutions that applied for CDFI status by April 30, 2010.411 According to Treasury, CPPparticipating CDFIs that were in good standing could exchange their CPP investments for CDCI investments.412 Each application for new or incremental funds had to be reviewed by the institution’s Federal regulator and approved by Treasury.413 CDCI closed to new investments on September 30, 2010.414 Terms for Senior Securities and Dividends An eligible bank, bank holding company, or thrift could apply to receive capital in an amount up to 5% of its risk-weighted assets. A credit union (which is a memberowned, nonprofit financial institution with a capital and governance structure different from that of for-profit banks) could apply for Government funding of up to 3.5% of its total assets — roughly equivalent to the 5% of risk-weighted assets for banks.415 Participating credit unions and subchapter S corporations (“S corporations”) issued subordinated debt to Treasury in lieu of the preferred stock issued by other CDFI participants.416 Many CDFI investments have an initial dividend rate of 2%, which increases to 9% after eight years. Participating S corporations pay an initial rate of 3.1%, which increases to 13.8% after eight years.417 A CDFI participating in CPP had the opportunity to request to convert those shares into CDCI shares, thereby reducing the annual dividend rate it pays the quarterly report to congress I april 28, 2011 Government from 5% to as low as 2%.418 According to Treasury, CDFIs were not required to issue warrants because of the de minimis exception in EESA, which grants Treasury the authority to waive the warrant requirement for qualifying institutions in which Treasury invested $100 million or less.419 If during the application process a CDFI’s primary regulator deemed it to be undercapitalized or to have “quality of capital issues,” the CDFI had the opportunity to raise private capital to achieve adequate capital levels. Treasury would match the private capital raised on a dollar-for-dollar basis, up to a total of 5% of the financial institution’s risk-weighted assets. In such cases, private investors had to agree to assume any losses before Treasury.420 CDCI Investment Update Treasury invested $570.1 million of the $780.2 million it originally allocated for CDCI.421 Treasury made investments in 84 institutions under the program — 36 banks or bank holding companies and 48 credit unions.422 Of these 84 investments, 28 were conversions from CPP (representing $363.3 million of the total $570.1 million); the remaining 56 were not CPP participants. For the 28 CPP banks, Treasury provided an additional $100.7 million in CDCI funds in addition to converting the CPP investments. Only $106 million of the total CDCI funds went to institutions that were not in CPP. As of March 31, 2011, Treasury had received $3.3 million in dividends and $1.6 million in interest from CDCI recipients. However, as of that date, three institutions (Carver Bancorp, Inc., First Vernon Bancshares, Inc., and Premier Bancorp, Inc.) had unpaid dividend or interest payments to Treasury totaling $231,277.423 A list of all CDCI investments is included in Appendix D: “Transaction Detail.” Small Business Lending Fund (“SBLF”) On September 27, 2010, the President signed into law the Small Business Jobs Act of 2010, which created the SBLF with a $30 billion authorization.424 SBLF is intended to allow Treasury “to make capital investments in eligible institutions in order to increase the availability of credit for small businesses.”425 Under SBLF, an eligible financial institution can receive a capital investment totaling up to 3% or 5% of its risk-weighted assets, depending on its size. To be eligible, the institution must have had less than $10 billion in total assets as of December 31, 2009.426 Bank holding companies (“BHCs”) must contribute at least 90% of any SBLF funding they receive to their insured depository institution subsidiaries that originate small-business loans.427 A bank is not eligible if it is on the FDIC’s problem bank list or if it has been removed from that list in the 90 days preceding its application to SBLF.428 Treasury consults with Federal and, where applicable, state regulators about the bank’s financial condition and whether it is eligible to receive funding from SBLF.429 Bank Holding Company (“BHC”): Company that owns and/or controls one or more U.S. banks. 127 128 special inspector general I troubled asset relief program Call Reports: Reports of condition and income that are required to be filed quarterly with financial regulatory authorities by insured depository institutions operating in the United States. These reports generally contain a balance sheet, an income statement, and supporting schedules. The initial 5% annual dividend drops 1% for every 2.5% increase over two years in the institution’s Qualified Small Business Lending, as defined by SBLF, subject to a minimum rate of 1%.430 If an institution achieves this lending increase during an initial two-year adjustment period, the decreased dividend holds until four and a half years from Treasury’s investment date.431 If the institution does not increase its small-business lending during the first two years, the rate later rises to 7%.432 In addition, CPP banks that refinance into SBLF and fail to increase small-business lending after two years following their entry into SBLF are subject to an additional 2% annual fee from the fifth anniversary of their CPP investment date until four and a half years after Treasury’s SBLF investment, at which time the dividend rate for all SBLF participants becomes 9%.433 SBLF participants are required to supplement their quarterly call reports with additional reporting on their Qualified Small Business Lending.434 In addition, SBLF participants must certify their adherence to anti-money-laundering requirements before receiving their investment and must submit annual certifications from their auditors regarding their supplemental reports on Qualified Small Business Lending and their adherence to required borrower certifications.435 Qualified Small Business Lending under SBLF includes:436 • • • • commercial and industrial loans to small businesses loans secured by owner-occupied nonfarm, nonresidential real estate loans to finance agricultural production and other loans to farmers loans secured by farmland So long as:437 • the original loan amount is $10 million or less and • the business receiving the loan does not exceed $50 million in annual revenues These criteria differ from the call report categories of “loans to small businesses” and “loans to small farms.” According to Treasury, the SBLF criteria include many of the business loans made by many community banks.438 In addition, no portion of lending guaranteed or assumed by the Government or third party is deemed Qualified Small Business Lending, including the insured portions of SBA loans.439 According to the governing provisions of the Small Business Jobs Act, increases in Qualified Small Business Lending are compared with a “baseline” equal to the average amount of such lending that an SBLF participant had outstanding for the four calendar quarters ending June 30, 2010 (adjustments are made to exclude loans obtained through “mergers, acquisitions, and loan purchases”).440 Participating banks qualify for reduced dividend rates to the extent that their Qualified Small Business Lending outstanding exceeds baseline levels. The quarterly report to congress I april 28, 2011 dividend rate for any quarter is determined according to a bank’s lending levels measured during the preceding two calendar quarters. As a result, a bank may receive a reduced dividend rate based on increases in lending that occurred before it received any SBLF funding.441 SBLF capital investments in institutions organized as C Corporations are in the form of senior perpetual, non-cumulative, preferred stock — meaning that participants have no obligation to make quarterly payments as scheduled or to catch up on missed payments.442 SBLF does specify some requirements for participants that miss dividend payments:443 • The participant’s senior management must provide Treasury written notice, including the rationale of the board of directors for not declaring a dividend. • No share repurchases or dividends on securities equal to or lower than the SBLF preferred stock in seniority are permitted during the quarter of the missed payment and for three quarters thereafter. (SBLF participating banks may otherwise repurchase shares or increase dividends subject to certain capital adequacy restrictions.) • After a participant has missed four dividend payments (consecutive or not), unless its regulator prohibited dividend payments, the bank’s board of directors must certify in writing that the bank used its best efforts to declare and pay its quarterly dividends in a manner consistent with safe and sound banking practices and the directors’ fiduciary obligation. • After a participant has missed five dividend payments (consecutive or not), Treasury has the right to appoint a representative to the participant’s board of directors, to serve as an observer. • After a participant has missed six dividend payments (consecutive or not), if the SBLF investment is $25 million or more, Treasury has the right to elect two directors to the bank’s board of directors. This right expires after full dividends have been paid for four consecutive dividend periods. Although this program operates outside TARP, as of March 31, 2011, 250 TARP recipients under either CPP or CDCI had applied to refinance their investments and, thus, potentially benefit from lower dividend rates, non-cumulative dividends, and the removal of rules on executive compensation and luxury expenditures.444 On December 20, 2010, Treasury issued guidance under which CPP and CDCI recipients can refinance into SBLF.445 C Corporation: “For-profit” corporate form organized under subsection C of the Internal Revenue Code and recognized as a separate taxpaying entity. The C corporation pays federal and state income taxes on earnings prior to any distribution of earnings to shareholders. Dividends paid to shareholders by the corporation are taxed to each shareholder individually. See SIGTARP’s January 2011 Quarterly Report, pages 185-192, for SIGTARP’s recommendations to Treasury about how SBLF is applied to current TARP recipients and, in particular, Treasury’s rejection of two important taxpayer-protecting recommendations advanced by SIGTARP. 129 130 special inspector general I troubled asset relief program SBLF Program Implementation for Banks Mutual Depository Institution: Any bank, savings association, bank holding company, or savings and loan holding company organized in a mutual form. Savings associations organized as mutual institutions issue no capital stock and therefore have no stockholders. Mutual savings associations build capital almost exclusively through retained earnings. On December 20, 2010, Treasury announced terms under which insured depository institutions, bank holding companies, and savings and loan holding companies (hereinafter “banks”) may request funds under SBLF.446 As of March 31, 2011, terms for mutual depository institutions, S corporations, and community development loan funds had not been released.447 The deadline for banks to apply to participate in SBLF is May 16, 2011.448 According to Treasury, the total number of SBLF applications Treasury received as of March 31, 2011, was 542 — of which 249 were existing CPP participants and one of which was an existing CDCI participant.449 Prospective participants in SBLF were required to submit an application and a “small business lending plan” of approximately two pages to their primary Federal regulator and to their state regulator, if applicable.450 The plan had to address the following points:451 • how the bank will use the funds to increase small-business lending in the community in which it does business • the anticipated increase in small-business lending as a result of the receipt of funds • proposed outreach and advertising efforts to inform members of the community about the availability of the loans and how to apply In evaluating an SBLF application, Treasury is required to coordinate with the bank’s primary Federal regulator as well as the state banking regulator, for statechartered banks. In particular, according to Treasury, the views of these regulators are taken into account when determining whether a bank is eligible to participate in SBLF.452 Additional eligibility restrictions pertain to institutions refinancing from CPP or CDCI. According to Treasury, the applications of current CPP or CDCI participants are evaluated under the same processes used for other applicants.453 However, Treasury has outlined additional terms for banks that have received investments under CPP or CDCI and seek to refinance into SBLF:454 • Banks that participate in SBLF cannot continue to participate in CPP or CDCI. • Banks that use SBLF to refinance their CPP or CDCI investments must redeem all outstanding preferred stock issued under those programs on or before the date of Treasury’s SBLF investment. Banks may use the SBLF funding to meet this requirement. • Banks must be in material compliance with all the terms, conditions, and covenants of CPP or CDCI in order to refinance through SBLF. quarterly report to congress I april 28, 2011 • Banks must be current in their dividend payments and must pay any accrued and unpaid dividends due to Treasury under CPP or CDCI. In addition, banks cannot have missed more than one previous dividend payment under CPP or CDCI (defined as a payment submitted more than 60 days late). • Banks’ matching funds from private sources are not considered in the preliminary approval process. Additional specific terms apply to banks that previously received investments under CPP: • Two years after refinancing to SBLF funding, a CPP-recipient bank must have increased its small-business lending relative to the baseline level of smallbusiness lending as defined in the Small Business Jobs Act. If it has not, then in addition to its SBLF dividends (which reset to 7%) the bank must pay Treasury an additional “lending incentive fee” equal to 2% per annum of its then outstanding SBLF investment, starting on the fifth anniversary of Treasury’s CPP investment. The lending incentive fee will be in effect until four and a half years after the SBLF investment (i.e., the time at which the SBLF dividend rate for all participants rises to 9%). This fee does not apply to a bank that redeemed, or applied to redeem, its CPP investment as of December 16, 2010. • Banks are not required to repurchase warrants from Treasury that were provided as a condition of receiving funds under CPP. Treasury does not require banks to issue warrants for participation in SBLF. 131 132 special inspector general I troubled asset relief program Systemically Significant Failing Institutions Program According to Treasury, the Systemically Significant Failing Institutions (“SSFI”) program was established to “provide stability and prevent disruptions to financial markets from the failure of institutions that are critical to the functioning of the nation’s financial system.”455 Through SSFI, Treasury obligated $69.8 billion to American International Group, Inc. (“AIG”), the program’s sole participant.456 Cumulative Preferred Stock: Stock requiring a defined dividend payment. If the company does not pay the dividend on schedule, it still owes the missed dividend to the stock’s owner. Non-Cumulative Preferred Stock: Preferred stock with a defined dividend, without the obligation to pay missed dividends. Equity Capital Facility: Commitment to invest equity capital in a firm under certain future conditions. An equity facility when drawn down is an investment that increases the provider’s ownership stake in the company. Investors may be able to recover the amounts invested by selling their ownership stakes to other investors at a later date. Status of SSFI Funds On November 25, 2008, Treasury made an initial $40 billion investment in AIG. In return, Treasury received AIG Series D cumulative preferred stock and warrants to purchase AIG common stock.457 On April 17, 2009, AIG and Treasury signed a securities exchange agreement under which Treasury exchanged the Series D cumulative preferred stock, which required AIG to make quarterly dividend payments, for less valuable and less liquid Series E non-cumulative preferred stock, which did not require AIG to make quarterly dividend payments. Additionally, on April 17, 2009, Treasury committed to fund an equity capital facility under which AIG could draw down up to $29.8 billion in exchange for Series F non-cumulative preferred stock and additional warrants.458 According to Treasury, through January 14, 2011, AIG had drawn down all but $2 billion of the Series F equity capital facility; the remaining $2 billion of available credit was then converted to a new $2 billion Series G standby equity commitment.459 On January 14, 2011, AIG executed its previously announced Recapitalization Plan, which resulted in the conversion of the Series E and F preferred shares to common stock.460 See the “AIG Recapitalization Plan” discussion below for more detailed information. Dividend Payments Before the recapitalization, for the period November 25, 2008, to January 14, 2011, AIG had failed to pay any dividends. As of December 31, 2010, AIG had not paid or had failed to declare dividends for eight consecutive quarters, for a total of $7.9 billion in missed or undeclared dividend payments.461 When AIG failed to pay dividends for four consecutive quarters on the Series E preferred stock, this gave Treasury the right to appoint to AIG’s board the greater of either two directors or a number (rounded upward) of directors equal to 20% of all AIG directors.462 On April 1, 2010, Treasury appointed Donald H. Layton and Ronald A. Rittenmeyer as directors of AIG.463 After the Recapitalization Plan was executed, AIG no longer had an obligation to pay dividends. quarterly report to congress I april 28, 2011 Federal Reserve Credit Facility and Maiden Lane Special Purpose Vehicles In September 2008, the Federal Reserve Bank of New York (“FRBNY”) extended an $85 billion revolving credit facility to AIG in an effort to stabilize the company. In return, AIG committed 79.8% of its voting equity to a trust for the sole benefit of Treasury.464 The terms of the credit facility included a high interest rate and increased AIG’s debt ratios significantly. Servicing this debt contributed to AIG’s financial troubles and put downward pressure on its credit rating.465 Federal officials feared that future downgrades in AIG’s credit rating could have “catastrophic” effects on the company, forcing it into bankruptcy.466 FRBNY and Treasury determined that this possibility posed a threat to the nation’s financial system and decided that additional transactions were necessary to modify the revolving credit facility.467 In November 2008, FRBNY and Treasury took the following actions to stabilize AIG’s operations:468 • Treasury purchased $40 billion in AIG preferred shares under TARP, the proceeds of which went directly to FRBNY to pay down a portion of the existing revolving credit facility. After that payment, the total amount available to AIG under FRBNY’s revolving credit facility was reduced from $85 billion to $60 billion. • FRBNY created Maiden Lane II, a special purpose vehicle (“SPV”), to which FRBNY lent $19.5 billion to fund the purchase of residential mortgage-backed securities from the securities-lending portfolios of several of AIG’s U.S.regulated insurance subsidiaries, in order to help relieve liquidity pressures stemming from their security-lending programs. • FRBNY created Maiden Lane III, another SPV, to which FRBNY lent $24.3 billion to buy from AIG’s counterparties collateralized debt obligations underlying credit default swap contracts written by AIG. On March 30, 2011, FRBNY announced that it will dispose of the securities in Maiden Lane II over time using a competitive sales process through its investment manager BlackRock Solutions. According to FRBNY, there will be no fixed timeframe for the sales.469 According to FRBNY, the fair value of the Maiden Lane II assets was $15.9 billion as of March 30, 2011.470 As of April 15, 2011, FRBNY had completed three sales of a total of 87 bonds from the Maiden Lane II portfolio with a face value totaling $2.5 billion. The first sale occurred on April 6, 2011, for 42 bonds with a face value of $1.3 billion. The second sale occurred on April 13, 2011, for 37 bonds with a face value of $626 million. The third sale occurred on April 14, 2011, for 8 bonds with a face value of $534 million. To date, FRBNY has not identified the purchasers or the sale prices of the securities sold. On March 30, 2011, FRBNY announced that, along with providing quarterly updates on total 133 Revolving Credit Facility: Line of credit for which borrowers pay a commitment fee, allowing them to repeatedly draw down funds up to a guaranteed maximum amount. The amount of available credit decreases and increases as funds are borrowed and then repaid. Special Purpose Vehicle (“SPV”): Offbalance--sheet legal entity that holds transferred assets presumptively beyond the reach of the entities that provide the assets, and that is legally isolated. For more on the creation of the Maiden Lane III SPV, see SIGTARP’s audit report, “Factors Affecting Payments to AIG’s Counterparties,” dated November 17, 2009. 134 special inspector general I troubled asset relief program For more on AIG’s Federal Reserve credit facility reduction transaction, see SIGTARP’s January 2010 Quarterly Report, page 73. proceeds from sales and the total amount purchased by each counterparty, it will publish the identity of the purchasers and sale price for each individual security three months after the last asset is sold.471 Treasury and the Federal Reserve on March 2, 2009, announced a restructuring of Government assistance to AIG that, according to Treasury, was designed to strengthen the company’s capital position.472 The measures included an authorization for FRBNY to acquire up to $26 billion of preferred equity interests in two SPVs formed to hold two of AIG’s largest foreign life insurance subsidiaries (American International Assurance Co., Ltd. [“AIA”], and American Life Insurance Company [“ALICO”]). The SPVs’ creation also facilitated the independence of these two subsidiaries in anticipation of a sale or initial public offering (“IPO”).473 On December 1, 2009, FRBNY received $16 billion in preferred equity interests in AIA Aurora LLC (“AIA SPV”) and $9 billion in the ALICO Holdings LLC (“ALICO SPV”). This action decreased the outstanding principal balance of AIG’s revolving credit facility by $25 billion and reduced its total facility borrowing capacity from $60 billion to $35 billion.474 Under the transaction’s original terms, with limited exceptions, all proceeds from the voluntary sale, public offering, or other liquidation of the assets or businesses held by the SPVs had to be used first to fully redeem FRBNY’s interests in the SPVs and then to reduce the outstanding revolving credit facility.475 After a series of additional payments, from March 12, 2010, to December 31, 2010, the borrowing capacity was reduced to approximately $25.1 billion and AIG’s total outstanding principal and interest balance under the revolving credit facility was $20.3 billion.476 As of January 14, 2011, that total, including fees, had grown to $20.7 billion.477 Upon closing the Recapitalization Plan on January 14, 2011, AIG repaid the remaining balance of the FRBNY revolving credit facility with proceeds from the AIA IPO and the ALICO sale, and the facility was terminated.478 Sale of Business Assets AIG announced on September 30, 2010, that it had entered into a definitive sale agreement with Prudential Financial, Inc., for the sale of its two Japanesebased life insurance subsidiaries, AIG Star Life Insurance Co., Ltd. (“Star”), and AIG Edison Life Insurance Company (“Edison”), for a total of $4.8 billion.479 On February 1, 2011, AIG completed the sale of Star and Edison to Prudential Financial, Inc., for $4.8 billion, consisting of $4.2 billion in cash and $0.6 billion in the assumption of third-party debt.480 Under the terms of the Recapitalization Plan, AIG was required to use all net cash proceeds from the Star and Edison sales to repay a portion of Treasury’s preferred interests in the AIA and ALICO SPVs.481 Instead, on February 8, 2011, AIG entered into a letter agreement with Treasury permitting AIG to retain $2 billion of net cash proceeds from the sale of Star and Edison to strengthen loss reserves and support the capital of one of AIG’s operating quarterly report to congress I april 28, 2011 companies, Chartis, Inc., which had taken a charge of more than $4 billion to its reserves.482 On February 14, 2011, the remaining $2.2 billion in cash proceeds went to repay a portion of Treasury’s preferred interests in the AIA and ALICO SPVs.483 On October 29, 2010, AIG completed an IPO of 8.1 billion shares of AIA Group Limited (“AIA”).484 According to AIG, the gross proceeds from the IPO were $20.5 billion. Upon completion of the IPO, AIG owned approximately 33% of AIA’s outstanding shares, which will continue to be held in the AIA SPV. AIG is precluded from selling or hedging any of its remaining shares in AIA until October 18, 2011, and from selling or hedging more than half of its remaining shares of AIA until April 18, 2012.485 On November 1, 2010, AIG finalized the sale of ALICO to MetLife, Inc. AIG received $16.2 billion through the sale of ALICO, $7.2 billion of which was paid in cash and $9.0 billion in equity interests in MetLife. These equity interests were initially held in the ALICO SPV, then were sold on March 8, 2011, for $9.6 billion.486 On January 12, 2011, AIG accepted a $2.2 billion cash offer for 97.6% of its Taiwan life insurance unit, Nan Shan Life Insurance Company, Ltd. (“Nan Shan”), from Ruen Chen Investment Holding Co., Ltd., subject to regulatory approval.487 Effective January 14, 2011, the cash proceeds from the AIA IPO and ALICO sale were disbursed to FRBNY as part of the Recapitalization Plan. For a summary of AIG asset sales in excess of $1 billion, see Table 2.27. Table 2.27 AIG ASSET SALES IN EXCESS of $1 Billion AIG Asset Gross Proceeds Date AIA (sold 67%) $20.5 billion 10/29/2010 Public: Initial Public Offering Buyer or Public ALICO $7.2 billion cash $9 billion MetLife equity interests 11/1/2010 Buyer: MetLife, Inc. MetLife equity interests $9.6 billion 3/8/2011 Buyer: MetLife, Inc. AIG Star Life Insurance and AIG Edison Life Insurance $4.8 billion 2/1/2011 Buyer: Prudential Financial, Inc. Nan Shan Life Insurance $2.2 billion Co. (agreed to sell 97.6%) Subject to regulatory approval Buyer: Ruen Chen Investment Holding Co., Ltd. Note: Numbers affected by rounding. Sources: AIG, “AIG Enters Into Agreement To Sell Star and Edison Life Companies,” 9/30/2010, www.aigcorporate.com/newsroom/index.html, accessed 12/9/2010; AIG, 8-K, 10/22/2010, www.sec.gov/Archives/edgar/ data/5272/000095012310095032/y87334e8vk.htm, accessed 12/22/2010; AIG, “AIG Raises Nearly $37 Billion In Two Transactions To Repay Government,” 11/1/2010, http://ir.aigcorporate.com/External.File?t=2&item=g7rqBLVLuv81UA mrh20Mp/lptmOSyzUBWuL0HcUb4QPW7icXt6tSsNcMErV4ODIOk1KW0aD3/sacvpSe5qek1w==, accessed 12/9/2010; AIG, 10-Q, 10/29/2010, www.sec.gov/Archives/edgar/data/5272/000104746910009269/a2200724z10-q.htm, accessed 1/18/2011; AIG, “AIG Raises Nearly $37 Billion In Two Transactions To Repay Government,” 11/1/2010, http:// ir.aigcorporate.com/External.File?t=2&item=g7rqBLVLuv81UAmrh20Mp/lptmOSyzUBWuL0HcUb4QPW7icXt6tSsNcMErV4ODIOk1KW0aD3/sacvpSe5qek1w==, accessed 1/18/2011; AIG, “AIG Enters Into Agreement To Sell Nan Shan To Taiwan-Based Consortium Led By The Ruentex Group,” 1/12/2011, http://ir.aigcorporate.com/External.File?t=2&item=g7r qBLVLuv81UAmrh20Mp2GDwAh4Ju2qNKZiaQ+LC4eLA/wD8wJ898T+OGLtuOD53u0EV2e/b6wq8HGwkVuaVQ==, accessed 1/18/2011; AIG, 10-K, 2/24/2011, www.sec.gov/Archives/edgar/data/5272/000104746911001283/a2202141z10-k. htm, accessed 3/31/2011; AIG, 13G, 3/08/2011, www.sec.gov/Archives/edgar/data/5272/000095012311023024/ y90152sc13gza.htm, accessed 3/11/2011. 135 136 special inspector general I troubled asset relief program AIG Recapitalization Plan On January 14, 2011, AIG completed its Recapitalization Plan, which consisted of a series of integrated transactions that were outlined in a Master Transaction Agreement dated December 8, 2010. The Recapitalization Plan was based on a plan originally announced on September 30, 2010.488 AIG executed the Recapitalization Plan with Treasury, FRBNY, the AIG Credit Facility Trust (“AIG Trust”) (the entity in which FRBNY placed the management of the 79.8% equity interest in AIG that was issued as a condition of the FRBNY credit facility), ALICO SPV, and AIA SPV to recapitalize itself, with the intent to repay the Government’s loans and investments in AIG.489 Execution of the Recapitalization Plan entailed three main steps. First, AIG terminated its revolving credit facility with FRBNY by repaying the $20.7 billion balance in full using a portion of the cash proceeds from the AIA IPO and the sale of ALICO.490 Second, the remaining amount of FRBNY’s holdings in the AIA and ALICO SPVs, $6.1 billion, was redeemed by AIG with cash proceeds from the AIA IPO and the ALICO sale.491 AIG then drew $20.3 billion of the remaining funds available under the TARP Series F equity capital facility (which had $22.3 billion still available as of December 31, 2010) to repurchase an equivalent amount of FRBNY’s preferred interests in the AIA and ALICO SPVs, and then transferred those interests to Treasury.492 The remaining available TARP funds, approximately $2 billion, were used to create a new standby equity commitment through the issuance of Series G preferred stock, which will be available for future drawdown by AIG.493 Treasury’s preferred SPV interests are secured by the following:494 • AIG’s remaining shares in AIA post-IPO (approximately 33% of AIA’s outstanding shares) • AIG’s equity and residual interests in Maiden Lane II and III • the proceeds of the sale of Nan Shan • AIG’s ownership interest in International Lease Finance Corporation (“ILFC”) The remaining preferred SPV interests were also secured by AIG’s ownership interest in Star and Edison and the equity interests in MetLife, Inc., received from the sale of ALICO to MetLife, Inc. On February 14, 2011, AIG used part of the proceeds from the sales of Star and Edison to repay $2.2 billion of Treasury’s preferred interests in the AIA and ALICO SPVs.495 On March 8, 2011, AIG sold its equity interests in MetLife for $9.6 billion. AIG reserved $3 billion in escrow for obligations that may be owed to MetLife under the terms of the ALICO sale and paid Treasury $6.9 billion, which included $300 million held in an expense reserve related to the sale of ALICO to MetLife. According to Treasury, this quarterly report to congress I april 28, 2011 transaction completely repaid Treasury’s preferred interest in the ALICO SPV and reduced Treasury’s preferred interests in the AIA SPV.496 The $3 billion in escrowed funds will be released to Treasury over a 30-month period, if they are not paid to MetLife.497 According to Treasury, the outstanding balance of Treasury’s preferred interest in the AIA SPV as of March 31, 2011, was $11.3 billion. AIG expects to continue to repay Treasury for its preferred interest in the SPVs through proceeds from future asset sales.498 If the proceeds from the sales of all the remaining assets securing the SPVs are insufficient to fully redeem Treasury’s interest in the AIA SPV, Treasury will recognize a loss in the amount of the shortfall. In the third and final step of the Recapitalization Plan, AIG extinguished all prior outstanding preferred shares (including a $1.6 billion obligation for unpaid dividends) held by the Government and issued 1.655 billion shares of common stock, representing 92.1% of the common stock of AIG.499 The AIG Trust was then terminated. Before the execution of the Recapitalization Plan, AIG had 143 million common shares outstanding, which represented a 20% ownership interest. The shares were owned by non-Government common shareholders. The 20% ownership interest of these shares was diluted to approximately 8% after the closing.500 To its existing non-Government common shareholders, AIG issued 10-year warrants to purchase up to a cumulative total of 75 million shares of common stock at a strike price of approximately $45 per share.501 Treasury’s Rights under the Exchange Plan As part of the exchange, AIG entered into an agreement with Treasury that grants Treasury registration rights with respect to the shares of AIG common stock. Under the rights agreement, until Treasury’s ownership of AIG’s voting securities falls below 33%, AIG will have to obtain Treasury’s consent to the terms, conditions, and pricing of any equity offering, including any primary offering by AIG. Additionally, AIG is required to pay Treasury’s expenses for the registration of shares and underwriting fees, up to 1% of the amount offered by Treasury.502 Recent AIG Credit Developments On January 31, 2011, ILFC, AIG’s aircraft leasing subsidiary, entered into a threeyear unsecured $2 billion revolving credit agreement with various financial institutions for general corporate purposes.503 On March 31, 2011, ILFC announced that a group of 15 banks had made a commitment for a $1.3 billion secured term loan; the company can borrow an additional $200 million under the facility if more banks participate. According to ILFC, proceeds from the loan will prepay existing bank facilities that were scheduled to mature in October 2011 and 2012. ILFC will draw down the new term loan over the next year, with final maturity scheduled for 2018.504 For a more detailed description of the AIG Recapitalization Plan, see SIGTARP’s January 2011 Quarterly Report, pages 135-139. 137 138 special inspector general I troubled asset relief program Loss Estimates Treasury has multiple investments in AIG, and potential losses (or gains) will depend on market conditions. First, Treasury has the 92.1% equity stake in AIG (composed of the exchanged $40 billion of Series E preferred shares, $1.6 billion in unpaid Series D dividends, and $7.5 billion drawn from the Series F equity capital facility). Second, according to Treasury, it has $11.3 billion in preferred interests in the AIA SPV. Third, Treasury allocated $2 billion to fund the Series G standby equity commitment, which, as of March 31, 2011, had not been drawn down.505 Under the Series G commitment, AIG may draw up to $2 billion in funds for general corporate purposes until March 31, 2012. At that time, Series G shares will automatically convert into a number of shares of common stock, which Treasury will have the right to sell.506 According to Treasury, it must sell the shares at or above $28.72 per share in order to recoup its investment. Treasury calculated this break-even price by dividing the $47.5 billion in cash invested in AIG by the 1.655 billion common shares Treasury received.507 The Recapitalization Plan states that AIG will use the proceeds from sales of Nan Shan, AIG Star, AIG Edison, ILFC, and its subsidiaries’ interests in Maiden Lane II and Maiden Lane III to pay down Treasury’s preferred interests in the AIA SPV after the closing.508 If Treasury holds any SPV preferred interests after May 1, 2013, Treasury will have the right to compel the sale of all or a portion of one or more of the entities that secure the SPV.509 In the President’s Fiscal Year 2012 budget, released on February 14, 2011, OMB estimated that Treasury’s losses from its investments in AIG would total $11.7 billion. (OMB valued the shares Treasury received from the AIG Trust, which is separate from TARP, at $20 billion at the end of November 2010.) In order to calculate the value of Treasury’s AIG common stock, OMB adjusted the November 30, 2010, share price of $41.29 downward to $35.84, to reflect the value of the 75 million warrants that AIG issued to existing shareholders as part of the Recapitalization Plan that closed on January 14, 2011.510 On March 29, 2011, the CBO put its loss estimate for AIG at $14 billion.511 Targeted Investment Program and Asset Guarantee Program Treasury invested a total of $40 billion in two financial institutions, Citigroup Inc. (“Citigroup”) and Bank of America Corp. (“Bank of America”), through the Targeted Investment Program (“TIP”). Treasury invested $20 billion in Citigroup on December 31, 2008, and $20 billion in Bank of America on January 16, 2009, in return for preferred shares paying quarterly dividends at an annual rate of 8% and warrants from each institution.512 According to Treasury, TIP’s goal was to “strengthen the economy and protect American jobs, savings, and retirement security [where] the loss of confidence in a financial institution could result in quarterly report to congress I april 28, 2011 significant market disruptions that threaten the financial strength of similarly situated financial institutions.”513 Both banks repaid TIP in December 2009.514 On March 3, 2010, Treasury auctioned the Bank of America warrants it received under TIP for $1.26 billion.515 On January 25, 2011, Treasury auctioned the Citigroup warrants it had received under TIP for $190.4 million.516 Under the Asset Guarantee Program (“AGP”), Treasury, the Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve, and Citigroup agreed to provide loss protection on a pool of Citigroup assets valued at approximately $301 billion. In return, as a premium, the Government received warrants to purchase Citigroup common stock and $7 billion in preferred stock. The preferred stock was subsequently exchanged for trust preferred securities (“TRUPS”).517 Treasury received $4 billion of the TRUPS and the FDIC received $3 billion.518 Although Treasury’s asset guarantee was not a direct cash investment, it exposed taxpayers to a potential TARP loss of $5 billion. On December 23, 2009, in connection with Citigroup’s TIP repayment, Citigroup and Treasury terminated the AGP agreement. Although at the time of termination the asset pool suffered a $10.2 billion loss, this number was below the agreed-upon deductible and the Government suffered no loss.519 Treasury agreed to cancel $1.8 billion of the TRUPS issued by Citigroup, reducing the premium it received from $4.0 billion to $2.2 billion, in exchange for the early termination of the loss protection. The FDIC retained all of its $3 billion in securities.520 Under the termination agreement, however, the FDIC will transfer up to $800 million of those securities to Treasury if Citigroup’s participation in the FDIC’s Temporary Liquidity Guarantee Program closes without a loss.521 On September 29, 2010, Treasury entered into an agreement with Citigroup to exchange the entire $2.2 billion in Citigroup TRUPS that it held under AGP for new TRUPS. Because the interest rate necessary to receive par value was below the interest rate paid by Citigroup to Treasury, Citigroup increased the principal amount of the securities sold by Treasury by an additional $12.0 million, thereby enabling Treasury to receive an additional $12.0 million in proceeds from the $2.2 billion sale of the Citigroup TRUPS, which occurred on September 30, 2010.522 On January 25, 2011, Treasury auctioned the Citigroup warrants it had received under AGP for $67.2 million.523 According to Treasury, it has realized a gain of approximately $12.3 billion over the course of Citigroup’s participation in AGP, TIP, and CPP, including dividends, other income, and warrant sales.524 Bank of America announced a similar asset guarantee agreement with respect to approximately $118 billion in Bank of America assets, but the final agreement was never executed. Bank of America paid $425 million to the Government as a termination fee.525 Of this $425 million, $276 million was paid to Treasury, $92 million was paid to the FDIC, and $57 million was paid to the Federal Reserve.526 For a discussion of the basis of the decision to provide Federal assistance to Citigroup, see SIGTARP’s audit report, “Extraordinary Financial Assistance Provided to Citigroup, Inc.,” dated January 13, 2011. Trust Preferred Securities (“TRUPS”): Securities that have both equity and debt characteristics created by establishing a trust and issuing debt to it. 139 140 special inspector general I troubled asset relief program ASSET SUPPORT PROGRAMS Non-Recourse Loan: Secured loan in which the borrower is relieved of the obligation to repay the loan upon surrendering the collateral. Three TARP programs have focused on supporting markets for specific asset classes: the Term Asset-Backed Securities Loan Facility (“TALF”), the Public-Private Investment Program (“PPIP”), and the Unlocking Credit for Small Businesses (“UCSB”) program. As initially announced, TALF was designed to support asset-backed securities (“ABS”) transactions by providing investors up to $200 billion in non-recourse loans through the Federal Reserve Bank of New York (“FRBNY”) to purchase nonmortgage-backed ABS and commercial mortgage‑backed securities (“CMBS”). The program was supported by up to $20 billion in TARP funds to be used if borrowers surrendered the ABS purchased through the program and walked away from their loans. The TARP obligation was subsequently reduced to $4.3 billion.527 TALF ultimately provided $71.1 billion in Federal Reserve financing by the time the program closed to new loans.528 Of that amount, as of March 31, 2011, $19.2 billion remains outstanding.529 PPIP uses a combination of private equity, Government equity, and Government debt through TARP to facilitate purchases of legacy mortgage-backed securities (“MBS”) held by financial institutions. In July 2009, Treasury announced the selection of nine Public-Private Investment Fund (“PPIF”) managers and a total potential commitment of $30 billion in TARP funds.530 The actual funding of that commitment depended on how much private capital the PPIF managers raised. After the fund-raising period was completed, Treasury’s PPIP obligation was capped at $22.4 billion.531 The PPIF managers are currently purchasing investments and managing their portfolios. Through the UCSB loan support initiative, Treasury launched a program to purchase SBA 7(a) securities, which are securitized small-business loans. Treasury originally committed $15 billion to the program; the commitment was subsequently lowered several times. By the time the program closed, it had made a total of approximately $368.1 million in purchases.532 TALF TALF, which was announced in November 2008, issued loans collateralized by eligible ABS.533 According to FRBNY, “The ABS markets historically have funded a substantial share of credit to consumers and businesses,” and TALF was “designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and business ABS.”534 The program was extended to eligible newly issued CMBS in June 2009 and to eligible legacy CMBS in July 2009.535 TALF closed to new lending in June 2010.536 quarterly report to congress I april 28, 2011 TALF is divided into two parts:537 • a lending program, TALF, that originated non-recourse loans to eligible borrowers using eligible ABS and CMBS as collateral • an asset disposition facility, TALF LLC, that purchases the collateral from FRBNY if borrowers choose to surrender it and walk away from their loans or if the collateral is seized in the event of default TALF, which was managed and substantially funded by FRBNY, closed its lending program in 2010, with the last non-mortgage-backed ABS and legacy CMBS subscriptions closing on March 11, 2010, and March 29, 2010, respectively, and the last subscription for newly issued CMBS closing on June 28, 2010.538 The asset disposition facility, TALF LLC, is managed by FRBNY and remains in operation.539 TALF LLC charges FRBNY a fee for the commitment to purchase any collateral surrendered by the borrowers. TALF LLC’s funding comes first from that fee, which is derived from the principal balance of each outstanding TALF program loan.540 In the event that such funding proves insufficient, funding would then come from TARP, which is obligated to lend up to the authorized limit in subordinated debt from TALF LLC.541 TARP’s original TALF obligation was $20 billion, to support up to $200 billion in TALF loans. However, when TALF’s lending phase ended in June 2010 with $42.5 billion in loans outstanding, Treasury and the Federal Reserve agreed to reduce the TARP obligation to $4.3 billion.542 The TARP money is available for TALF LLC to use to purchase surrendered assets from FRBNY and may offset losses associated with disposing of the surrendered assets. As of March 31, 2011, $19.2 billion in TALF loans were outstanding.543 No TALF loans have been in default and consequently no collateral has been purchased by TALF LLC since its inception.544 Lending Program TALF’s lending program made secured loans to eligible borrowers.545 The loans were issued with terms of three or five years and were available for non-mortgagebacked ABS, newly issued CMBS, and legacy CMBS.546 To be eligible for TALF, the non-mortgage-backed ABS had to meet certain criteria, including the following:547 • be U.S.-dollar-denominated cash (not synthetic ABS) • bear short-term and long-term credit ratings of the highest investment grade (i.e., AAA) from two or more major nationally recognized statistical rating organizations (“NRSROs”) identified by FRBNY as eligible to rate non-mortgagebacked ABS collateral for TALF loans Collateral: Asset pledged by a borrower to a lender until a loan is repaid. Generally, if the borrower defaults on the loan, the lender gains ownership of the pledged asset and may sell it to satisfy the debt. In TALF, the ABS or CMBS purchased with the proceeds from the TALF loan is the collateral that is posted with FRBNY. Synthetic ABS: Security deriving its value and cash flow from sources other than conventional debt, equities, or commodities — for example, credit derivatives. Nationally Recognized Statistical Rating Organization (“NRSRO”): Credit rating agency registered with the SEC. Credit rating agencies provide their opinion of the creditworthiness of companies and the financial obligations issued by companies. The ratings distinguish between investment grade and non‑investment grade equity and debt obligations. 141 142 special inspector general I troubled asset relief program For a discussion of the credit rating agency industry and an analysis of the impact of NRSROs on TARP and the overall financial market, see SIGTARP’s October 2009 Quarterly Report, pages 113-148. • not bear a long-term credit rating less than the highest rating by a major NRSRO • have all or substantially all of the underlying loans originate in the United States • have any one of the following types of underlying loans: automobile, student, credit card, equipment, dealer floor plan, insurance premium finance, small business with principal and interest fully guaranteed by SBA, or receivables related to residential mortgage servicing advances (“servicing advance receivables”) • not have collateral backed by loans originated or securitized by the TALF borrower or one of its affiliates To qualify as TALF collateral, newly issued CMBS and legacy CMBS had to meet numerous requirements, some of which were the same for both CMBS types:548 • evidence an interest in a trust fund that consists of fully funded mortgage loans and not other CMBS, other securities or interest rate swap or cap instruments or other hedging instruments • possess a credit rating of the highest long-term investment grade from at least two rating agencies identified by FRBNY as eligible to rate CMBS collateral for TALF loans, and not possess a credit rating below the highest investment grade from any of those rating agencies • offer principal and interest payments • have been issued by any institution other than a Government-sponsored enterprise (“GSE”) or an agency or instrumentality of the U.S. Government • include a mortgage or similar instrument on a fee or lease-hold interest in one or more income-generating commercial properties Some differences existed between requirements for eligible newly issued CMBS and eligible legacy CMBS. Newly issued CMBS had to meet the following additional requirements:549 • be issued on or after January 1, 2009 • evidence first-priority mortgage loans that were current in payment at the time of securitization • not be junior to other securities with claims on the same pool of loans • have 95% or more of the dollar amount of the underlying credit exposures originated by a U.S.-organized entity or a U.S. branch or agency of a foreign bank • have each property located in the United States or its territories quarterly report to congress I april 28, 2011 Legacy CMBS had to meet the following additional requirements:550 • be issued before January 1, 2009 • not have been junior to other securities with claims on the same pool of loans at the time the CMBS was issued • have 95% or more of the underlying properties, in terms of the related loan principal balance, located in the United States or its territories The final maturity date of loans in the TALF portfolio is March 30, 2015.551 TALF loans are non-recourse (unless the borrower has made any misrepresentations or breaches warranties or covenants), which means that FRBNY cannot hold the borrower liable for any losses beyond the surrender of any assets pledged as collateral.552 Loan Terms TALF participants were required to use a TALF agent to apply for a TALF loan.553 After the collateral (the particular asset-backed security financed by the TALF loan) was deemed eligible by FRBNY, the collateral was assigned a haircut. A haircut, which represents the amount of money put up by the borrower (the borrower’s “skin in the game”), was required for each TALF loan.554 Haircuts for non-mortgage-backed ABS varied based on the riskiness and maturity of the collateral, and generally ranged between 5% and 16% for non-mortgage-backed ABS with average lives of five years or less.555 The haircut for legacy and newly issued CMBS was generally 15% but increased above that amount if the average life of the CMBS was greater than five years.556 FRBNY lent each borrower the amount of the market price of the pledged collateral minus the haircut, subject to certain limitations.557 The borrower delivered the collateral to the custodian bank, which collects payments generated by the collateral and distributes them to FRBNY (representing the borrower’s payment of interest on the TALF loan).558 Any excess payments from the collateral above the interest due and payable to FRBNY on the loan go to the TALF borrower.559 Because the loans are non-recourse, the risk for any borrower is limited to the haircut and any additional principal that may be paid down on the TALF loan. If the securities pledged as collateral are worth less than the loan balance when the loan is due, the borrower would likely surrender the collateral rather than pay the loan balance. The Government would then be at risk for potential losses equal to the difference between the loan balance and the value of the collateral.560 TALF Agent: Financial institution that is party to the TALF Master Loan and Security Agreement and that occasionally acts as an agent for the borrower. TALF agents include primary and nonprimary broker-dealers. Haircut: Difference between the value of the collateral and the amount of the loan (the loan amount is less than the collateral value). Skin in the Game: Equity stake in an investment; down payment; the amount an investor can lose. Custodian Bank: Bank holding the collateral and managing accounts for FRBNY; for TALF the custodian is Bank of New York Mellon. 143 144 special inspector general I troubled asset relief program TALF Loan Subscriptions The final TALF loans collateralized by non-mortgage-backed ABS were settled on March 11, 2010.561 TALF provided $59 billion of loans to purchase non-mortgagebacked ABS during the lending phase of the program. Of all such loans settled, $15.5 billion was outstanding as of March 31, 2011.562 Table 2.28 lists all settled TALF loans collateralized by non-mortgage-backed ABS, by ABS sector. The final subscription for TALF CMBS loans was settled on June 28, 2010. TALF provided $12.1 billion of loans to purchase CMBS during the lending phase of the program; approximately 99% of the loan amount was used to purchase legacy securities.563 Of all such loans settled, $3.7 billion was outstanding as of March 31, 2011.564 Table 2.29 includes all TALF CMBS loans that have been settled. Table 2.28 TALF Loans Settled by ABS Sector (Non-mortgage-backed Collateral) ABS Sector Auto Loans Credit Card Receivables ($ Billions) 1st Quarter 2009 2nd Quarter 2009 3rd Quarter 2009 4th Quarter 2009 1st Quarter 2010 Total $1.9 $6.1 $4.5 $0.2 $0.1 $12.8 2.8 12.4 8.4 1.8 0.9 26.3 Equipment Loans — 1.0 0.1 0.3 0.2 1.6 Floor Plan Loans — — 1.0 1.5 1.4 3.9 Premium Finance — 0.5 0.5 — 1.0 2.0 Servicing Advance Receivables — 0.4 0.1 0.6 0.1 1.3 Small-Business Loans — 0.1 0.4 0.9 0.7 2.2 Student Loans Total — 2.5 3.6 1.0 1.8 8.9 $4.7 $23.0 $18.7 $6.4 $6.1 $59.0 Notes: Numbers may not total due to rounding. Data as of 3/31/2011. The first subscription in the program was in March 2009; therefore, the first quarter of 2009 represents one subscription while the remaining quarters represent three subscriptions. Sources: FRBNY, “Term Asset-Backed Securities Loan Facility: non-CMBS,” no date, www.newyorkfed.org/markets/talf_operations. html, accessed 4/3/2011; FRBNY, “Term Asset-Backed Securities Loan Facility: non-CMBS,” no date, www.newyorkfed.org/markets/ TALF_recent_operations.html, accessed 4/3/2011. Table 2.29 TALF LOANS SETTLED (CMBS COLLATERAL) ($ Billions) Type of Collateral Assets 2nd Quarter 2009 3rd Quarter 2009 4th Quarter 2009 1st Quarter 2010 2nd Quarter 2010 Total Newly Issued CMBS $— $— $0.1 $— $— $ 0.1 Legacy CMBS Total — 4.1 4.5 3.3 — 12.0 $— $4.1 $4.6 $3.3 $— $12.1 Notes: Numbers may not total due to rounding. Data as of 3/31/2011. The second quarter of 2009 was only for legacy CMBS, while the second quarter of 2010 was only for newly issued CMBS. Sources: FRBNY, “Term Asset-Backed Securities Loan Facility: CMBS,” no date, www.newyorkfed.org/markets/cmbs_operations.html, accessed 4/3/2011; FRBNY, “Term Asset-Backed Securities Loan Facility: CMBS,” no date, www.newyorkfed.org/markets/CMBS_recent_operations.html, accessed 4/3/2011. quarterly report to congress I april 28, 2011 The Federal Reserve posted on its website detailed information on the 177 TALF borrowers, including: 565 • the names of all the borrowers from TALF (some of which share a parent company) • each borrower’s city, state, and country • the name of any material investor in the borrower (defined as a 10% or greater beneficial ownership interest in any class of security of a borrower) • the amount of the loan • outstanding loan amount as of September 30, 2010 • the loan date • the loan maturity date • the date of full repayment (if applicable) • the date of loan assignment (if applicable) • the loan rate (fixed or floating) • the market value of the collateral associated with the loan at the time the loan was extended • the name of the issuer of the ABS collateral associated with the loan • the collateral asset class and subclass As of March 31, 2011, $51.9 billion in TALF loans had been repaid. According to FRBNY, the borrowers of the $19.2 billion in TALF loans that had not been repaid in full were current in their payments.566 Asset Disposition Facility When FRBNY created TALF LLC, the facility that is used to purchase collateral received by FRBNY if TALF borrowers walk away from their loans, TARP loaned the facility $100 million. Of this initial funding, $15.8 million was allocated to cover administrative costs.567 TARP will continue to fund TALF LLC, as needed, until TARP’s entire $4.3 billion obligation has been funded, all TALF loans are retired, or the loan commitment term expires. Any additional funds, if needed, will be provided by a loan from FRBNY that will be collateralized by the assets of TALF LLC and will be senior to the TARP loan.568 Payments by TALF LLC from the proceeds of its holdings will be made in the following order:569 • • • • • • operating expenses of TALF LLC principal due to FRBNY and funding of FRBNY’s senior loan commitment principal due to Treasury interest due to FRBNY interest due to Treasury other secured obligations Any remaining money will be shared by Treasury (90%) and FRBNY (10%).570 For the complete list of TALF borrowers, refer to the FRBNY website: www.federalreserve.gov/newsevents/ reform_talf.htm. 145 146 special inspector general I troubled asset relief program Current Status As of March 31, 2011, no collateral had been surrendered or purchased by TALF LLC.571 As of the same date, TALF LLC had assets of $718 million.572 That amount included the $100 million in initial TARP funding.573 The remainder consisted of interest payments and interest income earned from permitted investments. From its February 4, 2009, formation through March 31, 2011, TALF LLC had spent approximately $1.5 million on administration.574 When TALF closed for new loans in June 2010, FRBNY’s responsibilities under the program shifted primarily to portfolio management, which includes the following duties:575 Excess Spread: Funds left over after required payments and other contractual obligations have been met. In TALF it is the difference between the periodic amount of interest paid out by the collateral and the amount of interest charged by FRBNY on the nonrecourse loan provided to the borrower to purchase the collateral. • • • • maintaining documentation overseeing the custodian that is responsible for holding ABS collateral calculating and collecting principal and interest on TALF loans disbursing excess spread to TALF borrowers in accordance with the governing documents • monitoring the TALF portfolio • collecting and managing collateral assets if a borrower defaults or surrenders the collateral in lieu of repayment • paying TALF LLC interest that borrowers pay FRBNY on TALF loans, in excess of FRBNY’s cost of funding quarterly report to congress I april 28, 2011 Public-Private Investment Program According to Treasury, the purpose of the Public-Private Investment Program (“PPIP”) is to purchase legacy securities from financial institutions through PublicPrivate Investment Funds (“PPIFs”). PPIFs are partnerships, formed specifically for this program, that invest in mortgage-backed securities using equity capital from private-sector investors combined with TARP equity and debt. A private-sector fund management firm oversees each PPIF on behalf of these investors. According to Treasury, the aim of PPIP was to “restart the market for legacy securities, allowing banks and other financial institutions to free up capital and stimulate the extension of new credit.”576 Treasury selected nine fund management firms to establish PPIFs. One PPIF manager, The TCW Group, Inc. (“TCW”), subsequently withdrew. Private investors and Treasury co-invested in the PPIFs to purchase legacy securities from financial institutions. The fund managers raised private-sector capital. Treasury matched the private-sector equity dollar for dollar and provided debt financing in the amount of the total combined equity. Each PPIF manager was also required to invest at least $20 million of its own money in the PPIF.577 Each PPIF is approximately 75% TARP funded. PPIP was designed as an eight-year program but, under certain circumstances, Treasury can terminate it early or extend it for up to two additional years.578 The intent of the program is for the PPIFs to purchase securities from banks, insurance companies, mutual funds, pension funds, and other eligible financial institutions, as defined in EESA.579 Treasury, the PPIF managers, and the private investors share PPIF profits on a pro rata basis based on their limited partnership interests. PPIF losses are also shared on a pro rata basis, up to each participant’s investment amount.580 In addition to its pro rata share, Treasury received warrants in each PPIF, as mandated by EESA.581 Legacy Securities: Real estate-related securities originally issued before 2009 that remained on the balance sheets of financial institutions because of pricing difficulties that resulted from market disruption. Equity: Investment that represents an ownership interest in a business. Debt: Investment in a business that is required to be paid back to the investor, usually with interest. For more information on the selection of PPIF managers, see SIGTARP’s October 7, 2010, audit entitled “Selecting Fund Managers for the Legacy Securities Public-Private Investment Program.” For more information on the withdrawal of TCW as a PPIF manager, see SIGTARP’s January 2010 Quarterly Report, page 88. Pro Rata: Refers to dividing something among a group of participants according to the proportionate share that each participant holds as a part of the whole. Limited Partnership: Partnership in which there is at least one partner whose liability is limited to the amount invested (limited partner) and at least one partner whose liability extends beyond monetary investment (general partner). 147 148 special inspector general I troubled asset relief program Non-Agency Residential MortgageBacked Securities (“non-agency RMBS”): Financial instrument backed by a group of residential real estate mortgages (i.e., home mortgages for residences with up to four dwelling units) not guaranteed or owned by a Government-sponsored enterprise (“GSE”) (Fannie Mae, Freddie Mac, or a Government agency). The securities eligible for purchase by PPIFs (“eligible assets”) are supported by real estate-related loans, including non-agency residential mortgage-backed securities (“non-agency RMBS”) and commercial mortgage-backed securities (“CMBS”) that meet the following criteria:582 • issued before January 1, 2009 (legacy) • rated when issued AAA or equivalent by two or more credit rating agencies designated as nationally recognized statistical rating organizations (“NRSROs”) • secured directly by actual mortgages, leases, or other assets, not other securities (other than certain swap positions, as determined by Treasury) • located primarily in the United States (the loans and other assets that secure the non-agency RMBS and CMBS) • purchased from financial institutions that are eligible for TARP participation Legacy Securities Program Process The following steps describe the process by which funds participate in the Legacy Securities Program:583 1. Fund managers applied to Treasury to participate in the program. 2. Pre-qualified fund managers raised the necessary private capital for the PPIFs. 3. Treasury matched the capital raised, dollar for dollar, up to a preset maximum. Treasury also received warrants so that it could benefit further if the PPIFs turn a profit. 4. Fund managers may borrow additional funds from Treasury up to 100% of the total equity investment (including the amount invested by Treasury). 5. Each fund manager purchases and manages the legacy securities and provides monthly reports to its investors, including Treasury. Obligated funds are not given immediately to PPIF managers. Instead, PPIF managers send a notice to Treasury and the private investors requesting portions of obligated contributions in order to purchase specific investments or to pay certain expenses and debts of the partnerships.584 When the funds are delivered, the PPIF is said to have “drawn down” on the obligation.585 PPIF Purchasing Power During the capital-raising period, the eight PPIP fund managers raised $7.4 billion of private-sector equity capital, which Treasury matched with a dollar-for-dollar obligation for a total of $14.7 billion in equity capital. Treasury also obligated $14.7 billion of debt financing, resulting in $29.4 billion of PPIF purchasing power. As of March 31, 2011, the current PPIFs have drawn down a total of approximately $20.9 billion, of which $0.5 billion was repaid by PPIP manager Invesco. The $20.9 billion ($5.3 billion from private-sector equity capital and $15.7 billion quarterly report to congress I april 28, 2011 from TARP funding ($5.3 billion in equity and $10.4 billion in debt)) was used to purchase PPIP-eligible assets.586 The assets purchased have been valued according to a process administered by Bank of New York Mellon, operating as valuation agent, at $22.1 billion as of March 31, 2011.587 Treasury has disbursed a total of $16.0 billion for PPIP, $15.7 billion for the eight active PPIFs, and $356.3 million for TCW.588 The fund-raising stage for PPIFs is now complete. PPIF managers had six months from the closing date of their first private-sector fund raising to raise additional private-sector equity.589 Although Treasury initially pledged up to $30 billion for PPIP, the fund managers did not raise enough private-sector capital for Treasury’s combination of matching funds and debt financing to reach that amount. Treasury’s total obligation is now limited to $22.4 billion, which includes $22.1 billion for active PPIFs, and $356.3 million disbursed to TCW, which TCW repaid.590 Notwithstanding the expiration of TARP’s purchasing authority on October 3, 2010, each active PPIF manager has up to three years from closing its first privatesector equity contribution (the investment period) to draw upon the TARP funds obligated for the PPIF.591 The last of the three-year investment periods expires in December 2012. Table 2.30 shows all equity and debt obligated for active PPIFs under the program. Table 2.30 Public-private investment program, AS OF 3/31/2011 ($ Billions) PrivateSector Equity Capital Treasury Equity Treasury Debt Total Purchasing Power AG GECC PPIF Master Fund, L.P. $1.2 $1.2 $2.5 $5.0 AllianceBernstein Legacy Securities Master Fund, L.P. 1.2 1.2 2.3 4.6 BlackRock PPIF, L.P. 0.7 0.7 1.4 2.8 Invesco Legacy Securities Master Fund, L.P. 0.9 0.9 1.7 3.4 Marathon Legacy Securities PublicPrivate Investment Partnership, L.P. 0.5 0.5 0.9 1.9 Oaktree PPIP Fund, Inc. 1.2 1.2 2.3 4.6 RLJ Western Asset Public/ Private Master Fund, L.P. 0.6 0.6 1.2 2.5 Wellington Management Legacy Securities PPIF Master Fund, LP 1.1 1.1 2.3 4.6 $7.4 $7.4 $14.7 $29.4a Current Totals Notes: Numbers affected by rounding. Treasury initially obligated $0.4 billion to TCW. The $0.4 billion was paid to TCW, and TCW subsequently repaid the funds that were invested in its PPIF. Because this PPIF has closed, the amount is not included in the total purchasing power. a Source: PPIF Monthly Performance Reports submitted by each PPIF manager, March 2011, received 4/15/2011. 149 150 special inspector general I troubled asset relief program Fund Performance Each PPIF’s performance — its gross and net returns since inception — as reported by PPIF managers, is listed in Table 2.31. The returns are calculated based on a methodology requested by Treasury. Each PPIF has three years to buy legacy securities on behalf of its private and Government investors. The program strives to maintain “predominantly a long-term buy and hold strategy.”592 The data in Table 2.31 constitutes a snapshot of the funds’ performance during the quarter ended March 31, 2011, and may not predict the funds’ performance over the long term. According to some PPIF managers, it would be premature to draw any long-term conclusions because, among other reasons, some managers have not fully executed their investment strategies or fully drawn down Treasury’s capital or debt obligations. Table 2.31 PPIF INVESTMENT STATUS, AS OF 3/31/2011 Manager 1-Month Return (percent)a 3-Month Return (percent)a Cumulative Since Inception (percent)a Net Internal Rate of Return Since Inception (percent)b AG GECC PPIF Master Fund, L.P. Gross (2.72) 6.71 76.97 51.78 Net (2.75) 6.64 74.49 51.12 AllianceBernstein Legacy Securities Master Fund, L.P. Gross (1.56) 4.12 43.51 34.25 Net (1.69) 3.83 40.15 32.49 Gross (1.12) 5.60 51.93 34.56 Net (1.24) 5.36 49.19 32.94 Invesco Legacy Securities Master Fund, L.P. Gross (2.24) 5.53 45.54 31.73 Net (2.41) 5.23 41.88 29.96 Marathon Legacy Securities Public-Private Investment Partnership, L.P. Gross (1.44) 5.24 48.31 38.31 Net (1.55) 4.99 44.07 36.49 0.94 6.65 34.49 31.20 BlackRock PPIF, L.P. Oaktree PPIP Fund, Inc. Gross Net 0.73 6.11 27.25 27.65 RLJ Western Asset Public/ Private Master Fund, L.P. Gross (1.22) 6.78 47.56 35.17 Net (1.34) 6.53 45.07 33.63 Wellington Management Legacy Securities PPIF Master Fund, LP Gross (2.11) 4.62 32.27 23.96 Net (2.24) 4.32 29.72 22.44 Notes: The performance indicators are listed as reported by the PPIF managers without further analysis by SIGTARP. The net returns include the deduction of management fees and partnership expenses attributable to Treasury. a Time-weighted, geometrically linked returns. b Dollar-weighted rate of return. Sources: PPIF Monthly Performance Reports submitted by each PPIF manager, March 2011, received 4/15/2011. 151 quarterly report to congress I april 28, 2011 According to their agreements with Treasury, PPIF managers may trade in both RMBS and CMBS, except for Oaktree PPIP Fund, Inc., which may purchase only CMBS.593 Figure 2.4 shows the collective value of securities purchased by all PPIFs as of March 31, 2011, broken down by RMBS and CMBS. PPIF investments can be classified by underlying asset type. All non-agency RMBS investments are considered residential. The underlying assets are mortgages for residences with up to four dwelling units. For CMBS, the assets are commercial real estate mortgages: office, retail, multi-family, hotel, industrial (such as warehouses), mobile home parks, mixed-use (combination of commercial and residential), and self-storage. Figure 2.5 breaks down CMBS investment distribution by sector. The aggregate CMBS portfolio had large concentrations in office (29%) and retail (25%) loans as of March 31, 2011. Non-agency RMBS and CMBS can be classified by the degree of estimated default risk (sometimes referred to as “quality”). Investors are most concerned about whether borrowers will default and the underlying collateral will be sold at a loss. Estimated risk, or quality, attempts to measure the likelihood of that outcome. There are no universal standards for ranking mortgage quality, and the designations vary depending on context. In general, the highest-quality rankings are granted to mortgages that have the strictest requirements regarding borrower credit, completeness of documentation, and underwriting standards. Treasury characterizes these investment-quality levels of risk for the types of mortgage loans that support non-agency RMBS as follows:594 • Prime — mortgage loan made to a borrower with good credit that generally meets the lender’s strictest underwriting criteria. Non-agency prime loans generally exceed the dollar amount eligible for purchase by GSEs (jumbo loans) but may include lower-balance loans as well. • Alt-A — mortgage loan made to a borrower with good credit but with limited documentation or other characteristics that do not meet the standards for prime loans. An Alt-A loan may have a borrower with a lower credit rating, a higher loan-to-value ratio, or limited or no documentation, compared with a prime loan. • Subprime — mortgage loan made to a borrower with a poor credit rating. • Option Adjustable Rate Mortgage (“ARM”) — mortgage loan that gives the borrower a set of choices about how much interest and principal to pay each month. This may result in negative amortization (an increasing loan principal balance over time). • Other (RMBS) — RMBS that do not meet the definitions for prime, Alt-A, subprime, or option ARM but meet the definition of “eligible assets” above. Figure 2.4 AGGREGATE COMPOSITION OF PPIF PURCHASES, AS OF 3/31/2011 Percentage of $22.1 Billion CMBS 20% 80% RMBS Notes: Numbers affected by rounding. Calculated based on monthly data supplied by the PPIF managers. Source: PPIF Monthly Performance Reports, March 2011. Figure 2.5 AGGREGATE CMBS PURCHASES BY SECTOR, AS OF 3/31/2011 Percentage of $4.4 Billion Other 12% Lodging/ Hotel 15% 29% Office Industrial 5% Multi-family 14% 25% Retail Notes: Numbers affected by rounding. Calculated based on monthly data supplied by the PPIF managers. Source: PPIF Monthly Performance Reports, March 2011. 152 special inspector general I troubled asset relief program Treasury characterizes CMBS according to the degree of “credit enhancement” supporting them:595 • Super Senior — most senior originally rated AAA bonds in a CMBS securitization with the highest level of credit enhancement. Credit enhancement refers to the percentage of the underlying mortgage pool by balance that must be written down before the bond suffers any losses. Super senior bonds often compose approximately 70% of a securitization and, therefore, have approximately 30% credit enhancement at issuance. • AM (Mezzanine) — mezzanine-level originally rated AAA bond. Creditors receive interest and principal payments after super senior creditors but before junior creditors.596 AM bonds often compose approximately 10% of a CMBS securitization. • AJ (Junior) — the most junior bond in a CMBS securitization that attained a AAA rating at issuance. • Other (CMBS) — CMBS that do not meet the definitions for super senior, AM, or AJ but meet the definition of “eligible assets” above. Figure 2.6 and Figure 2.7 show the distribution of non-agency RMBS and CMBS investments held in PPIP by respective risk levels, as reported by PPIF managers. Figure 2.6 Figure 2.7 AGGREGATE RMBS PURCHASES BY QUALITY, AS OF 3/31/2011 AGGREGATE CMBS PURCHASES BY QUALITY, AS OF 3/31/2011 Percentage of $17.7 Billion Percentage of $4.4 Billion Other RMBSa <1% Option ARM Subprime 11% Super Senior Other (CMBS) 8% 21% 13% 34% Prime Alt-A 47% Notes: Numbers affected by rounding. Calculated based on monthly data supplied by the PPIF managers. a The actual percentage for “Other RMBS” is 0.24%. Source: PPIF Monthly Performance Reports, March 2011. AJ (Junior) 27% 39% AM (Mezzanine) Notes: Numbers affected by rounding. Calculated based on monthly data supplied by the PPIF managers. Source: PPIF Monthly Performance Reports, March 2011. quarterly report to congress I april 28, 2011 Non-agency RMBS and CMBS can be classified geographically, according to the states where the underlying mortgages are held. Figure 2.8 and Figure 2.10 show the states with the greatest representation in the underlying non-agency RMBS and CMBS investments in PPIFs, as reported by PPIF managers. Non-agency RMBS and CMBS can also be classified by the delinquency of the underlying mortgages. Figure 2.9 and Figure 2.11 show the distribution of non-agency RMBS and CMBS investments held in PPIP by delinquency levels, as reported by PPIF managers. Figure 2.8 Figure 2.10 AGGREGATE GEOGRAPHICAL DISTRIBUTION — PERCENT OF TOTAL RMBS, AS OF 3/31/2011 AGGREGATE GEOGRAPHICAL DISTRIBUTION — PERCENT OF TOTAL CMBS, AS OF 3/31/2011 40% 43% 15% 16% 30 10 10% 9% 20 8% 5 10 9% 0 CA FL 5% NY 3% VA Notes: Only states with the largest representation shown. Calculated based on monthly data supplied by PPIF managers. Source: PPIF Monthly Performance Reports, March 2011. 0 CA NY FL TX Notes: Only states with largest representation shown. Calculated based on monthly data supplied by the PPIF managers. Source: PPIF Monthly Performance Reports, March 2011. Figure 2.9 Figure 2.11 AGGREGATE AVERAGE RMBS DELINQUENCIES BY MARKET VALUE, AS OF 3/31/2011 AGGREGATE AVERAGE CMBS DELINQUENCIES BY MARKET VALUE, AS OF 3/31/2011 Percentage of $17.7 Billion 60+ Days (FCL/REO included)a 1% 30 − 59 Days 3% 60+ Days 10% 29% 30 − 59 Days Percentage of $4.4 Billion 68% Current Notes: Numbers affected by rounding. Calculated based on monthly data supplied by the PPIF managers. a “REO” means Real Estate Owned and “FCL” means Foreclosure. Source: PPIF Monthly Performance Reports, March 2011. 89% Current Notes: Numbers affected by rounding. Calculated based on monthly data supplied by the PPIF managers. Source: PPIF Monthly Performance Reports, March 2011. 153 154 special inspector general I troubled asset relief program Unlocking Credit for Small Businesses/Small Business Administration Loan Support Initiative 7(a) Loan Program: SBA loan program guaranteeing a percentage of loans for small businesses that cannot otherwise obtain conventional loans at reasonable terms. 504 Community Development Loan Program: SBA program combining Government-guaranteed loans with private-sector mortgages to provide loans of up to $10 million for community development. Pool Assemblers: Firms authorized to create and market pools of SBAguaranteed loans. SBA Pool Certificates: Ownership interest in a bond backed by SBAguaranteed loans. On March 16, 2009, Treasury announced the Unlocking Credit for Small Businesses (“UCSB”) program, designed to encourage banks to increase lending to small businesses. Treasury stated that, through UCSB, it would purchase up to $15 billion in securities backed by pools of loans from two Small Business Administration (“SBA”) programs: the 7(a) Loan Program and the 504 Community Development Loan Program.597 Treasury never purchased any 504 Community Development Loan-backed securities through UCSB.598 Treasury later lowered the amount available to purchase securities under UCSB to $400 million.599 Treasury initiated the 7(a) portion of the program and signed contracts with two pool assemblers, Coastal Securities, Inc. (“Coastal Securities”), and Shay Financial Services, Inc. (“Shay Financial”), on March 2, 2010, and August 27, 2010, respectively.600 Under the governing agreement, Earnest Partners, on behalf of Treasury, purchased SBA pool certificates from Coastal Securities and Shay Financial without confirming to the counterparties that Treasury was the buyer.601 From March 19, 2010, to September 28, 2010, Treasury purchased 31 floatingrate 7(a) securities from Coastal Securities and Shay Financial for a total of approximately $368.1 million.602 As of March 31, 2011, Treasury had received $14.2 million and $6.1 million in amortizing principal and interest payments, respectively.603 Table 2.32 shows the CUSIPs and investment amounts for the securities Treasury bought. quarterly report to congress I april 28, 2011 Table 2.32 Floating-rate sba 7(A) securitIes ($ millions) Investment Amounta Trade Date CUSIP Pool Assembler 3/19/2010 83164KYN7 Coastal Securities $4.4 3/19/2010 83165ADC5 Coastal Securities 8.3 3/19/2010 83165ADE1 Coastal Securities 8.7 4/8/2010 83165AD84 Coastal Securities 26.0 4/8/2010 83164KZH9 Coastal Securities 9.6 5/11/2010 83165AEE0 Coastal Securities 11.5 5/11/2010 83164K2Q5 Coastal Securities 14.2 5/11/2010 83165AED2 Coastal Securities 9.7 5/25/2010 83164K3B7 Coastal Securities 9.3 5/25/2010 83165AEK6 Coastal Securities 18.8 6/17/2010 83165AEQ3 Coastal Securities 38.3 6/17/2010 83165AEP5 Coastal Securities 31.7 7/14/2010 83164K3Y7 Coastal Securities 6.4 7/14/2010 83164K4J9 Coastal Securities 7.5 7/14/2010 83165AE42 Coastal Securities 14.8 7/29/2010 83164K4E0 Coastal Securities 2.8 7/29/2010 83164K4M2 Coastal Securities 10.4 8/17/2010 83165AEZ3 Coastal Securities 9.2 8/17/2010 83165AFB5 Coastal Securities 5.5 8/17/2010 83165AE91 Coastal Securities 11.1 8/31/2010 83165AEW0 Shay Financial 10.3 8/31/2010 83165AFA7 Shay Financial 11.7 8/31/2010 83164K5H2 Coastal Securities 9/14/2010 83165AFC3 Shay Financial 10.0 9/14/2010 83165AFK5 Shay Financial 8.9 9/14/2010 83164K5F6 Coastal Securities 6.1 9/14/2010 83164K5L3 Coastal Securities 6.4 9/28/2010 83164K5M1 Coastal Securities 3.8 9/28/2010 83165AFT6 Coastal Securities 13.1 9/28/2010 83165AFM1 Shay Financial 15.3 9/28/2010 83165AFQ2 Shay Financial 17.1 Total Investment Amount 7.3 $368.1 Notes: Numbers affected by rounding. a Investment amounts may include accrued principal and interest. Sources: Treasury, Transactions Report, 4/4/2011; Treasury, responses to SIGTARP data call, 12/16/2010, 1/14/2011, and 4/6/2011. 155 156 special inspector general I troubled asset relief program AUTOMOTIVE INDUSTRY SUPPORT PROGRAMS During the financial crisis, Treasury, through TARP, launched three automotive industry support programs: the Automotive Industry Financing Program (“AIFP”), the Auto Supplier Support Program (“ASSP”), and the Auto Warranty Commitment Program (“AWCP”). According to Treasury, these programs were established “to prevent a significant disruption of the American automotive industry that poses a systemic risk to financial market stability and will have a negative effect on the economy of the United States.”604 AIFP has not expended any TARP funds for the automotive industry since December 30, 2009, when GMAC Inc. (“GMAC”), now Ally Financial Inc. (“Ally Financial”), received a $3.8 billion capital infusion.605 ASSP, designed to “ensure that automotive suppliers receive compensation for their services and products,” was terminated in April 2010 after all $413.1 million in loans made through it were fully repaid.606 AWCP, a $640.7 million program, was designed to assure car buyers that the warranties on any vehicles purchased during the bankruptcies of General Motors Corp. (“Old GM”) and Chrysler LLC (“Old Chrysler”) would be guaranteed by the Government. It was terminated in July 2009 after all loans under the program were fully repaid upon the companies’ emergence from bankruptcy.607 Treasury initially obligated approximately $84.8 billion through these three programs to Old GM and General Motors Company (“New GM” or “GM”), Ally Financial, the Chrysler entities (Chrysler Holding LLC [now called CGI Holding LLC], Chrysler LLC [collectively, “Old Chrysler”], and Chrysler Group LLC [“New Chrysler”]), and Chrysler Financial Services Americas LLC (“Chrysler Financial”).608 Treasury originally obligated $5.0 billion under ASSP but adjusted this amount to $413.1 million to reflect actual borrowings, thereby reducing the total obligation for all automotive industry support programs to approximately $81.8 billion (including approximately $2.1 billion in loan commitments to New Chrysler that remain available to be drawn down).609 As of March 31, 2011, Treasury had received approximately $29.6 billion in principal and $3.8 billion in dividends, interest, and fees.610 As a result of these payments, old loan conversions (into common equity), and post-bankruptcy restructurings, Treasury now holds 32.0% of the common equity in New GM; a debt instrument of approximately $985.8 million from Old GM (for which Treasury was granted an allowed administrative expense pursuant to Old GM’s bankruptcy liquidation plan); a loan of approximately $7.1 billion to New Chrysler and 8.6% of the common equity in New Chrysler; and $5.9 billion in mandatorily convertible preferred shares (“MCP”) and 73.8% of the common equity in Ally Financial.611 On March 31, 2011, and April 5, 2011, GM made debt payments of $50 million and $45 million, respectively.612 quarterly report to congress I april 28, 2011 Table 2.33 TARP Automotive programs expenditures and payments, AS OF 3/31/2011 ($ BILLIONS) Chrysler GMa Chrysler Financial $1.5 Ally Financial/ GMAC Total $17.2 $42.1 Pre-Bankruptcy AIFP $4.0 $19.4 ASSPb 0.1 0.3 0.4 AWCP 0.3 0.4 0.6 $4.4 $20.1 AIFP $1.9 $30.1 $32.0 Subtotal $1.9 $30.1 $32.0 Subtotal $1.5 $17.2 $43.1 In-Bankruptcy (DIP Financing) Post-Bankruptcy (Working Capital) AIFP $4.6c $4.6 Subtotal $4.6 $4.6 Subtotals by Program: AIFP $78.6 ASSP 0.4 AWCP 0.6 Total Expenditures $10.9 $50.2 $1.5 $17.2 $79.7 Principal Repaid to Treasury ($2.4) ($23.1) ($1.5) ($2.7)d ($29.6) $8.5 $27.1 $ —e $14.5 $50.1 Net Expenditures Notes: Numbers may not total due to rounding. a Includes GM’s debt payments of $50 million on March 31, 2011, and $45 million on April 5, 2011. b The final commitment and repayment amounts reflect the total funds expended under the ASSP loans. Treasury initially obligated $5.0 billion under ASSP. Treasury adjusted its obligation to $0.4 billion. c Chrysler has not drawn down approximately $2.07 billion of its $6.642 billion post-bankruptcy working capital loan from Treasury. d On March 2, 2011, Treasury entered into an underwriting offering of its Ally Financial TRUPS, which resulted in approximately $2.7 billion in total proceeds to Treasury. e This symbol indicates a value of zero. Source: Treasury, Transactions Report, 3/31/2011; Treasury, Transactions Report, 4/4/2011. Treasury’s investments in these three programs and the companies’ payments of principal are summarized in Table 2.33 and categorized by the timing of the investment in relation to the companies’ progressions through bankruptcy. Automotive Industry Financing Program Treasury provided $80.7 billion through AIFP to support automakers and their financing arms in order to “avoid a disorderly bankruptcy of one or more auto[motive] companies.”613 As of March 31, 2011, Treasury had received approximately $3.7 billion in dividends, interest, and fees from participating companies.614 Of AIFP-related loan principal repayments and share sale proceeds, Treasury has received approximately $22.4 billion from the GM entities, $1.9 billion from the 157 158 special inspector general I troubled asset relief program Chrysler entities, $2.7 billion from Ally Financial/GMAC, and $1.5 billion from Chrysler Financial.615 As discussed below, additional payments of $640.7 million and $413.1 million, respectively, were received under AWCP and ASSP.616 Debtor-in-Possession (“DIP”): Company operating under Chapter 11 bankruptcy protection that technically still owns its assets but is operating them to maximize the benefit to its creditors. GM Through March 31, 2011, Treasury had provided approximately $49.5 billion to GM through AIFP. Of that amount, $19.4 billion was provided before bankruptcy and $30.1 billion was provided as debtor-in-possession (“DIP”) financing during bankruptcy. During bankruptcy proceedings, most of Treasury’s pre-bankruptcy and DIP financing loans to Old GM were converted into common or preferred stock in New GM (the company that purchased substantially all of the assets of Old GM pursuant to Section 363 of the Bankruptcy Code) or debt assumed by New GM. As a result, after Old GM’s bankruptcy, Treasury’s investment in Old GM was converted to a 60.8% common equity stake in New GM, $2.1 billion in preferred stock in New GM, and a $7.1 billion loan to New GM ($6.7 billion through AIFP and $360.6 million through AWCP). As part of a credit agreement with Treasury, $16.4 billion of the DIP money was set in an escrow account that GM could access only with Treasury’s permission. Separately, approximately $985.8 million in loans was left as an obligation of Old GM to facilitate the orderly wind-down and liquidation of Old GM.617 On March 31, 2011, Old GM’s Plan of Liquidation became effective and Treasury was granted an allowed administrative expense with respect to Treasury’s $985.8 million loan to Old GM. According to Treasury, under the Plan of Liquidation, Treasury retained the right to receive additional proceeds; however, any additional recovery is dependent on actual liquidation proceeds and pending litigation.618 Debt Repayments New GM repaid the $6.7 billion loan provided through AIFP with interest, using a portion of the previously mentioned $16.4 billion escrow account that had been funded originally with TARP funds provided to GM during its bankruptcy. What remained in escrow was released to New GM without restrictions with the final debt payment in April 2010.619 A separate $985.8 million loan was left behind with Old GM for wind-down costs associated with its liquidation.620 As previously discussed, Treasury was granted an allowed administrative expense with respect to its $985.8 million loan to Old GM once Old GM’s Plan of Liquidation went into effect on March 31, 2011. As of April 5, 2011, Treasury has received $95 million in repayments related to its right to recover proceeds from Old GM under the Plan of Liquidation agreed upon on March 31, 2011.621 As of March 31, 2011, the GM entities had made approximately $756.7 million in dividend and interest payments to Treasury under AIFP.622 quarterly report to congress I april 28, 2011 159 GM IPO Results and GM’s Repurchase of Series A Preferred Shares from Treasury In November and December 2010, New GM successfully completed an initial public offering (“IPO”) in which New GM’s shareholders sold 549.7 million shares of their common stock for $33.00 per share, or $18.1 billion in gross proceeds.623 New GM also sold 100 million shares of Series B MCP priced at $50.00 per share, bringing the offering’s total gross proceeds to $23.1 billion.624 As part of the IPO, Treasury sold a total of 412.3 million common shares for $13.5 billion in net proceeds (after taking into account underwriting fees associated with the IPO), reducing its number of shares to 500.1 million and its ownership in New GM from 60.8% to 33.3%.625 In addition to Treasury selling a portion of its common shares in the IPO, on December 15, 2010, GM repurchased Treasury’s Series A preferred stock (83.9 million shares) for total proceeds of $2.1 billion.626 The share sale price included a 2.0% premium to the liquidation price of $25.00 and resulted in a capital gain to Treasury of approximately $41.9 million.627 Table 2.34 shows the four largest holders’ remaining common equity investments in GM pre- and post-IPO. As of February 15, 2011, 1.6 billion shares of GM common stock were outstanding.628 The breakdown of ownership in GM’s common equity following the IPO is shown in Figure 2.12. In order to recoup its total investment in GM, Treasury will need to recover an additional $27.1 billion in proceeds. This translates to an average of For more on the results of GM’s November 2010 IPO, see SIGTARP’s January 2011 Quarterly Report, page 163. Figure 2.12 POST-IPO OWNERSHIP IN NEW GM Third-Party Investors Table 2.34 39% Common equity share holdings in GM prior to ipo and post-ipo, as of 3/31/2011 Financial Institution U.S. Department of the Treasury Shares Prior to IPO (w/o Warrants) Shares Post-IPO 912,394,068 500,065,254 Canada GEN Investment Corp. 175,105,932 140,084,746 UAW VEBA Trusta 262,500,000 160,150,000 Old GM Bondholdersb 150,000,000 150,000,000 Notes: a Under the terms of the UST Credit Agreement, on July 10, 2009, the UAW VEBA Trust received a warrant to acquire an additional 45,454,545 shares in GM common equity. The warrant is exercisable at any time prior to December 31, 2015, with an exercise price of $42.31 per share. b Under the terms of the UST Credit Agreement, on July 10, 2009, the Old GM bondholders received two warrants, each to acquire 136,363,635 shares in GM common equity. The first tranche of warrants issued to the Old GM bondholders is exercisable at any time prior to July 10, 2016, with an exercise price of $10.00 per share. The second tranche of warrants issued to the Old GM bondholders is exercisable at any time prior to July 10, 2019, with an exercise price of $18.33 per share. Source: SEC, “General Motors Company: Amendment No. 9 to Form S-1 Registration Statement,” 11/17/2010, www.sec.gov/Archives/ edgar/data/1467858/000119312510262471/ds1a.htm#rom45833_12, accessed 1/5/2011. United States Department of the Treasury 32% 10% 10% Old GM Bondholders 9% Canada GEN Investment Corporation UAW VEBA Trust Notes: Numbers may not total due to rounding. Ownership percentages are shown prior to the exercising of any warrants for additional shares by the UAW or Old GM bondholders. Sources: SEC, “General Motors Company: Amendment No. 9 to Form S-1 Registration Statement,” 11/17/2010, www.sec.gov/ Archives/edgar/data/1467858/000119312510262471/ds1a.htm #rom45833_12; SEC, “General Motors Company: Form 10-K,” 3/1/2011, www.sec.gov/Archives/edgar/data/1467858/ 000119312511051462/d10k.htm. 160 special inspector general I troubled asset relief program $54.09 per share on its remaining common shares in New GM, not taking into account dividend, interest, and fee payments received from the GM entities.629 The break-even price — $54.09 per share — is calculated by dividing the $27.1 billion that Treasury extended to GM (but that was still outstanding after the IPO and repurchase of the Series A preferred shares [including a $41.9 million gain]) by the 500.1 million remaining shares. If the $822.3 million in dividend, interest, and fee payments received by Treasury is included in this computation, then Treasury will need to recover an additional $26.2 billion in proceeds, which translates into a break-even price of $52.45 per share, not taking into account other fees or costs associated with selling the shares. Treasury and the other selling stockholders are restricted from selling additional common shares for six months after November 17, 2010, subject to the terms of the lock-up agreements described in the prospectus.630 As of the drafting of this report, Treasury had not made a public statement articulating its specific plans for the future disposition of its common stock holdings in New GM. Chrysler Through October 3, 2010, Treasury had made approximately $12.5 billion available to Chrysler directly through AIFP in three stages to three corporate entities: $4.0 billion before bankruptcy to CGI Holding LLC — the parent company of Old Chrysler (the bankrupt entity) — and Chrysler Financial; $1.9 billion in DIP financing to Old Chrysler during bankruptcy; and $6.6 billion to New Chrysler, the company formed post-bankruptcy that purchased most of Old Chrysler’s assets through a working capital facility.631 As of March 31, 2011, New Chrysler had not drawn down approximately $2.1 billion of the $6.6 billion post-bankruptcy working capital facility it received from Treasury.632 On April 30, 2010, following the bankruptcy court’s approval of the plan of liquidation for Old Chrysler, the $1.9 billion DIP loan was extinguished without repayment. In return, Treasury retained the right to recover proceeds from the sale of assets that were collateral for the DIP loan from a liquidation trust that received all of Old Chrysler’s remaining assets.633 As of March 31, 2011, Treasury had recovered approximately $48.1 million from asset sales.634 Of the $4.0 billion lent to Old Chrysler’s parent company, CGI Holding LLC, before bankruptcy, $500.0 million of the debt was assumed by New Chrysler while the remaining $3.5 billion was held by CGI Holding LLC.635 Under the terms of this loan agreement, as amended on July 23, 2009, Treasury was entitled to the greater of approximately $1.4 billion or 40% of any proceeds that Chrysler Financial paid to its parent company, CGI Holding LLC, after certain other distributions were made.636 On May 14, 2010, Treasury accepted $1.9 billion in full satisfaction of its $3.5 billion loan to CGI Holding LLC.637 quarterly report to congress I april 28, 2011 In consideration for its assistance to Chrysler, Treasury received 9.9% of the common equity in New Chrysler. Additionally, Treasury holds $7.1 billion in loans, composed of the $6.6 billion in post-bankruptcy financing (of which $2.1 billion remains available to be drawn down) and the $500.0 million in debt assumed by New Chrysler from the original $4.0 billion loan to CGI Holding LLC.638 Table 2.35 provides the status of Treasury’s original investments in the Chrysler entities. On July 10, 2009, as part of the AWCP wind-down, Treasury received a payment from CGI Holding LLC of approximately $280.1 million for principal it had received through AWCP upon New Chrysler’s exit from bankruptcy.639 On April 7, 2010, as part of the scheduled termination of ASSP, Treasury received payment from New Chrysler for the full $123.1 million in principal it had received through the program as well as $50.3 million in additional fees and interest.640 On January 10, 2011, Fiat North America LLC (“Fiat”) automatically increased its ownership of New Chrysler’s common equity from 20% to 25% by meeting the performance metric to build a new fuel-efficient engine in the United States.641 Fiat further increased its ownership of New Chrysler to 30% on April 12, 2011, after New Chrysler surpassed an international sales and revenue target and reached a pact to expand its presence through 90% of Fiat dealerships in Latin America.642 Following this increase in Fiat’s ownership stake in New Chrysler, Treasury’s equity ownership interest in New Chrysler’s common equity decreased from 9.2% to 8.6%, with the remaining ownership split between the UAW VEBA Trust’s 59.2% and the Table 2.35 Treasury holdings in the Chrysler entities, AS OF 3/31/2011 Original Treasury Commitment Initial Investment Amount Pre-Bankruptcy Loan to CGI Holding LLC $0.5 transferred to New Chrysler $4.0 DIP Financing to Old Chrysler 1.9 Loan to New Chrysler 4.6c Total Subsequent Transactions ($ BILLIONS) Outstanding Treasury Investments in New Chryslera $0.5 1.9 repaid to Treasury 0.0 1.6 unpaidb 1.6 0.05 repaid to Treasury 1.84 unpaid b None 0.0 1.84 4.6 $8.5 Notes: Numbers may not total due to rounding. a This column represents the total dollar value of funding provided to Chrysler that would be required to be paid back in order for Treasury to break even on its investments in the company. b Treasury received a 9.9% common equity stake in New Chrysler upon execution of the $6.642 billion post-bankruptcy loan agreement in consideration for loans it had extended to Chrysler. c As of March 31, 2011, Chrysler had not drawn down approximately $2.07 billion of the $6.642 billion post-bankruptcy loan it received from Treasury. Source: Treasury, Transactions Report, 3/31/2011. 161 162 special inspector general I troubled asset relief program Figure 2.13 OWNERSHIP IN NEW CHRYSLER Government of Canada 2% United States Department of the Treasury 9% Fiat 30% 59% UAW VEBA Trust Canadian Government’s 2.2%.643 Figure 2.13 represents the allocation of ownership in New Chrysler’s common equity following the increase in Fiat’s ownership. The ownership percentages shown in Figure 2.13 will change if Fiat meets the final performance goal to produce a 40 mile-per-gallon car and/or exercises options to purchase additional equity, which could eventually result in Fiat increasing its ownership interest, which is capped at 49.9% until the loans to the U.S. and Canadian Governments are repaid in full.644 As of March 31, 2011, the Chrysler entities had made approximately $693.7 million in interest payments to Treasury under AIFP.645 Automotive Financing Companies Ally Financial/GMAC Notes: Numbers may not total due to rounding. Ownership percentages are shown prior to Fiat meeting additional performance metrics, which would allow it to increase its ownership in New Chrysler. Source: Chrysler Press Release, “Chrysler Group LLC Meets Second of Three Performance Events; Fiat Increases Ownership to 30 Percent,” 4/12/2011, www.media.chrysler.com/ newsrelease. do?id=10773&mid=2, accessed 4/12/2011. On December 29, 2008, Treasury purchased $5 billion in senior preferred equity from GMAC and received an additional $250 million in preferred shares through warrants that Treasury exercised immediately at a cost of $2,500.646 On the same day, Treasury agreed to lend up to $1 billion to Old GM in order to increase Old GM’s ownership interest in GMAC. In January 2009, Old GM borrowed $884 million, which it invested in GMAC.647 In May 2009, Treasury exchanged that $884 million note for a 35.4% common equity ownership in GMAC, thereby giving Treasury the right to appoint two directors to GMAC’s board.648 On May 21, 2009, Treasury made an additional investment in GMAC when it purchased $7.5 billion of MCP and received warrants that Treasury immediately exercised for an additional $375.0 million in MCP at an additional cost of approximately $75,000.649 On December 30, 2009, Treasury invested another $3.8 billion in GMAC, consisting of $2.5 billion in trust preferred securities (“TRUPS”) and $1.3 billion in MCP. Treasury also received warrants, which were immediately exercised, to purchase an additional $127.0 million in TRUPS and $62.5 million in MCP at an additional cost of approximately $1,270 and $12,500, respectively.650 Additionally, Treasury converted $3.0 billion of its MCP into GMAC common stock, increasing its common equity ownership from 35.4% to 56.3%. This gave Treasury the right to appoint two additional directors to GMAC’s board, potentially bringing the total number of Treasury-appointed directors to four.651 On May 10, 2010, GMAC changed its name to Ally Financial Inc.652 On December 30, 2010, Treasury announced the conversion of $5.5 billion of its MCP in Ally Financial to common equity. This conversion increased Treasury’s ownership stake in Ally Financial’s common equity from 56.3% to 73.8%. Treasury converted the MCP at 1.0 times the book value of Ally Financial’s tangible common equity balance as of September 30, 2010, subject to certain adjustments.653 According to Treasury, the conversion aimed to stabilize Ally Financial through the addition of common equity to its capital structure, thereby allowing it easier 163 quarterly report to congress I april 28, 2011 access to both equity and debt financing in private capital markets. The move was also intended to facilitate any future efforts on the part of Treasury to reduce its investment in Ally Financial through the sale of its common equity holdings in the company.654 As a result, Treasury will no longer receive the quarterly dividend payments that Ally Financial was required to pay on the $5.5 billion of MCP. On March 1, 2011, Treasury announced its intention to sell its $2.7 billion in TRUPS in Ally Financial in a public offering.655 The public offering closed on March 7, 2011, resulting in approximately $2.7 billion in total proceeds to Treasury.656 As a result of its conversion of MCP to common stock in Ally Financial, and for so long as Treasury maintains common equity ownership at or above 70.8%, Treasury has the right to appoint two additional directors, for a total of six, to Ally Financial’s board, increasing the size of the board to 11 members.657 On February 28, 2011, Treasury appointed its fourth director to Ally Financial’s board.658 As of March 31, 2011, Treasury had not exercised its right to fill its remaining two director positions.659 The conversion of $5.5 billion of Treasury’s MCP diluted the shares of other existing shareholders in Ally Financial. Following the conversion, the private equity firm Cerberus Capital Management, L.P. (“Cerberus”) held 8.7%, third-party investors collectively held 7.6%, an independently managed trust owned by New GM held 5.9%, and New GM directly held a 4.0% stake in Ally Financial’s common equity.660 Figure 2.14 shows the breakdown of common equity ownership in Ally Financial as of March 31, 2011. Figure 2.14 OWNERSHIP IN ALLY FINANCIAL/GMAC New GM 4% Ally Financial Files S-1 Registration Statement in Preparation for IPO On March 31, 2011, Ally Financial filed a Form S-1 Registration statement for an IPO with the Securities and Exchange Commission (“SEC”).661 The document includes a prospectus relating to the issuance of Ally Financial common stock.662 The prospectus also outlines certain aspects of Ally Financial’s business operations and risks facing the company.663 Ally Financial stated that the IPO would consist of “common stock to be sold by the U.S. Department of the Treasury.”664 As of the drafting of this report, the number of shares to be offered and the offering’s price range had not been set and are subject to market conditions.665 Treasury agreed to be named as a seller but retained the right to decide whether to sell any of its 73.8% ownership of Ally Financial’s common stock and in what amounts.666 As of March 31, 2011, Treasury still held its initial investments of approximately $14.6 billion in Ally Financial/GMAC, composed of 73.8% of Ally Financial’s common stock and $5.3 billion in MCP.667 In return for these investments, Treasury was also granted warrants, which it executed immediately at a cost of $90,015, to purchase securities with a par value of approximately $688 million: GM Trust Third-Party Investors Cerberus 7% 9% 6% 74% United States Department of the Treasury Note: Numbers may not total due to rounding. Source: SEC, “Ally Financial Inc.: Form S-1,” 3/31/2011. 164 special inspector general I troubled asset relief program $250 million in preferred shares (which were later converted to MCP) and $438 million in additional MCP.668 This brought Treasury’s total holdings in Ally Financial securities to a par value of approximately $15.3 billion, for which it expended approximately $14.6 billion in TARP funds.669 Table 2.36 summarizes Treasury’s Ally Financial holdings as of March 31, 2011. As of March 31, 2011, Ally Financial had made approximately $2.2 billion in dividend and interest payments to Treasury.670 Chrysler Financial In January 2009, Treasury loaned Chrysler Financial $1.5 billion under AIFP to support Chrysler Financial’s retail lending. On July 14, 2009, Chrysler Financial fully repaid the loan in addition to approximately $7.4 million in interest payments.671 In connection with the $3.5 billion pre-bankruptcy loan remaining with CGI Holding LLC, the parent company of Old Chrysler (the bankrupt entity) and Chrysler Financial, Treasury was entitled to the greater of approximately $1.4 billion or 40% of any proceeds that Chrysler Financial paid to its parent company, CGI Holding LLC, after certain other distributions were made.672 On May 14, 2010, Treasury accepted $1.9 billion in full satisfaction of its $3.5 billion loan to CGI Holding LLC, thereby relinquishing any interest in or claim on Chrysler Financial.673 Seven months later, on December 21, 2010, TD Bank Group announced it had agreed to purchase Chrysler Financial from Cerberus, the owner of CGI Holding LLC, for approximately $6.3 billion.674 Table 2.36 Treasury holdings in Ally Financial (formerly GMAC), AS OF 3/31/2011 ($ BILLIONS) Total Mandatorily Convertible Preferred Shares (MCP) Common Equity Total $5.9a 9.4b $15.3c Notes: Numbers may not total due to rounding. a This figure includes three separate tranches of MCP acquired through the exercise of warrants: $250 million in warrants that were exercised to acquire preferred shares that were later converted to MCP on December 30, 2009; $375 million in MCP warrants exercised on May 21, 2009; and $63 million in MCP warrants exercised on December 30, 2009. b The dollar value of Treasury’s 73.8% stake in Ally Financial’s common equity is based on the costs to acquire such a stake, including the conversion of the GM rights loan of $884 million in May 2009, the $3 billion of MCP in December 2009, and the $5.5 billion of MCP in December 2010. c This figure includes $687.5 million in shares acquired by the exercise of the warrants discussed above. These warrants were exercised at an aggregate cost of $90,015 to the taxpayer. Sources: Treasury Press Release, “Treasury Converts Nearly Half of its Ally Preferred Shares to Common Stock,” 12/30/2010, www. treasury.gov/press-center/press-releases/Pages/tg1014.aspx, accessed 1/3/2011; Ally Financial, Form 8-K, 1/5/2010, www.sec.gov/ Archives/edgar/data/40729/000119312510001221/d8k.htm, accessed 3/22/2011; Treasury Press Release, “Treasury Announces Pricing of $2.7 Billion of Ally TRuPs,” 3/2/2011, www.treasury.gov/press-center/press-releases/Pages/tg1086.aspx, accessed 3/3/2011. quarterly report to congress I april 28, 2011 Auto Supplier Support Program (“ASSP”) On March 19, 2009, Treasury announced a commitment of $5.0 billion to ASSP to “help stabilize the automotive supply base and restore credit flows in a critical sector of the American economy.”675 Because of concerns about the auto manufacturers’ ability to pay their invoices, suppliers had not been able to borrow from banks by using their receivables as collateral. ASSP enabled automotive parts suppliers to access Government-backed protection for money owed to them for the products they shipped to manufacturers. The total commitment of $5.0 billion was reduced to $3.5 billion on July 8, 2009 — $2.5 billion for GM and $1.0 billion for Chrysler.676 Of the $3.5 billion reduced commitment to GM and Chrysler, approximately $413.1 million was actually expended. Because the actual expenditure was lower than initially anticipated, Treasury reduced its obligation under ASSP to $413.1 million. Treasury received a total of $413.1 million in ASSP loan repayments — $290.0 million from GM and approximately $123.1 million from Chrysler.677 Additionally, Treasury received $115.9 million in fees and interest payments — $65.6 million from GM and $50.3 million from Chrysler.678 ASSP was terminated on April 5, 2010, for GM and April 7, 2010, for Chrysler.679 All loans made under this program have been repaid with interest. Auto Warranty Commitment Program (“AWCP”) AWCP was designed to bolster consumer confidence by guaranteeing Chrysler and GM vehicle warranties during the companies’ restructuring in bankruptcy.680 Treasury obligated $640.7 million to this program — $360.6 million for GM and $280.1 million for Chrysler.681 On July 10, 2009, the companies fully repaid Treasury upon their exit from bankruptcy.682 165 166 special inspector general I troubled asset relief program EXECUTIVE COMPENSATION Exceptional Assistance Recipients: Companies that receive assistance under SSFI, TIP, and AIFP. Current recipients are AIG, Chrysler, GM, and Ally Financial (formerly GMAC). For more information on the Rule and a summary of the timeline of TARP executive compensation restrictions, see SIGTARP’s July 2009 Quarterly Report, page 118. For more information on executive compensation issues and findings, refer to SIGTARP audits: “Despite Evolving Rules on Executive Compensation, SIGTARP Survey Provides Insights on Compliance,” issued August 19, 2009, and “Extent of Federal Agencies’ Oversight of AIG Compensation Varied, and Important Challenges Remain,” issued October 14, 2009. Senior Executive Officers (“SEOs”): “Named executive officers” of TARP recipients as defined under Federal securities law, which generally include the principal executive officer, the principal financial officer, and the next three most highly compensated officers. TARP recipients are subject to executive compensation restrictions. The original executive compensation rules set forth in Section 111 of EESA were amended in February 2009 in the American Recovery and Reinvestment Act of 2009 (“ARRA”) and have been interpreted and implemented by Treasury regulations and notices.683 On June 10, 2009, Treasury released its Interim Final Rule on TARP Standards for Compensation and Corporate Governance (the “Rule”), which “implement[s] the ARRA provisions, consolidates all of the executive-compensation-related provisions that are specifically directed at TARP recipients into a single rule (superseding all prior rules and guidance), and utilizes the discretion granted to the [Treasury] Secretary under the ARRA to adopt additional standards, some of which are adapted from principles set forth” in guidance provided by Treasury in February 2009.684 The Rule applies to institutions that meet its definition of a TARP recipient as well as any entity that owns at least 50% of any TARP recipient. As long as a TARP recipient has an outstanding “obligation” to Treasury (as defined by ARRA, this does not include warrants to purchase common stock), it must abide by the Rule.685 The Rule also specifically subjects exceptional assistance recipients to enhanced restrictions designed to “maximize long-term shareholder value and protect taxpayer interests.”686 Some program participants are exempt from the Rule: • TALF recipients, because they did not directly receive TARP assistance (instead, TARP funds are available to purchase collateral surrendered to TALF)687 • PPIFs, because they have no employees. In addition, PPIF investors and asset managers are exempt because the program’s terms prohibit any single private entity from owning more than 9.9% of any such fund and, therefore, fall below the 50% ownership threshold688 • Making Home Affordable (“MHA”) program participants, which are statutorily exempt Special Master Treasury created the Office of the Special Master for TARP Executive Compensation on June 15, 2009, and appointed Kenneth R. Feinberg to the position of Special Master; Mr. Feinberg was succeeded by Ms. Patricia Geoghegan, who became Acting Special Master on September 10, 2010.689 The Special Master’s responsibilities include the following:690 • Top 25 Reviews — review and approve compensation structures and payments for the five senior executive officers (“SEOs”) and the next 20 most highly paid employees at institutions that received exceptional financial assistance quarterly report to congress I april 28, 2011 • Top 26 through 100 Reviews — review and approve compensation structures for the next 75 highest-paid employees at institutions that received exceptional financial assistance (employees who are not in the top 25 but are executive officers or among the top 100 most highly compensated employees fall into this category) • Prior Payment Reviews — review bonuses, retention awards, and other compensation paid to SEOs and the 20 next most highly compensated employees of each entity that received TARP assistance from the date the entity first received TARP assistance until February 17, 2009, and seek to negotiate reimbursements where the payment was determined to be inconsistent with the purposes of EESA or TARP, or otherwise contrary to the public interest • Interpretation — provide advisory opinions with respect to the Rule’s application and whether compensation payments and structures were consistent with the purposes of EESA or TARP, or otherwise contrary to the public interest Exceptional Assistance Recipients As of March 31, 2011, only AIG, Chrysler, GM, and Ally Financial (formerly GMAC) were still considered exceptional assistance recipients.691 Citigroup and Bank of America had been considered exceptional assistance recipients because each participated in TIP, but neither falls under this designation now because of repayments each made in December 2009.692 Chrysler Financial was released from all its obligations under the Rule after it repaid its $1.5 billion loan under AIFP and its parent company, CGI Holding LLC, repaid $1.9 billion of its original $4.0 billion TARP loan under AIFP to Treasury on May 14, 2010, in full satisfaction of its outstanding obligations to Treasury.693 On April 1, 2011, the Office of the Special Master issued the following compensation determinations for 2011 concerning 98 executives who were the “Top 25” executives at the four remaining exceptional assistance recipients:694 • Compensation packages for the AIG, GM, and Ally Financial CEOs did not increase and the cash component remained frozen at 2010 levels (as in past years, the Chrysler CEO is compensated by Fiat rather than by the taxpayer-assisted Chrysler company). • 82% of the Top 25 pay packages for 2011 (the same percentage as in 2010), including target incentives, were in the form of stock, thereby “tying the ultimate value of the compensation to company performance.” • More than 75% of the Top 25 pay packages limited cash salary to $500,000 or less. • The four companies have made more than $36 billion in TARP repayments since the Special Master’s March 2010 Top 25 compensation rulings. For a discussion of the Special Master “Look Back” Review, which was completed on July 23, 2010, see SIGTARP’s October 2010 Quarterly Report, pages 153-154. Public Interest: Regulatory standard that the Special Master is required to apply in making determinations. It refers to the determination of whether TARP-recipient compensation plans are aligned with the best interests of the U.S. taxpayer, based on a balancing of specific principles set forth in the Rule. For the specific principles used in reviewing compensation plans, see SIGTARP’s July 2009 Quarterly Report, pages 122-123. 167 168 special inspector general I troubled asset relief program • The overall cash compensation and direct compensation levels for the 98 executives decreased in 2011 by 18.2% and 1.3%, respectively. Of the 98 executives, 62 individuals were in the Top 25 in 2010 and 2011, and the overall cash compensation and direct compensation levels increased in 2011 by 4.7% and 4.4%, respectively. Of the 98 executives, 36 individuals were new to the 2011 Top 25, and overall cash compensation and direct compensation decreased by 39% and 9.6%, respectively, as compared to the cash they received for 2010.695 S ec tio n 3 TARP OPERATIONS AND ADMINISTRATION 170 special inspector general I troubled asset relief program quarterly report to congress I april 28, 2011 Under the Emergency Economic Stabilization Act of 2008 (“EESA”), Congress authorized the Secretary of the Treasury (“Treasury Secretary”) to create the operational and administrative mechanisms to carry out the Troubled Asset Relief Program (“TARP”). EESA established the Office of Financial Stability (“OFS”) within the U.S. Department of the Treasury (“Treasury”). OFS is responsible for administering TARP.696 Treasury has authority to establish program vehicles, issue regulations, directly hire or appoint employees, enter into contracts, and designate financial institutions as financial agents of the Government.697 In addition to using permanent and interim staff, OFS relies on contractors and financial agents for legal services, investment consulting, accounting, and other key services. TARP Administrative and Program Expenditures According to Treasury, as of March 31, 2011, it had spent $181.1 million on TARP administrative costs and $572.5 million on programmatic expenditures, for a total of $753.6 million. As of March 31, 2011, Treasury has obligated $225.7 million for TARP administrative costs and $798.6 million in programmatic expenditures for a total of $1.0 billion.698 Treasury reported that it has employed 102 career civil servants, 116 term appointees, and 34 reimbursable detailees, for a total of 252 full-time employees.699 Table 3.1 provides a summary of the expenditures and obligations for TARP administrative costs through March 31, 2011. These costs are categorized as “personnel services” and “non-personnel services,” with a few exceptions. Table 3.2 provides a summary of the programmatic expenditures, which include costs to hire financial agents and contractors, and obligations through March 31, 2011. 171 172 special inspector general I troubled asset relief program Table 3.1 TARP Administrative expenditures and obligations Budget Object Class Title Obligations for Period Expenditures for Period Ending 3/31/2011 Ending 3/31/2011 Personnel Services Personnel Compensation & Services Total Personnel Services $60,243,480 $60,027,571 $60,243,480 $60,027,571 $1,043,227 $1,007,895 Non-Personnel Services Travel & Transportation of Persons Transportation of Things Rents, Communications, Utilities & Misc Charges Printing & Reproduction Other Services 11,960 11,960 753,957 610,107 395 395 162,560,737 118,413,080 Supplies & Materials 806,231 799,444 Equipment 232,054 222,675 Land & Structures — — Dividends and Interest 37 37 Total Non-Personnel Services $165,408,598 $121,065,594 Grand Total $225,652,078 $181,093,165 Notes: Numbers affected by rounding. The costs associated with “Other Services” under TARP Administrative Expenditures and Obligations are composed of administrative services including financial, administrative, IT, and legal (non-programmatic) support. Source: Treasury, response to SIGTARP data call, 4/11/2011. Current Contractors and Financial Agents As of March 31, 2011, Treasury had retained 76 private vendors: 17 financial agents and 59 contractors, to help administer TARP.700 Table 3.2 lists service providers retained as of March 31, 2011. Although Treasury informed SIGTARP that it “does not track” the number of individuals who provide services under its agreements, the number likely dwarfs the 252 that Treasury has identified as working for OFS.701 For example, on October 14, 2010, the Congressional Oversight Panel (“COP”) reported that “Fannie Mae alone currently has 600 employees working to fulfill its TARP commitments.”702 To streamline and expedite contract solicitation, EESA allowed the Treasury Secretary to waive specific Federal Acquisition Regulations for urgent and compelling circumstances.703 173 quarterly report to congress I april 28, 2011 table 3.2 OFS SERVICE CONTRACTS (continued) Type of Transaction Obligated Value Expended Value Legal services for the implementation of TARP Contract $931,090 $931,090 Ennis Knupp & Associates Inc. Investment and advisory services Contract 2,470,242 855,199 10/14/2008 The Bank of New York Mellon Corporation Custodian Financial Agent 40,867,341 30,284,746 10/16/2008 PricewaterhouseCoopers Internal control services Contract 31,017,937 26,803,498 For process mapping consultant services Interagency Agreement 9,000 — Date Vendor Purpose 10/10/2008 Simpson Thacher & Bartlett MNP LLP 10/11/2008 10/17/2008 Turner Consulting Group, Inc. 10/18/2008 Ernst & Young LLP Accounting services Contract 14,704,519 11,936,929 10/29/2008 Hughes Hubbard & Reed LLP Legal services for the Capital Purchase Program Contract 3,060,921 2,835,357 10/29/2008 Squire, Sanders & Dempsey LLP Legal services for the Capital Purchase Program Contract 5,787,939 2,687,999 10/31/2008 Lindholm & Associates, Inc. Human resources services Contract 614,963 614,963 11/7/2008 Sonnenschein Nath & Rosenthal LLP Legal services related to auto industry loans Contract 2,722,326 2,702,441 11/9/2008 Internal Revenue Service Detailees Interagency Agreement 97,239 97,239 11/17/2008 Internal Revenue Service CSC Systems & Solutions LLC Interagency Agreement 8,095 8,095 11/25/2008 Department of the Treasury — Departmental Offices Administrative support Interagency Agreement 16,512,820 15,844,623 12/3/2008 Alcohol and Tobacco Tax and Trade Bureau IAA - TTB development, management & operation of SharePoint Interagency Agreement 67,489 67,489 12/5/2008 Washington Post Subscription Interagency Agreement 395 — 12/10/2008 Thacher Proffitt & Wood1 Admin action to correct system issue Contract — — 12/10/2008 Sonnenschein Nath & Rosenthal LLP Legal services for the purchase of assetbacked securities Contract 249,999 102,769 12/15/2008 Office of Thrift Supervision Detailees Interagency Agreement 225,547 164,823 12/16/2008 Department of Housing and Urban Development Detailees Interagency Agreement 142,863 124,773 12/22/2008 Office of Thrift Supervision Detailees Interagency Agreement 103,871 — 12/24/2008 Cushman and Wakefield of VA Inc. Painting services for TARP offices Contract 8,750 8,750 1/6/2009 Securities and Exchange Commission Detailees Interagency Agreement 30,416 30,416 1/7/2009 Colonial Parking Inc. Lease of parking spaces Contract 275,650 134,146 1/27/2009 Cadwalader Wickersham & Taft LLP Bankruptcy legal services Contract 409,955 409,955 1/27/2009 Whitaker Brothers Bus Machines Inc. Paper shredder Contract 3,213 3,213 Detailees Interagency Agreement 501,118 501,118 1/30/2009 Comptroller of the Currency Continued on next page. 174 special inspector general I troubled asset relief program OFS SERVICE CONTRACTS (continued) Obligated Value Expended Value Interagency Agreement $7,459,049 $7,459,049 Interagency Agreement 242,499 — Temporary services for document production, FOIA assistance, and program Contract support 692,108 692,108 Locke Lord Bissell & Liddell LLP Initiate interim legal services in support of Contract Treasury investments under EESA 272,243 272,243 Fannie Mae Homeownership preservation program Financial Agent 249,431,528 177,331,720 2/18/2009 Freddie Mac Homeownership preservation program Financial Agent 143,850,119 102,187,739 2/20/2009 Simpson Thacher & Bartlett MNP LLP Capital Assistance Program (I) Contract 2,047,872 1,530,023 2/20/2009 Financial Clerk U.S. Senate Congressional Oversight Panel Interagency Agreement 3,394,348 3,394,348 2/20/2009 Venable LLP Capital Assistance Program (II) legal services Contract 1,394,724 1,394,724 2/20/2009 Office of Thrift Supervision Detailees Interagency Agreement 226,931 189,533 2/26/2009 Securities and Exchange Commission Detailees Interagency Agreement 18,531 18,531 2/27/2009 Pension Benefit Guaranty Corporation Rothschild, Inc. Interagency Agreement 7,750,000 7,750,000 3/6/2009 The Boston Consulting Group Management consulting relating to the auto industry 991,169 991,169 3/16/2009 Earnest Partners Small business assistance program Financial Agent 2,550,000 2,087,915 Architectural services Interagency Agreement — — Date Vendor Purpose 2/2/2009 US Government Accountability Office IAA - GAO required by P.L. 110-343 to conduct certain activities related to TARP IAA 2/3/2009 Internal Revenue Service Detailees 2/9/2009 Pat Taylor & Associates, Inc. 2/12/2009 2/18/2009 Type of Transaction Contract 3/23/2009 Heery International Inc. 3/30/2009 Cadwalader Wickersham & Taft LLP Auto investment legal services Contract 17,392,786 17,392,786 3/30/2009 Bingham McCutchen LLP SBA initiative legal services — contract novated to TOFS-10-D-0001 with Bingham Contract McCutchen LLP 149,349 126,631 3/30/2009 Bingham McCutchen LLP2 SBA initiative legal services — Contract novated from TOFS-09-D-0005 with McKee Contract Nelson 273,006 143,893 3/30/2009 Haynes and Boone, LLP Auto investment legal services Contract 345,746 345,746 3/30/2009 Sonnenschein Nath & Rosenthal LLP Auto investment legal services Contract 1,834,193 1,834,193 3/31/2009 FI Consulting Inc. Credit reform modeling and analysis Contract 2,803,505 1,875,091 4/3/2009 American Furniture Rentals Inc. Furniture rental 1801 Interagency Agreement 35,187 25,808 4/3/2009 The Boston Consulting Group Management consulting relating to the auto industry Contract 4,100,195 4,099,923 4/17/2009 Herman Miller, Inc. Aeron chairs Contract 53,799 53,799 4/17/2009 Bureau of Engraving and Printing Detailees Interagency Agreement 45,822 45,822 4/21/2009 AllianceBernstein LP Asset management services Financial Agent 33,288,445 26,886,543 4/21/2009 FSI Group, LLC Asset management services Financial Agent 18,016,838 14,714,713 4/21/2009 Piedmont Investment Advisors, LLC Asset management services Financial Agent 8,522,375 7,086,625 Detailees Interagency Agreement 45,492 45,492 4/30/2009 Department of State Continued on next page. 175 quarterly report to congress I april 28, 2011 OFS SERVICE CONTRACTS (continued) Obligated Value Expended Value Interagency Agreement $48,422 $48,422 Interagency Agreement 975 325 Executive search and recruiting services— Contract chief homeownership officer 124,340 124,340 Freedom of Information Act (FOIA) analysts to support the disclosure services, privacy Contract and Treasury records 103,425 90,301 Interagency Agreement 430,000 430,000 Detailees Interagency Agreement 243,778 243,740 Legal services for work under Treasury’s Public-Private Investment Fund (PPIF) program Contract 4,068,834 2,286,996 5/26/2009 Legal services for work under Treasury’s Simpson Thacher & Bartlett MNP LLP Public-Private Investment Fund (PPIF) program Contract 7,849,026 3,505,917 6/9/2009 Financial Management Services Gartner, Inc. Interagency Agreement 89,436 89,436 6/29/2009 Department of the Interior Federal consulting group (Foresee Consulting, Inc.) Interagency Agreement 49,000 49,000 7/15/2009 Judicial Watch3 Payment to liquidate claim — contract protest Interagency Agreement 1,500 1,500 7/17/2009 Korn/Ferry International Executive search services for the OFS chief investment officer position Contract 75,017 75,017 7/30/2009 Cadwalader Wickersham & Taft LLP4 Restructuring legal services Contract 2,049,979 1,278,696 7/30/2009 Debevoise & Plimpton LLP Restructuring legal services Contract 159,175 1,650 7/30/2009 Fox, Hefter, Swibel, Levin & Carol, LLP Restructuring legal services Contract 84,125 26,493 8/10/2009 Department of Justice — ATF Detailees Interagency Agreement 63,218 54,679 8/10/2009 National Aeronautics and Space Administration (NASA) Detailees Interagency Agreement 140,889 140,889 8/18/2009 Mercer LLC Executive compensation data subscription Contract 3,000 3,000 63,494 63,248 Date Vendor Purpose 5/5/2009 Federal Reserve Board Detailees 5/13/2009 Department of the Treasury — U.S. Mint “Making Home Affordable” logo search 5/14/2009 Knowledgebank Inc. 5/15/2009 Phacil, Inc. 5/20/2009 Securities and Exchange Commission Detailees 5/22/2009 Department of Justice — ATF 5/26/2009 Anderson, McCoy & Orta 8/25/2009 Department of Justice — ATF Type of Transaction Detailees Interagency Agreement 9/2/2009 Knowledge Mosaic Inc. SEC filings subscription service Contract 5,000 5,000 9/10/2009 Equilar, Inc. Executive compensation data subscription Contract 59,990 59,990 9/11/2009 PricewaterhouseCoopers PPIP compliance Contract 1,995,269 1,630,781 436,054 436,054 9/18/2009 Treasury Franchise Fund BPD Interagency Agreement 9/30/2009 Immixtechnology Inc. EnCase eDiscovery ProSuite Interagency Agreement 210,184 — 9/30/2009 Immixtechnology Inc. Guidance Inc. Interagency Agreement 108,000 — 9/30/2009 NNA INC. Newspaper delivery Contract 8,479 8,220 9/30/2009 SNL Financial LC SNL Unlimited, a web-based financial analytics service Contract 260,000 260,000 Continued on next page. 176 special inspector general I troubled asset relief program OFS SERVICE CONTRACTS (continued) Date Vendor Purpose 11/9/2009 Department of the Treasury — Departmental Offices Administrative support 12/16/2009 Internal Revenue Service Detailees Type of Transaction Obligated Value Expended Value Interagency Agreement $23,682,061 $16,636,521 Interagency Agreement 46,202 — 12/22/2009 Avondale Investments LLC Asset management services Financial Agent 1,562,500 776,630 12/22/2009 Bell Rock Capital, LLC Asset management services Financial Agent 1,535,000 1,245,708 12/22/2009 Howe Barnes Hoefer & Arnett, Inc. Asset management services Financial Agent 2,856,438 1,904,146 Hughes Hubbard & Reed LLP Document production services and litigation support Contract 1,097,205 699,683 12/22/2009 12/22/2009 KBW Asset Management, Inc. Asset management services Financial Agent 4,937,433 4,937,433 12/22/2009 Lombardia Capital Partners, LLC Asset management services Financial Agent 2,450,000 1,877,501 12/22/2009 Paradigm Asset Management Co., LLC Asset management services Financial Agent 2,387,250 1,856,500 1/14/2010 US Government Accountability Office IAA - GAO required by P.L.110-343 to conduct certain activities related to TARP Interagency Agreement 7,304,722 7,304,722 1/15/2010 Association of Government Accountants CEAR program application Contract 5,000 5,000 2/16/2010 Internal Revenue Service Detailees Interagency Agreement 52,742 52,742 2/16/2010 The MITRE Corporation FNMA IR2 assessment — OFS task order on Treasury MITRE contract Contract 777,604 726,465 2/18/2010 Treasury Franchise Fund BPD Interagency Agreement 1,221,140 1,221,140 3/8/2010 Qualx Corporation FOIA support services Contract 510,438 435,771 3/12/2010 Department of the Treasury — Departmental Offices Administrative support Interagency Agreement 689,599 670,982 3/17/2010 Ennis Knupp & Associates Inc. Investment consulting services Contract 3,037,100 590,000 73,750 73,750 159,141 159,141 3/22/2010 Gartner, Inc. Financial management services Interagency Agreement 3/26/2010 Federal Maritime Commission Detailees Interagency Agreement 3/29/2010 Morgan Stanley Disposition agent services Financial Agent 16,685,290 16,685,290 Congressional Oversight Panel Interagency Agreement 4,797,556 4,797,556 4/2/2010 Financial Clerk U.S. Senate 4/8/2010 Squire, Sanders & Dempsey LLP Housing legal services Contract 1,229,350 774,012 4/22/2010 Digital Management Inc. Data and document management consulting services Contract — — 4/22/2010 MicroLink, LLC Data and document management consulting services Contract 4,275,596 2,548,694 4/23/2010 RDA Corporation Data and document management consulting services Contract 2,468,290 — 5/4/2010 Internal Revenue Service Training — Bulux CON 120 Interagency Agreement 1,320 1,320 5/17/2010 Lazard Fréres & Co. LLC Transaction structuring services Financial Agent 7,500,000 4,216,667 6/24/2010 Reed Elsevier Inc (dba LexisNexis) Accurint subscription service for one year — 4 users Contract 8,208 8,208 6/30/2010 The George Washington University Financial institution management & modeling — training course (J.Talley) Contract 5,000 5,000 7/21/2010 Navigant Consulting Program compliance support services Contract 847,416 — 7/21/2010 Regis and Associates PC Program compliance support services Contract $553,990 $— Continued on next page. 177 quarterly report to congress I april 28, 2011 OFS SERVICE CONTRACTS (continued) Date Vendor Purpose Type of Transaction Obligated Value Expended Value 7/22/2010 Schiff Hardin LLP Housing legal services Contract 537,375 97,526 7/22/2010 Ernst & Young LLP Program compliance support services Contract 1,329,943 — 7/22/2010 PricewaterhouseCoopers Program compliance support services Contract — — 7/27/2010 West Publishing Corporation Subscription service for 4 users Contract 6,722 6,664 8/6/2010 Alston & Bird LLP Omnibus procurement for legal services Contract 1,285,416 2,277 8/6/2010 Cadwalader Wickersham & Taft LLP Omnibus procurement for legal services Contract 3,789,815 992,237 8/6/2010 Fox, Hefter, Swibel, Levin & Carol, LLP Omnibus procurement for legal services Contract 181,200 660 8/6/2010 Haynes and Boone, LLP Omnibus procurement for legal services Contract — — 107,301 8/6/2010 Hughes Hubbard & Reed LLP Omnibus procurement for legal services Contract 113,655 8/6/2010 Love & Long LLP Omnibus procurement for legal services Contract — — 8/6/2010 Orrick Herrington Sutcliffe LLP Omnibus procurement for legal services Contract — — 8/6/2010 Paul, Weiss, Rifkind, Wharton & Garrison LLP Omnibus procurement for legal services Contract 3,565,041 294,118 8/6/2010 Perkins Coie LLP Omnibus procurement for legal services Contract — — 8/6/2010 Seyfarth Shaw LLP Omnibus procurement for legal services Contract — — 8/6/2010 Shulman, Rogers, Gandal, Pordy & Ecker, PA Omnibus procurement for legal services Contract 313,725 — 8/6/2010 Sullivan Cove Reign Enterprises JV Omnibus procurement for legal services Contract — — 8/6/2010 Venable LLP Omnibus procurement for legal services Contract 498,100 190 8/12/2010 Knowledge Mosaic Inc. SEC filings subscription service Contract 5,000 5,000 8/30/2010 Department of Housing and Urban Development Detailees Interagency Agreement 29,915 29,915 9/1/2010 CQ-Roll Call Inc. One-year subscription (3 users) to the CQ Today Breaking News & Schedules, CQ Contract Congressional & Financial Transcripts, CQ Custom Email Alerts 7,500 7,500 9/17/2010 Bingham McCutchen LLP SBA 7(a) Security Purchase Program Contract 19,975 11,177 9/27/2010 Davis Audrey Robinette Program operations support services to include project management, scanning and document management and correspondence Contract 636,830 360,875 9/30/2010 CCH Incorporated GSA task order for procurement books — FAR, T&M, Government Contracts Reference, World Class Contracting Contract 2,430 2,430 10/1/2010 Financial Clerk U.S. Senate Congressional Oversight Panel Interagency Agreement 5,200,000 2,467,763 10/8/2010 Management Concepts Inc. Training course — CON 217 Contract 1,025 1,025 10/8/2010 Management Concepts Inc. Training course — CON 216 Contract 1,025 1,025 10/8/2010 Management Concepts Inc. Training course — CON 218 Contract 2,214 2,214 10/8/2010 Management Concepts Inc. Training course — 11107705 Contract 995 995 10/8/2010 Management Concepts Inc. Training course — Analytic Boot Contract 1,500 1,500 10/8/2010 Management Concepts Inc. Training course — CON 218 Contract 2,214 2,214 10/8/2010 Management Concepts Inc. Training course — CON 217 Contract 1,025 1,025 10/8/2010 Management Concepts Inc. Training course — CON 218 Contract 2,214 2,214 10/14/2010 Hispanic Association of Colleges & Universities Detailees Contract 12,975 12,975 Continued on next page. 178 special inspector general I troubled asset relief program OFS SERVICE CONTRACTS (continued) Date Vendor Purpose Type of Transaction Obligated Value Expended Value 10/26/2010 US Government Accountability Office IAA - GAO required by P.L. 110-343 to conduct certain activities related to TARP Interagency Agreement $7,600,000 $2,512,210 11/8/2010 The MITRE Corporation FNMA IR2 assessment — OFS task order on Treasury MITRE contract for cost and Contract data validation services related to HAMP FA 1,007,050 181,014 11/18/2010 Greenhill & Co., Inc. Structuring and disposition services 7,050,000 2,200,000 12/2/2010 Addx Corporation Acquisition support services — PSD TARP Contract (action is an order against BPA) 768,653 — 12/29/2010 Reed Elsevier Inc (dba LexisNexis) Accurint subscription services one user Contract 1,026 342 1/5/2011 Canon U.S.A. Inc. Administrative support Interagency Agreement 12,937 — 1/18/2011 Perella Weinberg Partners & Co. Structuring and disposition services Financial Agent 6,000,000 1,200,000 1/24/2011 Treasury Franchise Fund BPD Interagency Agreement 1,092,962 272,715 1/26/2011 Association of Government Accountants CEAR program application Contract 5,000 5,000 2/24/2011 ESI International Inc. Mentor program training (call against IRS BPA) Contract 6,563 — 2/28/2011 Department of the Treasury — Departmental Offices Administrative support Interagency Agreement 17,805,529 3,441,742 Financial Agent 3/3/2011 Equilar, Inc. Executive compensation data subscription Contract 59,995 59,995 3/10/2011 Mercer LLC Executive compensation data subscription Contract 3,600 — 3/28/2011 Fox News Network LLC5 Litigation settlement 121,000 — Interagency Agreement Total $798,621,647 $572,533,910 Notes: Numbers may not total due to rounding. At year-end, OFS validated the matrix against source documents resulting in modification of award date. At year-end, a matrix entry that included several Interagency Agreements bundled together was split up to show the individual IAAs. For IDIQ contracts, $0 is obligated if no task orders have been awarded. Thacher Proffitt & Wood, Contract TOS09-014B, was novated to Sonnenschein Nath & Rosenthal (TOS09-014C). McKee Nelson Contract, TOFS-09-D-0005, was novated to Bingham McCutchen. Judicial Watch is a payment in response to a litigation claim. No contract or agreement was issued to Judicial Watch. 4 $1.4M de-obligation submitted on 9/30/2010. 5 Fox News Network LLC is a payment in response to a litigation claim. No contract or agreement was issued to Fox News Network LLC. 1 2 3 Source: Treasury, response to SIGTARP data call, 4/11/2011. Se ction 4 SIGtarp recommendations 180 special inspector general I troubled asset relief program quarterly report to congress I april 28, 2011 One of the critical responsibilities of the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”) is to provide recommendations to the U.S. Department of the Treasury (“Treasury”) and other Federal agencies managing Troubled Asset Relief Program (“TARP”) initiatives so that the various TARP-related programs can be designed or modified to facilitate transparency and effective oversight and to prevent fraud, waste, and abuse. SIGTARP has made such recommendations in its quarterly reports to Congress and in many of its audit reports. This section discusses developments with respect to SIGTARP’s prior recommendations, including recommendations made since SIGTARP’s Quarterly Report to Congress dated January 26, 2011 (the “January 2011 Quarterly Report”), and, in the table at the end of this section, summarizes SIGTARP’s recommendations from past quarters and notes the extent of implementation. Appendix H: “Correspondence” includes Treasury’s written responses to recommendations referenced in this section. UPDATE ON SIGTARP’S RECOMMENDATIONS REGARDING CAPITAL PURCHASE PROGRAM RESTRUCTURINGS AND RECAPITALIZATIONS AND SMALL BUSINESS LENDING FUND REFINANCINGS In the January 2011 Quarterly Report, SIGTARP reported one recommendation regarding restructurings and recapitalizations under TARP’s Capital Purchase Program (“CPP”) and a related recommendation concerning the Small Business Lending Fund (“SBLF”). As discussed more extensively in Section 2: “TARP Overview” of this report, CPP recipients in danger of becoming insolvent may propose to Treasury a restructuring or recapitalization of Treasury’s CPP investment to make it easier for the institution to attract private capital. After Treasury receives a restructuring proposal from a CPP institution, it performs due diligence on the institution. These transactions may result in Treasury taking a haircut on its CPP investment and Treasury often requires the CPP recipient to raise capital from private entities before it will consummate the transaction. Treasury has explained to SIGTARP that it enters into these transactions in an attempt to avoid the total loss of Treasury’s investment that would occur if the institution failed. SIGTARP recommended that Treasury resume its practice of sharing with SIGTARP, in advance of the transaction, the identity of the candidate and details of the proposed transaction in order to determine whether the candidate is the subject of an ongoing criminal investigation by SIGTARP. This recommendation was based on SIGTARP’s concern that if Treasury did not consult with SIGTARP to determine whether the CPP participant was currently under investigation for For more information on CPP, see pages 102-125 of this report. For more information on SBLF, see pages 126-131 of this report. 181 182 special inspector general I troubled asset relief program fraud, there existed unwarranted and unnecessary risk of harm both to Treasury’s decision-making process and to unknowing private investors. Similarly, if a CPP recipient seeking refinancing and additional funding under the SBLF program is under investigation for fraud, additional taxpayer dollars may be at risk. Each recommendation is discussed below, along with Treasury’s response. SIGTARP recommends that Treasury, as part of its due diligence concerning any proposed restructuring, recapitalization, or sale of its investment to a third party, provide to SIGTARP the identity of the CPP institution and the details of the proposed transaction. Treasury has adopted this recommendation, allowing SIGTARP to share information about relevant investigations, on a strictly confidential basis, with certain Treasury personnel so that Treasury can be better informed before engaging in such transactions. When a CPP participant applies to refinance into SBLF and seeks additional taxpayer funds, SIGTARP recommends that Treasury provide to SIGTARP the identity of the institution and details of the proposed additional SBLF investment. Treasury has adopted this recommendation, allowing SIGTARP to share information about relevant investigations, on a strictly confidential basis, with certain Treasury personnel so that Treasury can be better informed before acting on the application. Recommendations Regarding Treasury’s Process for Contracting for Professional Services Under TARP The Office of Financial Stability (“OFS”) within Treasury is responsible for administering TARP. Included within Treasury’s authorities under the Emergency Economic Stabilization Act of 2008 is the power to enter into contracts. In addition to using permanent and interim staff, OFS relies on contractors for legal services. On April 14, 2011, SIGTARP released an audit report, “Treasury’s Process for Contracting for Professional Services under TARP.” The report was issued as part of SIGTARP’s continuing oversight of TARP and in response to a request from Senator Tom Coburn, M.D. SIGTARP interviewed Treasury officials in OFS and Treasury’s Procurement Services Division, reviewed relevant Treasury policies and procedures governing contracts, analyzed Treasury’s contracts with five law firms, and reviewed a sample of invoices for legal services (“fee bills”) from each of the firms. The five law firms quarterly report to congress I april 28, 2011 are: (1) Cadwalader Wickersham & Taft LLP, (2) Locke Lord Bissell & Liddell LLP, (3) McKee Nelson LLP (which merged with, and is now, Bingham McCutchen LLP), (4) Simpson Thacher & Bartlett LLP, and (5) Venable LLP (“Venable”). As of December 31, 2010, OFS paid these five law firms more than $27 million in legal fees. The report discusses the results of SIGTARP’s audit of OFS’ contracting processes related to Venable and SIGTARP’s audit of fee bills submitted by Venable and paid by OFS. In addition, SIGTARP’s initial review of other law firms’ contracts and fee bills suggests that they too raise issues similar to those discussed in SIGTARP’s report. SIGTARP issued the report so that OFS would have the opportunity to quickly strengthen its policies, controls, and contracts. SIGTARP’s analysis of OFS’ contracting process and fee bill review related to Venable, as well as SIGTARP’s preliminary review of fee bills and contracts of other law firms, disclosed areas where OFS can immediately improve its contracting policies and its controls over payment of outside legal fees. SIGTARP found weaknesses in the OFS contract with Venable as well as the OFS policies for review of Venable’s fee bills. First, OFS contracts for legal services do not adequately describe how to prepare fee bills or provide adequate information on what costs, services, or charges are allowable or unallowable. Although OFS legal services contracts incorporate several clauses of the Federal Acquisition Regulation (“FAR”) regarding general payment and allowable cost information, the mere reference to these clauses does not appear to have given sufficient guidance either to outside counsel preparing fee bills or OFS Contracting Officer’s Technical Representatives (“COTRs”) reviewing those bills to ensure that tax dollars are wisely and appropriately spent. Second, OFS’ procedures for reviewing fee bills offer insufficient guidance to OFS COTRs, resulting in inadequate and inconsistent review of legal fee bills. Those procedures regarding invoice review simply state that a COTR’s duties may include reviewing “contractor invoices to ensure costs are allocable to the contract, allowable pursuant to financial regulations, and reasonable.” They do not provide specific standards or instructions on how to review the fee bills for accuracy and reasonableness nor are OFS COTRs separately provided this information as a guide to perform reviews of the fee bills. SIGTARP found that Venable’s bills contained block billing (the combination of different types of activities in one entry on the invoice), vague and inadequate descriptions of work, and administrative charges not allowed under the contract. OFS COTRs did not question any hourly labor charges, including those with vague and inadequate descriptions of work and those that were block billed. In many instances, OFS could not have adequately assessed the reasonableness of the fees. In addition, the lack of detailed language in the OFS contract with Venable resulted in OFS COTRs routinely approving charges for tasks that could be considered administrative, and thus not reimbursable under a labor-hours contract. Similarly, when conducting its own audit of Venable’s legal fee bills, SIGTARP was unable to 183 184 special inspector general I troubled asset relief program assess the reasonableness of Venable’s fees because of the billing methods allowed and the lack of adequate detail in many of the fee bills. Using legal fee bill review standards contained in the Federal Deposit Insurance Corporation’s (“FDIC”) Outside Counsel Deskbook and standards used by other Federal entities, SIGTARP questioned $676,840 in fee billings (approximately two-thirds of the total value of the Venable fee bills SIGTARP reviewed). That SIGTARP questioned these fee billings does not mean that the fees themselves were unreasonable, only that the information provided by Venable in the bills was insufficient to allow SIGTARP, or OFS, to fairly assess their reasonableness. SIGTARP continues to believe that OFS’ legal fee bill review practices create an unacceptable risk that Treasury, and therefore the American taxpayer, is overpaying for legal services. Because OFS did not question legal fee bills that contained block billed charges, vague and inadequate descriptions of work performed, and charges for administrative functions not allowed under the contract, it could not have conclusively determined that amounts billed and paid were reasonable. To improve controls over the review and payment of legal fees and related costs with respect to OFS contracting practices and procedures, SIGTARP, as part of its continuing oversight of TARP, made the four recommendations listed below. In its response, Treasury noted that it had been subject to extensive oversight of its general contracting practices, stated that it has implemented “strong and effective processes in regard to all of its contracts, including those for legal services,” and declared that “we disagree with the . . . suggestion that our practices have created an ‘unacceptable risk’ that Treasury is overpaying for legal services.” Treasury has stated its intent to adopt SIGTARP’s recommendations, and OFS has taken important steps in response to SIGTARP’s recommendations, including meeting with FDIC officials to discuss FDIC’s practices for reviewing fee bills, providing its outside counsel with instructions on submitting invoices, meeting with and providing training to its COTRs on reviewing invoices, and planning further follow-up actions with Venable regarding SIGTARP’s findings. These actions, along with others that OFS will need to take to fully implement SIGTARP’s recommendations, should afford American taxpayers far greater protection and assurance that they are getting their money’s worth. SIGTARP will continue to monitor OFS’ progress in implementing these recommendations. The four recommendations, along with Treasury’s responses, are discussed below. quarterly report to congress I april 28, 2011 First, OFS should adopt the legal fee bill submission standards contained in the FDIC’s Outside Counsel Deskbook, or establish similarly detailed requirements for how law firms should prepare legal fee bills and describe specific work performed in the bills, and which costs and fees are allowable and unallowable. Second, OFS should include in its open legal service contracts detailed requirements for law firms on the preparation and submission of legal fee bills, or separately provide the instructions to law firms and modify its open contracts, making application of the instructions mandatory. With respect to the first two recommendations, Treasury told SIGTARP that OFS staff has reviewed the FDIC’s Outside Counsel Deskbook, met with members of the FDIC legal team who developed and implemented the deskbook, and reviewed local rules from the U.S. Bankruptcy Court for the District of Delaware. After its review, OFS adopted portions of each document for use as new submission and review standards, and distributed this new guidance to all law firms currently under contract to OFS. The new, more specific OFS guidance prescribing how legal fee bills should be prepared was included as an appendix to the audit report. Treasury further stated that OFS will work with Treasury’s Procurement Services Division to begin modifying base contracts for OFS legal services to include those standards as well. Third, OFS should adopt the legal fee bill review standards and procedures contained in the Federal Deposit Insurance Corporation’s Outside Counsel Deskbook, or establish similarly specific instructions and guidance for OFS COTRs to use when reviewing legal fee bills, and incorporate those instructions and guidance into OFS written policies. Treasury stated that OFS held training on its newly adopted guidance prescribing how legal fee bills should be prepared with OFS COTRs and other staff involved in the review of legal fee bills, and that the OFS COTRs will begin reviewing invoices in accordance with its new guidance for periods starting with March 2011. Treasury also stated that it will work to incorporate relevant portions of its training on the new legal fee bill review standards into written procedures. Fourth, OFS should review previously paid legal fee bills to identify unreasonable or unallowable charges, and seek reimbursement for those charges, as appropriate. Treasury stated that OFS is following up with Venable on SIGTARP’s findings and, in accordance with applicable contract closeout procedures, each contract will be subject to further review by OFS. According to Treasury, in the event questionable invoice amounts are identified during such closeouts, OFS intends to seek additional support or remittance, as appropriate. 185 * * * * * * * * 2 3 4 5 6 7 8 9 Treasury should give careful consideration before agreeing to the expansion of TALF to include MBS without a full review of risks that may be involved and without considering certain minimum fraud protections. Agreements with TALF participants should include an acknowledgment that: (1) they are subject to the oversight of OFS-Compliance and SIGTARP, (2) with respect to any condition imposed as part of TALF, that the party on which the condition is imposed is required to establish internal controls with respect to each condition, report periodically on such compliance, and provide a certification with respect to such compliance. In formulating the structure of TALF, Treasury should consider requiring, before committing TARP funds to the program, that certain minimum underwriting standards and/ or other fraud prevention mechanisms be put in place with respect to the ABS and/or the assets underlying the ABS used for collateral. Treasury begins to develop an overall investment strategy to address its portfolio of stocks and decide whether it intends to exercise warrants of common stock. Treasury quickly determines its going-forward valuation methodology. Treasury should require all TARP recipients to report on the actual use of TARP funds. All existing TARP agreements, as well as those governing new transactions, should be posted on the Treasury website as soon as possible. Treasury should include language in new TARP agreements to facilitate compliance and oversight. Specifically, SIGTARP recommends that each program participant should (1) acknowledge explicitly the jurisdiction and authority of SIGTARP and other oversight bodies, as relevant, to oversee compliance of the conditions contained in the agreement in question, (2) establish internal controls with respect to that condition, (3) report periodically to the Compliance department of the Office of Financial Stability (“OFS-Compliance”) regarding the implementation of those controls and its compliance with the condition, and (4) provide a signed certification from an appropriate senior official to OFS-Compliance that such report is accurate. Treasury should include language in the automobile industry transaction term sheet acknowledging SIGTARP’s oversight role and expressly giving SIGTARP access to relevant documents and personnel. (continued) X X X X X X X Implemented X Partially Implemented Note: * Indicates that Treasury considers the recommendation closed and will take no further action. * 1 Recommendation SIGTARP Recommendations Table In Process X Not Implemented TBD/NA Continued on next page. This recommendation was implemented with respect to CMBS, and the Federal Reserve did not expand TALF to RMBS. The Federal Reserve adopted mechanisms that address this recommendation. Although Treasury has made substantial efforts to comply with this recommendation in many of its agreements, there have been exceptions, including in its agreements with servicers in MHA. Comments 186 special inspector general I troubled asset relief program * * * * * * * 13 14 15 16 17 18 19 X X X X X X X Implemented Partially Implemented Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should address the confusion and uncertainty on executive compensation by immediately issuing the required regulations. All TALF modeling and decisions, whether on haircuts or any other credit or fraud loss mechanisms, should account for potential losses to Government interests broadly, including TARP funds, and not just potential losses to the Federal Reserve. Treasury should not allow Legacy Securities PPIFs to invest in TALF unless significant mitigating measures are included to address these dangers. Treasury should design a robust compliance protocol with complete access rights to all TALF transaction participants for itself, SIGTARP, and other relevant oversight bodies. Treasury should require additional anti-fraud and credit protection provisions, specific to all MBS, before participating in an expanded TALF, including minimum underwriting standards and other fraud prevention measures. In TALF, Treasury should require significantly higher haircuts for all MBS, with particularly high haircuts for legacy RMBS, or other equally effective mitigation efforts. In TALF, Treasury should dispense with rating agency determinations and require a security-by-security screening for each legacy RMBS. Treasury should refuse to participate if the program is not designed so that RMBS, whether new or legacy, will be rejected as collateral if the loans backing particular RMBS do not meet certain baseline underwriting criteria or are in categories that have been proven to be riddled with fraud, including certain undocumented subprime residential mortgages. Treasury and the Federal Reserve should provide to SIGTARP, for public disclosure, the identity of the borrowers who surrender collateral in TALF. * 12 Treasury should oppose any expansion of TALF to legacy MBS without significant modifications to the program to ensure a full assessment of risks associated with such an expansion. Treasury should formalize its valuation strategy and begin providing values of the TARP investments to the public. * (continued) 11 10 Recommendation SIGTARP Recommendations Table In Process X Not Implemented X X TBD/NA Continued on next page. The Federal Reserve adopted mechanisms that address this recommendation with respect to CMBS, and did not expand TALF to RMBS. This recommendation was implemented with respect to CMBS, and the Federal Reserve did not expand TALF to RMBS. The Federal Reserve announced that RMBS were ineligible for TALF loans, rendering this recommendation moot. On December 1, 2010, the Federal Reserve publicly disclosed the identities of all TALF borrowers and that there had been no surrender of collateral. SIGTARP will continue to monitor disclosures if a collateral surrender takes place. Treasury has formalized its valuation strategy and regularly publishes its estimates. This recommendation was implemented with respect to CMBS, and the Federal Reserve did not expand TALF to RMBS. Comments quarterly report to congress I april 28, 2011 187 * * * * 21 22 23 24 Treasury should require servicers in MHA to submit thirdparty verified evidence that the applicant is residing in the subject property before funding a mortgage modification. Treasury should require most-favored-nation clauses, PPIF managers to acknowledge that they owe Treasury a fiduciary duty, and that each manager adopt a robust ethics policy and compliance apparatus. Treasury should require that all PPIF fund managers (1) have stringent investor-screening procedures, including comprehensive “Know Your Customer” requirements at least as rigorous as that of a commercial bank or retail brokerage operation to prevent money laundering and the participation of actors prone to abusing the system, and (2) be required to provide Treasury with the identities of all the beneficial owners of the private interests in the fund so that Treasury can do appropriate diligence to ensure that investors in the funds are legitimate. Treasury should impose strict conflict-of-interest rules upon PPIF managers across all programs that specifically address whether and to what extent the managers can (1) invest PPIF funds in legacy assets that they hold or manage on behalf of themselves or their clients or (2) conduct PPIF transactions with entities in which they have invested on behalf of themselves or others. Treasury should require CAP participants to (1) establish an internal control to monitor their actual use of TARP funds, (2) provide periodic reporting on their actual use of TARP funds, (3) certify to OFS-Compliance, under the penalty of criminal sanction, that the report is accurate, that the same criteria of internal controls and regular certified reports should be applied to all conditions imposed on CAP participants, and (4) acknowledge explicitly the jurisdiction and authority of SIGTARP and other oversight bodies, as appropriate, to oversee conditions contained in the agreement. Treasury should significantly increase the staffing levels of OFS-Compliance and ensure the timely development and implementation of an integrated risk management and compliance program. (continued) X Implemented X X X Partially Implemented Note: * Indicates that Treasury considers the recommendation closed and will take no further action. 25 * 20 Recommendation SIGTARP Recommendations Table X In Process Not Implemented X TBD/NA Comments Continued on next page. Treasury has decided to adopt this important SIGTARP recommendation and stated that its program administrator Fannie Mae conducted a pilot program to verify owner occupancy. However, as discussed in Section 2 of this report, the residency requirement for HAFA transactions has been significantly loosened so that the borrower only needs to demonstrate that he lives in the residence in the preceding 12 months and Treasury will not require third party verification of this requirement. Treasury’s agreements with PPIF managers include investor-screening procedures such as “Know Your Customer” requirements. Treasury has agreed that it will have access to any information in a fund manager’s possession relating to beneficial owners. However, Treasury did not impose an affirmative requirement that managers obtain and maintain beneficial owner information. Treasury has adopted some significant conflict-of-interest rules related to this recommendation, but has failed to impose other significant safeguards. Treasury closed the program with no investments having been made, rendering this recommendation moot. According to Treasury, OFS-Compliance has increased its staffing level and has contracted with four private firms to provide additional assistance to OFSCompliance. 188 special inspector general I troubled asset relief program * * * 29 30 31 X X Implemented X Partially Implemented Note: * Indicates that Treasury considers the recommendation closed and will take no further action. In MHA, Treasury should proactively educate homeowners about the nature of the program, warn them about modification rescue fraudsters, and publicize that no fee is necessary to participate in the program. In MHA, Treasury should defer payment of the $1,000 incentive to the servicer until after the homeowner has verifiably made a minimum number of payments under the mortgage modification program. In MHA, Treasury should require that verifiable, third-party information be obtained to confirm an applicant’s income before any modification payments are made. In MHA, Treasury should require the servicer to compare the income reported on a mortgage modification application with the income reported on the original loan applications. * 28 In MHA, Treasury should require a closing-like procedure be conducted that would include (1) a closing warning sheet that would warn the applicant of the consequences of fraud; (2) the notarized signature and thumbprint of each participant; (3) mandatory collection, copying, and retention of copies of identification documents of all participants in the transaction; (4) verbal and written warnings regarding hidden fees and payments so that applicants are made fully aware of them; (5) the benefits to which they are entitled under the program (to prevent a corrupt servicer from collecting payments from the Government and not passing the full amount of the subsidies to the homeowners); and (6) the fact that no fee should be charged for the modification. Additional anti-fraud protections should be adopted in MHA to verify the identity of the participants in the transaction and to address the potential for servicers to steal from individuals receiving Government subsidies without applying them for the benefit of the homeowner. * (continued) 27 26 Recommendation SIGTARP Recommendations Table X In Process X X Not Implemented TBD/NA Comments Continued on next page. Rather than deferring payment of the incentive until after the homeowner has verifiably made a minimum number of payments on its permanent modification, Treasury will pay the incentive after the servicer represents that the homeowner has made three payments during the trial period. Treasury has rejected SIGTARP’s recommendation and does not require income reported on the modification application to be compared to income reported on the original loan application. Treasury stated that its compliance agent Freddie Mac has developed and implemented procedures to address this recommendation. Treasury also stated that its program administrator Fannie Mae conducted a pilot program to verify owner occupancy. Treasury has reassigned this effort to its compliance agent Freddie Mac. SIGTARP will continue to monitor implementation of this recommendation. See discussion in Section 5: “SIGTARP Recommendations” of SIGTARP’s October 2009 Quarterly Report. quarterly report to congress I april 28, 2011 189 * 37 X Implemented X Partially Implemented Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should require PPIF managers to disclose to Treasury, as part of the Watch List process, not only information about holdings in eligible assets but also holdings in related assets or exposures to related liabilities. The conditions that give Treasury “cause” to remove a PPIF manager should be expanded to include a manager’s performance below a certain standard benchmark, or if Treasury concludes that the manager has materially violated compliance or ethical rules. * Treasury should periodically disclose PPIF trading activity and require PPIF managers to disclose to SIGTARP, within seven days of the close of the quarter, all trading activity, holdings, and valuations so that SIGTARP may disclose such information, subject to reasonable protections, in its quarterly reports. 36 * 34 Treasury should require the imposition of strict information barriers or “walls” between the PPIF managers making investment decisions on behalf of the PPIF and those employees of the fund management company who manage non-PPIF funds. Treasury should define appropriate metrics and an evaluation system should be put in place to monitor the effectiveness of the PPIF managers, both to ensure they are fulfilling the terms of their agreements and to measure performance. * 33 In MHA, Treasury should require its agents to keep track of the names and identifying information for each participant in each mortgage modification transaction and to maintain a database of such information. (continued) 35 * 32 Recommendation SIGTARP Recommendations Table In Process X X X X Not Implemented TBD/NA Continued on next page. Treasury has refused to adopt this recommendation, relying solely on Treasury’s right to end the investment period after 12 months. During this time the PPIF manager’s performance may continue to fall below a standard benchmark, potentially putting significant Government funds at risk. Despite that there has been eighteen months of trading by the PPIFs, Treasury still has not specified a benchmark by which performance of a PPIF can be measured. Treasury stated that its contractor Ennis Knupp has identified a subcontractor that will assist with providing analytics and metrics on the PPIF portfolio. SIGTARP will continue to monitor Treasury’s progress in this area. Treasury has committed to publish on a quarterly basis certain high-level information about aggregated purchases by the PPIFs, but not within seven days of the close of the quarter. Treasury has not committed to providing full transparency to show where public dollars are invested by requiring periodic disclosure of every trade in the PPIFs. Treasury has refused to adopt this significant anti-fraud measure designed to prevent conflicts of interest. This represents a material deficiency in the program. While Treasury’s program administrator, Fannie Mae, has developed a HAMP system of record that maintains the servicers’ and investors’ names and participating borrowers’ personally identifiable information, such as names and addresses, the database is not constructed to maintain other information that may assist in detecting insiders who are committing large-scale fraud. Comments 190 special inspector general I troubled asset relief program * * * * * 40 41 42 43 44 Treasury should rectify the confusion that its own statements have caused for HAMP by prominently disclosing its goals and estimates (updated over time, as necessary) of how many homeowners the program will help through permanent modifications and report monthly on its progress toward meeting that goal. Treasury should establish policies to guide decision making in determining whether it is appropriate to defer to another agency when making TARP programming decisions where more than one Federal agency is involved. Treasury should establish policies to guide any similar future decisions to take a substantial ownership position in financial institutions that would require an advance review so that Treasury can be reasonably aware of the obligations and challenges facing such institutions. The Secretary of the Treasury should direct the Special Master to work with FRBNY officials in understanding AIG compensation programs and retention challenges before developing future compensation decisions that may affect both institutions’ ability to get repaid by AIG for Federal assistance provided. Treasury should improve existing control systems to document the occurrence and nature of external phone calls and in-person meetings about actual and potential recipients of funding under the CPP and other similar TARP-assistance programs to which they may be part of the decision making. X X X X Implemented X Partially Implemented Note: * Indicates that Treasury considers the recommendation closed and will take no further action. 45 Treasury and FRBNY should (1) examine Moody’s assertions that some credit rating agencies are using lower standards to give a potential TALF security the necessary AAA rating and (2) develop mechanisms to ensure that acceptance of collateral in TALF is not unduly influenced by the improper incentives to overrate that exist among the credit agencies. * 39 Treasury should more explicitly document the vote of each Investment Committee member for all decisions related to the investment of TARP funds. Treasury should require PPIF managers to obtain and maintain information about the beneficial ownership of all of the private equity interests, and Treasury should have the unilateral ability to prohibit participation of private equity investors. (continued) 38 Recommendation SIGTARP Recommendations Table In Process X X Not Implemented X TBD/NA Comments Continued on next page. Despite SIGTARP’s repeated highlighting of this essential transparency and effectiveness measure, Treasury has refused to disclose clear and relevant goals and estimates for the program. Treasury has agreed to work closely with other Federal agencies that are involved in TARP. Treasury stated that it does not anticipate taking a substantial percentage ownership position in any other financial institution pursuant to EESA. Treasury and the Federal Reserve have discussed concerns about potential overrating or rating shopping with the rating agencies, and have agreed to continue to develop and enhance risk management tools and processes, where appropriate. Treasury has agreed that it can have access to any information in a fund manager’s possession relating to beneficial owners. However, Treasury is not making an affirmative requirement that managers obtain and maintain beneficial owner information. Treasury will not adopt the recommendation to give itself unilateral ability to deny access to or remove an investor, stating that such a right would deter participation. quarterly report to congress I april 28, 2011 191 Treasury should undertake a sustained public service campaign as soon as possible, both to reach additional borrowers who could benefit from the program and to arm the public with complete, accurate information – this will help to avoid confusion and delay, and prevent fraud and abuse. Treasury should reconsider its position that allows servicers to substitute alternative forms of income verification based on subjective determinations by the servicer. Treasury should re-examine HAMP’s structure to ensure that it is adequately minimizing the risk of re-default stemming from non-mortgage debt, second liens, partial interest rate resets after the five-year modifications end, and from many borrowers being underwater. Treasury should institute careful screening before putting additional capital through CDCI into an institution with insufficient capital to ensure that the TARP matching funds are not flowing into an institution that is on the verge of failure. Treasury should develop a robust procedure to audit and verify the bona fides of any purported capital raise in CDCI and to establish adequate controls to verify the source, amount and closing of all claimed private investments. Treasury should revise CDCI terms to clarify that Treasury inspection and copy rights continue until the entire CDCI investment is terminated. Additionally, consistent with recommendations made in connection with other TARP programs, the terms should be revised to provide expressly that SIGTARP shall have access to the CDFI’s records equal to that of Treasury. Treasury should consider more frequent surveys of a CDCI participant’s use of TARP funds than annually as currently contemplated. Quarterly surveys would more effectively emphasize the purpose of CDCI. Treasury should ensure that more detail is captured by the Warrant Committee meeting minutes. At a minimum, the minutes should include the members’ qualitative considerations regarding the reasons bids were accepted or rejected within fair market value ranges. 47 48 49 50 51 52 53 54 X X X X X Implemented X X Partially Implemented Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should develop other performance metrics and publicly report against them to measure over time the implementation and success of HAMP. For example, Treasury could set goals and publicly report against those goals for servicer processing times, modifications as a proportion of a servicer’s loans in default, modifications as a proportion of foreclosures generally, rates of how many borrowers fall out of the program prior to permanent modification, and re-default rates. (continued) 46 Recommendation SIGTARP Recommendations Table In Process X X Not Implemented TBD/NA Comments Continued on next page. Treasury has indicated that it has implemented this recommendation. Although the detail of the minutes has improved, Treasury is still not identifying how each member of the committee casts his or her vote. Treasury has stated that it has implemented this recommendation. SIGTARP will examine Treasury’s implementation of the recommendation. Treasury has stated that it has implemented this recommendation. SIGTARP will examine Treasury’s implementation of the recommendation. Treasury has adopted some programs to assist underwater mortgages to address concerns of negative equity but has not addressed other factors contained in this recommendation. Although Treasury has increased its reporting of servicer performance, it has not identified goals for each metric and measured performance against those goals. 192 special inspector general I troubled asset relief program * 57 Implemented X X Partially Implemented Note: * Indicates that Treasury considers the recommendation closed and will take no further action. Treasury should reconsider the length of the minimum term of HAMP’s unemployment forbearance program. 62 Treasury should re-evaluate the voluntary nature of its principal reduction program and, irrespective of whether it is discretionary or mandatory, consider changes to better maximize its effectiveness, ensure to the greatest extent possible the consistent treatment of similarly situated borrowers, and address potential conflict of interest issues. 60 Treasury should adopt a uniform appraisal process across all HAMP and HAMP-related short-sale and principal reduction programs consistent with FHA’s procedures. For each HAMP-related program and subprogram, Treasury should publish the anticipated costs and expected participation in each and that, after each program is launched, it report monthly as to the program’s performance against these expectations. 59 61 Treasury should develop guidelines that apply consistently across TARP participants for when a violation is sufficiently material to merit reporting, or in the alternative require that all violations be reported. 58 * Treasury should develop and follow guidelines and internal controls concerning how warrant repurchase negotiations will be pursued, including the degree and nature of information to be shared with repurchasing institutions concerning Treasury’s valuation of the warrants. * 56 Treasury should promptly take steps to verify TARP participants’ conformance to their obligations, not only by ensuring that they have adequate compliance procedures but also by independently testing participants’ compliance. Treasury should document in detail the substance of all communications with recipients concerning warrant repurchases. (continued) 55 Recommendation SIGTARP Recommendations Table X In Process X X Not Implemented X X TBD/NA Continued on next page. Treasury plans to maintain the existing minimum term, providing an explanation that on its face seems unpersuasive to SIGTARP. SIGTARP will continue to monitor performance. Treasury plans to maintain the voluntary nature of the program, providing an explanation that on its face seems unpersuasive to SIGTARP. SIGTARP will continue to monitor performance. Treasury has provided anticipated costs, but not expected participation. Treasury states that it intends to develop standard guidelines. Although Treasury largely continues to rely on self-reporting, stating that it only plans to conduct testing where they have particular concerns as to a TARP recipient’s compliance procedures or testing results, it has conducted independent testing of compliance obligations during two recent compliance reviews. Treasury has adopted procedures designed to address this recommendation, including a policy to discuss only warrant valuation inputs and methodologies prior to receiving a bid, generally to limit discussion to valuation ranges after receiving approval from the Warrant Committee, and to note the provision of any added information in the Committee minutes. However, Treasury believes that its existing internal controls are sufficient to ensure adequate consistency in the negotiation process. Treasury has agreed to document the dates, participants, and subject line of calls. It has refused to document the substance of such conversations. Comments quarterly report to congress I april 28, 2011 193 When Treasury considers whether to accept an existing CPP participant into SBLF, because conditions for many of the relevant institutions have changed dramatically since they were approved for CPP, Treasury and the bank regulators should conduct a new analysis of whether the applying institution is sufficiently healthy and viable to warrant participation in SBLF. When Treasury conducts the new analysis of an institution’s health and viability, the existing CPP preferred shares should not be counted as part of the institution’s capital base. Treasury should take steps to prevent institutions that are refinancing into the SBLF from CPP from securing windfall dividend reductions without any relevant increase in lending. Treasury, as part of its due diligence concerning any proposed restructuring, recapitalization, or sale of its CPP investment to a third party, should provide to SIGTARP the identity of the CPP institution and the details of the proposed transaction. * * * 64 65 66 67 68 69 X X X X X Implemented Partially Implemented Note: * Indicates that Treasury considers the recommendation closed and will take no further action. OFS should adopt the legal fee bill submission standards contained in the FDIC’s Outside Counsel Deskbook, or establish similarly detailed requirements for how law firms should prepare legal fee bills and describe specific work performed in the bills, and which costs and fees are allowable and unallowable. When a CPP participant refinances into SBLF and seeks additional taxpayer funds, Treasury should provide to SIGTARP the identity of the institution and details of the proposed additional SBLF investment. Treasury should launch a broad-based information campaign, including public service announcements in target markets that focus on warnings about potential fraud, and include conspicuous fraud warnings whenever it makes broad public announcements about the program. (continued) 63 Recommendation SIGTARP Recommendations Table In Process X X Not Implemented TBD/NA Continued on next page. See discussion in this section. See discussion in this section. See discussion in this section. Treasury has refused to adopt this recommendation, suggesting that its adoption would subvert the will of Congress and that SIGTARP’s recommendation “may not be helpful” because “it is unclear that using this statutorily mandated baseline will lead to anomalies.” Treasury has refused to adopt this recommendation, citing its belief that current CPP participants may be unfairly disadvantaged in their SBLF applications if their existing CPP investments are not counted as part of their capital base, and that SBLF “already provides substantial hurdles that CPP recipients must overcome” that do not apply to other applicants. Treasury has indicated that it “generally agrees with and is implementing this recommendation.” SIGTARP will continue to monitor Treasury’s progress in this area. Comments 194 special inspector general I troubled asset relief program * * 71 72 OFS should review previously paid legal fee bills to identify unreasonable or unallowable charges, and seek reimbursement for those charges, as appropriate. OFS should adopt the legal fee bill review standards and procedures contained in the FDIC’s Outside Counsel Deskbook, or establish similarly specific instructions and guidance for OFS COTRs to use when reviewing legal fee bills, and incorporate those instructions and guidance into OFS written policies. OFS should include in its open legal service contracts detailed requirements for law firms on the preparation and submission of legal fee bills, or separately provide the instructions to law firms and modify its open contracts, making application of the instructions mandatory. (continued) Implemented Partially Implemented Note: *Indicates that Treasury considers the recommendation closed and will take no further action. * 70 Recommendation SIGTARP Recommendations Table X X X In Process Not Implemented TBD/NA See discussion in this section. See discussion in this section. See discussion in this section. Comments quarterly report to congress I april 28, 2011 195 196 special inspector general I troubled asset relief program 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. See, for example, SIGTARP’s audit report “Factors Affecting Implementation of the Home Affordable Modification Program,” published March 25, 2010. In October 2009 Treasury started to encounter challenges with its website counting system, and, as a result, changed to a new system in January 2010. SIGTARP has calculated the total number of website hits reported herein based on the number reported to SIGTARP as of September 30, 2009, plus an archived number provided by Treasury for October — December 2009 and information generated from Treasury’s new system from January 2010 through March 2011. Treasury, Transactions Report, 3/31/2011, www.treasury.gov/initiatives/financial-stability/briefing-room/reports/tarp-transactions/DocumentsTARPTransactions/4-04-11%20Transactions%20Report%20as%20of%203-31-11_INVESTMENT.pdf, accessed 4/4/2011; Treasury, response to SIGTARP data call, 4/6/2011. Emergency Economic Stabilization Act of 2008, P.L. 110-343, 10/3/2008, p. 1. Emergency Economic Stabilization Act of 2008, P.L. 110-343, 10/3/2008, pp. 2, 16. 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Congressional Budget Office, “Report on the Troubled Asset Relief Program — March 2011,” 3/2011, www.cbo.gov/ftpdocs/121xx/doc12118/0329-TARP.pdf, accessed 3/30/2011. Treasury, “Office of Financial Stability Agency Financial Report—Fiscal Year 2010,” 9/30/2010, www.treasury.gov/initiatives/financial-stability/ briefingroom/reports/agency_reports/Documents/2010%20OFS%20AFR%20Nov%2015.pdf, accessed 1/17/2011. Congressional Budget Office, “Report on the Troubled Asset Relief Program — March 2011,” 3/2011, www.cbo.gov/ftpdocs/121xx/doc12118/0329-TARP.pdf, accessed 3/30/2011. Treasury, Section 105(a) Report, 8/10/2010, www.treasury.gov/initiatives/financial-stability/briefing-room/reports/105/Documents105/July%20 2010%20105(a)%20Report_Final.pdf, accessed 1/17/2011; Helping Families Save Their Homes Act of 2009, P.L. 111-022, 5/20/2009, p. 12. Treasury, Section 105(a) Report, 8/10/2010, www.treasury.gov/initiatives/financial-stability/briefing-room/reports/105/Documents105/July%20 2010%20105(a)%20Report_Final.pdf, accessed 1/17/2011; Helping Families Save Their Homes Act of 2009, P.L. 111-022, 5/20/2009, p. 12. Treasury, response to SIGTARP data call, 4/6/2011. As of March 31, 2011, 165 TARP recipients in various programs had repaid their TARP funds. Under CPP, 158 TARP recipients had repaid a total of $179.1 billion. Chrysler, Chrysler Financial LLC, General Motors, and GMAC (now Ally Financial) had repaid TARP funds under AIFP totaling $29.6 billion. Under SSFI, AIG had repaid TARP funds totaling $9.1 billion. Under TIP, Bank of America and Citigroup had repaid $40.0 billion. Under PPIP, two PPIFs repaid a total of $840.5 million. Treasury and Citigroup had also terminated their agreement under AGP, reducing Treasury’s exposure by $5 billion. 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Treasury Press Release, “Fact Sheet: Acting Special Master Issues 2011 Compensation Determinations for ‘Top 25’ Executives at Four Companies that Received Exceptional TARP Assistance,” 4/1/2011, www.treasury.gov/press-center/press-releases/Pages/tg1126.aspx, accessed 4/4/2011. 696. Emergency Economic Stabilization Act of 2008, P.L. 110-343, 10/3/2008. 697. Emergency Economic Stabilization Act of 2008, P.L. 110-343, 10/3/2008. 698. Treasury, response to SIGTARP data call, 4/11/2011. 699. Treasury, response to SIGTARP data call, 4/6/2011. 700. Treasury, response to SIGTARP data call, 4/11/2011. 701. Treasury, response to SIGTARP data call, 4/11/2011. 702. Congressional Oversight Panel, “Examining Treasury’s Use of Financial Crisis Contracting Authority,” 10/14/2010, http://cybercemetery.unt.edu/ archive/cop/20110401233834/http://cop.senate.gov/reports/library/report-101410-cop.cfm, accessed 10/18/2010. 703. Emergency Economic Stabilization Act of 2008, P.L. 110-343, 10/3/2008. glossary I Appendix A I april 28, 2011 glossary This appendix provides a glossary of terms that are used in the context of this report. 504 Community Development Loan Program: SBA program combining Government-guaranteed loans with privatesector mortgages to provide loans of up to $10 million for community development. 7(a) Loan Program: SBA loan program guaranteeing a percentage of loans for small businesses that cannot otherwise obtain conventional loans at reasonable terms. Asset-Backed Securities (“ABS”): Bonds backed by a portfolio of consumer or corporate loans, e.g., credit card, auto, or small-business loans. Financial companies typically issue ABS backed by existing loans in order to fund new loans for their customers. Auction Agent: Firms (such as investment banks) that buy a series of securities from an institution for resale. Bank Holding Company: Company that owns and/or controls one or more U.S. bank. C Corporation: “For-profit” corporate form organized under subsection C of the Internal Revenue Service code and recognized as a separate taxpaying entity. The C corporation pays federal and state income taxes on earnings prior to any distribution of earnings to shareholders. Dividends paid to shareholders by the corporation are taxed to each shareholder individually. Call Reports: Reports of Condition and Income that are required to be filed quarterly with financial regulatory authorities by insured depository institutions operating in the United States. These reports, which generally contain a balance sheet, an income statement, and supporting schedules, are commonly referred to as Call Reports. Collateral: Asset pledged by a borrower to a lender until a loan is repaid. Generally, if the borrower defaults on the loan, the lender gains ownership of the pledged asset and may sell it to satisfy the debt. In TALF, the ABS or CMBS that is purchased with the proceeds from the TALF loan is the collateral that is posted with FRBNY. Commercial Mortgage-Backed Securities (“CMBS”): Bonds backed by one or more mortgages on commercial real estate (e.g., office buildings, rental apartments, hotels). Common Stock: Equity ownership entitling an individual to share in corporate earnings and voting rights. Community Development Financial Institutions (“CDFIs”): Financial institutions eligible for Treasury funding to serve urban and rural low-income communities through the CDFI Fund. CDFIs were created in 1994 by the Riegle Community Development and Regulatory Improvement Act. These entities must be certified by Treasury; certification confirms that they target at least 60% of their lending and other economic development activities to areas underserved by traditional financial institutions. Cumulative Preferred Stock: Stock requiring a defined dividend payment. If the company does not pay the dividend on schedule, it still owes the missed dividend to the preferred stock’s owner. Custodian Bank: Bank holding the collateral and managing accounts for FRBNY; for TALF the custodian is Bank of New York Mellon. Debt: Investment in a business that is required to be paid back to the investor, usually with interest. Debtor-in-Possession (“DIP”): Company operating under Chapter 11 bankruptcy protection that technically still owns its assets but is operating them to maximize the benefit to its creditors. Deeds-in-Lieu of Foreclosure: Instead of going through foreclosure, the borrower voluntarily surrenders the deed to the home to the lender as satisfaction of the unpaid mortgage balance. Deficiency Judgment: Court order authorizing a lender to collect all or part of an unpaid and outstanding debt resulting from the borrower’s default on the mortgage note securing a debt. A deficiency judgment is rendered after the foreclosed or repossessed property is sold when the proceeds are insufficient to repay the full mortgage debt. Direct Private Placement: Sale of securities to investors that meet minimum net worth and sophistication requirements, thereby receiving an exemption from normal SEC registration requirements. Due Diligence: Appropriate level of attention or care a reasonable person should take before entering into an agreement or a transaction with another party. In finance, often refers to the process of conducting an audit or review of the institution before initiating a transaction. 219 220 Appendix a I glossary I april 28, 2011 Dutch Auction: For a Treasury warrant auction (which has multiple bidders bidding for different quantities of the asset) the accepted price is set at the lowest bid of the group of high bidders whose collective bids fulfill the amount offered by Treasury. As an example, three investors place bids to own a portion of 100 shares offered by the issuer: • Bidder A wants 50 shares at $4/share • Bidder B wants 50 shares at $3/share • Bidder C wants 50 shares at $2/share The seller selects Bidders A and B as the two highest bidders, and their collective bids consume the 100 shares offered. The winning price is $3, which is what both bidders pay per share. Bidder C’s bid is not filled. Equity: Investment that represents an ownership interest in a business. Equity Capital Facility: Commitment to invest equity capital in a firm under certain future conditions. An equity facility when drawn down is an investment that increases the provider’s ownership stake in the company. The investor may be able to recover the amount invested by selling their ownership stake to other investors at a later date. Equity Share Agreement: Agreement that a homeowner will share future increases in home value with a mortgage investor or other party. In the context of mortgage loan modifications, the investor may reduce the borrower’s UPB in return for the right to share in a portion of any future rise in the home’s value. An equity share agreement thus may provide the mortgage investor with a prospect of recovering its full investment, even if it provides a principal reduction to the borrower. The agreement may also provide an immediate benefit to an “underwater” borrower, yet still offer that borrower some prospect of benefitting from future home price appreciation. Exceptional Assistance Recipients: Companies receiving assistance under SSFI, TIP, and AIFP. Current recipients are AIG, Chrysler, GM, and Ally Financial (formerly GMAC). Excess Spread: Funds left over after required payments and other contractual obligations have been met. In TALF it is the difference between the periodic amount of interest paid out by the collateral and the amount of interest charged by FRBNY on the non-recourse loan provided to the borrower to purchase the collateral. Exercise Price: Preset price at which the warrant holder may purchase each share. For warrants issued through CPP, this was based on the average stock price during the 20 days before the date that Treasury granted preliminary CPP participation approval. FICO Credit Score: Used by lenders to assess an applicant’s credit risk and whether to extend a loan. It is determined by the Fair Isaac Corporation (“FICO”) using mathematical models based on an applicant’s payment history, level of indebtedness, types of credit used, length of credit history, and newly extended credit. Haircut: Difference between the value of the collateral and the amount of the loan (the loan amount is less than the collateral value). Home Price Index: An index of price projections in 110 local housing markets that is used for all HPDP calculations related to home price. The projections are updated quarterly with new data and based on both long-term and short-term trends, adjusted for seasonal effects. Illiquid Assets: Assets that cannot be quickly converted to cash. Investors: Owners of mortgage loans or bonds backed by mortgage loans who receive interest and principal payments from monthly mortgage payments. Servicers manage the cash flow from these payments and distribute them to investors according to Pooling and Servicing Agreements (“PSAs”). Legacy Securities: Real estate-related securities originally issued before 2009 that remained on the balance sheets of financial institutions because of pricing difficulties that resulted from market disruption. Letter of Credit: Letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the payment is not made, the issuing bank is required to cover the full or remaining amount of the obligation. Limited Partnership: Partnership in which there is at least one partner whose liability is limited to the amount invested (limited partner) and at least one partner whose liability extends beyond monetary investment (general partner). Loan Servicers: Companies that perform administrative tasks on monthly mortgage payments until the loan is repaid. These tasks include billing, tracking, and collecting monthly payments; maintaining records of payments and balances; allocating and distributing payment collections to investors in accordance with each mortgage loan’s governing documentation; following up on delinquencies; and initiating foreclosures. glossary I Appendix A I april 28, 2011 Loan-to-Value (“LTV”) Ratio: Lending risk assessment ratio that mortgage lenders examine before approving a mortgage; calculated by dividing the outstanding amount of the loan by the value of the collateral backing the loan. Loans with high LTV ratios are generally seen as higher risk because the borrower has less of an equity stake in the property. Mandatorily Convertible Preferred Shares (“MCP”): Preferred share that can be converted to common stock at the issuer’s discretion if specific criteria are met by a certain date. Mutual Depository Institution: Any U.S. bank, U.S. savings association, bank holding company or savings and loan holding company organized in a mutual form. Savings associations organized as mutual institutions issue no capital stock and therefore have no stockholders. Mutual savings associations build capital almost exclusively through retained earnings. Nationally Recognized Statistical Rating Organizations (“NRSROs”): Credit rating agency registered with the SEC. Credit rating agencies provide their opinion on the creditworthiness of companies and the financial obligations issued by companies. The ratings distinguish between investment grade and non-investment grade equity and debt obligations. Net Present Value (“NPV”) Test: Compares the money generated by modifying the terms of the mortgage with the amount an investor can reasonably expect to recover in a foreclosure sale. Non-Agency Residential Mortgage-Backed Securities (“non-agency RMBS”): Financial instrument backed by a group of residential real estate mortgages (i.e., home mortgages for residences with up to four dwelling units) not guaranteed or owned by a Government-sponsored enterprise (Fannie Mae, Freddie Mac) or a Government agency. Non-Cumulative Preferred Stock: Preferred stock with a defined dividend, without the obligation to pay missed dividends. Non-Recourse Loan: Secured loan in which the borrower is relieved of the obligation to repay the loan upon surrendering the collateral. Obligations: Definite commitments that create a legal liability for the Government to pay funds. Pool Assemblers: Firms authorized to create and market pools of SBA guaranteed loans. Preferred Stock: Equity ownership that usually pays a fixed dividend before distributions for common stock owners but 221 only after payments due to holders of debt and depositors. It typically confers no voting rights. Preferred stock also has priority over common stock in the distribution of assets when a bankrupt company is liquidated. Pro Forma: In finance, refers to the presentation of hypothetical financial information assuming that certain events will happen. Pro Rata: Refers to dividing something among a group of participants according to the proportionate share that each participant holds as a part of the whole. Public Interest: Regulatory standard that the Special Master is required to apply in making determinations. It refers to the determination of whether TARP-recipient compensation plans are aligned with the best interests of the U.S. taxpayer, based on a balancing of specific principles set forth in the Rule. Qualifying Financial Institutions (“QFIs”): Private and public U.S.-controlled banks, savings associations, bank holding companies, certain savings and loan holding companies, and mutual organizations. Revolving Credit Facility: Line of credit for which borrowers pay a commitment fee, allowing them to repeatedly draw down funds up to a guaranteed maximum amount. The amount of available credit decreases and increases as funds are borrowed and then repaid. Risk-Weighted Assets: Risk-based measure of total assets held by a financial institution. Assets are assigned broad risk categories. The amount in each risk category is then multiplied by a risk factor associated with that category. The sum of the resulting weighted values from each of the risk categories is the bank’s total risk-weighted assets. SBA Pool Certificates: Ownership interest in a bond backed by SBA guaranteed loans. Senior Executive Officers (“SEOs”): “Named executive officer” of a TARP recipient as defined under Federal securities law, which generally include the principal executive officer, the principal financial officer, and the next three most highly compensated officers. Senior Preferred Stock: Shares that give the stockholder priority dividend and liquidation claims over junior preferred and common stockholders. Senior Subordinated Debentures: Debt instrument ranking below senior debt but above equity with regard to investors’ claims on company assets or earnings. Senior debt holders are 222 Appendix a I glossary I april 28, 2011 paid in full before subordinated debt holders are paid. There may be additional distinctions of priority among subordinated debt holders. Servicing Advances: If borrowers’ payments are not made promptly and in full, servicers are not contractually obligated to advance the required monthly payment amount in full to the investor. Once a borrower becomes current or the property is sold or acquired through foreclosure, the servicer is repaid all advanced funds. Short Sales: Sale of a home for less than the unpaid mortgage balance. A borrower sells the home and the lender collects the proceeds as full satisfaction of the unpaid mortgage balance, thus avoiding the foreclosure process. Skin in the Game: Equity stake in an investment; down payment; the amount an investor can lose. Special Purpose Vehicles (“SPV”): Off-balance-sheet legal entity that holds transferred assets presumptively beyond the reach of the entities providing the assets, and is legally isolated. Subchapter S-Corporation (“S corporation”): Corporate form that passes corporate income, losses, deductions, and credit through to shareholders for Federal tax purposes. Shareholders of S-corporations report the flow-through of income and losses on their personal tax returns and are taxed at their individual income tax rates. Subordinated Debt: Loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Synthetic ABS: Security deriving its value and cash flow from sources other than conventional debt, equities, or commodities — for example, credit derivatives. Systemically Significant: Term referring to any financial institution whose failure would impose significant losses on creditors and counterparties, call into question the financial strength of similar institutions, disrupt financial markets, raise borrowing costs for households and businesses, and reduce household wealth (also commonly used to describe institutions “too big to fail”). TALF Agent: Financial institution that is party to the TALF Master Loan and Security Agreement and that occasionally acts as an agent for the borrower. TALF agents include primary and nonprimary broker-dealers. Trial Modification: Under HAMP, a period of at least three months during which a borrower is given a chance to establish that he or she can make lower monthly mortgage payments and qualify for a permanent modification. Trust Preferred Securities (“TRUPS”): Securities that have both equity and debt characteristics, created by establishing a trust and issuing debt to it. Undercapitalized: Condition in which a financial institution does not meet its regulator’s requirements for sufficient capital to operate under a defined level of adverse conditions. Underemployment: Condition in which laborers are employed at less than full-time or at jobs inadequate with respect to their training or economic needs. Underwater Mortgage: Mortgage loan on which a homeowner owes more than the home is worth, typically as a result of a decline in the home’s value. Endnotes: Treasury, “Fact Sheet: Unlocking Credit for Small Businesses,” no date, www.treasury.gov/ initiatives/financial-stability/investment-programs/sbli/Pages/unlockingCreditforSmallBusinesses. aspx, accessed 1/20/2011. FDIC, “Credit Card Securitization Manual,” no date, www.fdic.gov/regulations/examinations/credit_ card_securitization/glossary.html, accessed 4/8/2009. Board of Governors of the the Federal Reserve System, “Bank Holding Companies,” no date, www. fedpartnership.gov/bank-life-cycle/manage-transition/bank-holding-companies.cfm, accessed 1/20/2011. Federal Reserve Board, Federal Reserve Banks Operating Circular No. 8: Collateral, www.frbservices. org, accessed 1/28/2009. Treasury, “Decoder,” www.treasury.gov/initiatives/financial-stability/Pages/Glossary.aspx, accessed 1/18/2011. U.S. Department of Housing and Urban Development, “Glossary,” no date, www.hud.gov/offices/hsg/ sfh/buying/glossary.cfm, accessed 4/8/2009. IRS, “Glossary of Offshore Terms,” no date, www.irs.gov/businesses/small/article/0,,id=106572,00. html, accessed 4/8/2009. GAO, “Troubled Asset Relief Program: Third Quarter 2010 Update of Government Assistance Provided to AIG and Description of Recent Execution of Recapitalization Plan,” 1/20/2011, www.gao.gov/new.items/d1146.pdf, accessed 1/20/2011. Treasury, “Supplemental Directive 1014: Making Home Affordable Program - Principal Reduction Alternative Update,” 10/15/2010, www. hmpadmin.com/portal/programs/docs/hamp_servicer/sd1014.pdf, accessed 1/19/2011. Treasury, “TARP Standards for Compensation and Corporate Governance,” 6/10/2009, www.treasury.gov/press-center/press-releases/Pages/tg165.aspx, accessed 1/18/2011. GAO, “Troubled Asset Relief Program Treasury Needs to Strengthen Its Decision-Making Process on the Term Asset-Backed Securities Loan Facility,” 2/2010, www.gao.gov/new.items/d1025.pdf, accessed 10/20/2010. Making Home Affordable base NPV model documentation v4.0, updated 10/1/2010. www.hmpadmin. com/portal/programs/docs/hamp_servicer/npvmodeldocumentationv4.pdf, pp. 23-24. FCIC, glossary, no date, www.fcic.gov/resource/glossary, accessed 3/21/2011. U.S. Census Bureau, “Residential Finance Survey, Glossary Of RFS Terms And Definitions,” no date, www.census.gov/hhes/www/rfs/glossary.html#l, accessed 10/20/2010. Treasury, “Decoder,” www.treasury.gov/initiatives/financial-stability/Pages/Glossary.aspx, accessed 1/18/2011, as changed by SIGTARP. Treasury, “Examinations of Mutual Savings Associations,” 11/1/2001, www.ots.treas.gov/_ files/25153.pdf, accessed 1/20/2011. SEC, “NRSRO,” no date, www.sec.gov/answers/nrsro.htm, accessed 10/20/2010. SIGTARP, “Factors Affecting Implementation of the Home Affordable Modification Program,” 3/25/2010, http://sigtarp.gov/reports/audit/2010/Factors_Affecting_Implementation_of_the_ Home_Affordable_Modification_Program.pdf, accessed 3/28/2010. GAO, “Principles of Federal Appropriations Law, Third Edition, Volume II,” 1/2004, www.gao.gov/ special.pubs/d06382sp.pdf, p. 7-3, accessed 10/20/2010. Treasury, “Fact Sheet: Unlocking Credit for Small Businesses,” no date, www.treasury.gov/ initiatives/financial-stability/investment-programs/sbli/Pages/unlockingCreditforSmallBusinesses. aspx, accessed 1/20/2011. glossary I Appendix A I april 28, 2011 Treasury, “Decoder,” www.treasury.gov/initiatives/financial-stability/Pages/Glossary.aspx, accessed 1/18/2011. Treasury, “Decoder,” www.treasury.gov/initiatives/financial-stability/Pages/Glossary.aspx, accessed 1/18/2011. Treasury, “Special Master Feinberg Testimony before the House Committee on Oversight and Government Reform,” 10/28/2009, www.treasury.gov/press-center/press-releases/Pages/tg334.aspx, accessed 1/18/2011. Treasury, “Decoder,” www.treasury.gov/initiatives/financial-stability/Pages/Glossary.aspx, accessed 1/18/2011. FDIC, “FDIC Law, Regulations, Related Acts,” no date, www.fdic.gov/regulations/laws/ rules/2000-4600.html, accessed 1/20/2011. SBA, “Notice of Changes to SBA Secondary Market Program,” 9/21/2004, www.sba.gov/idc/ groups/public/documents/sba_program_office/bank_notice_of_changes.htm, accessed 9/25/2010. Treasury, “TARP Standards for Compensation and Corporate Governance,” 6/10/2009, www. treasury.gov/press-center/press-releases/Pages/tg165.aspx, accessed 1/18/2011. FDIC, “Credit Card Securitization Manual,” no date, www.fdic.gov/regulations/examinations/credit_ card_securitization/glossary.html, accessed 10/212010. Treasury, “Decoder,” www.treasury.gov/initiatives/financial-stability/Pages/Glossary.aspx, accessed 1/18/2011. FRBNY, “TALF FAQ’s,” 9/1/2009, www.newyorkfed.org/markets/talf_faq.html, accessed 9/1/2009. SIGTARP, “Factors Affecting Implementation of the Home Affordable Modification Program,” 3/25/2010, http://sigtarp.gov/reports/audit/2010/Factors_Affecting_Implementation_of_the_ Home_Affordable_Modification_Program.pdf, accessed 3/28/2010. Treasury, “Decoder,” www.treasury.gov/initiatives/financial-stability/Pages/Glossary.aspx, accessed 1/18/2011. 223 224 Appendix B I Acronyms and abbreviations I April 28, 2011 Acronyms and Abbreviations 2MP Second Lien Modification Program Community Community Bancorp LLC ABS asset-backed securities COP Congressional Oversight Panel AGP Asset Guarantee Program COTR contracting officer’s technical representative AIA American International Assurance Co., Ltd.; AIA Group Limited CPP Capital Purchase Program AIA SPV AIA Aurora LLC Delphi Delphi Automotive LLP AIFP Automotive Industry Financing Program DIP debtor-in-possession AIG American International Group, Inc. Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act AIG Trust AIG Credit Facility Trust DTI debt-to-income ratio ALICO American Life Insurance Company Edison AIG Edison Life Insurance Company ALICO SPV ALICO Holdings LLC EESA Emergency Economic Stabilization Act of 2008 Ally Financial Ally Financial Inc. Fannie Mae Federal National Mortgage Association ARM adjustable rate mortgage FAR Federal Acquisition Regulation ARRA American Recovery and Reinvestment Act of 2009 FBI Federal Bureau of Investigation ASSP Auto Supplier Support Program FCB First Community Bank of America AWCP Auto Warranty Commitment Program FCBA First Community Bank Corporation of America Bank of America Bank of America Corp. FBHC FBHC Holding Company BHC bank holding company FDIC Federal Deposit Insurance Corporation Broadway Broadway Financial Corp. FDIC OIG Federal Deposit Insurance Corporation Office of Inspector General Broadway Bank Broadway Federal Bank, F.S.B. FFETF Financial Fraud Enforcement Task Force Cadence Cadence Financial Corporation FHA Federal Housing Administration CAP Capital Assistance Program FHA2LP Federal Housing Administration Second Lien Program Capital Bank Capital Bank Corporation FHFA Federal Housing Finance Agency Carlile Carlile Bancshares Inc. CBO Congressional Budget Office FHFA OIG Federal Housing Finance Agency Office of the Inspector General CDCI Community Development Capital Initiative Fiat Fiat North America LLC CDFI Community Development Financial Institution Fidelity Fidelity Resources Company Central Pacific Central Pacific Financial Corp. FinCEN Financial Crimes Enforcement Network CEO chief executive officer FirstCity FirstCity Bank Cerberus Cerberus Capital Management, L.P. Flatirons Flatirons Bank Chrysler Chrysler Holding LLC FRBNY Federal Reserve Bank of New York Chrysler Financial Chrysler Financial Services Americas LLC FRB OIG Federal Reserve Board Office of the Inspector General Citigroup Citigroup, Inc. Freddie Mac Federal Home Loan Mortgage Corporation CMBS commercial mortgage-backed securities FTC Federal Trade Commission Coastal Securities Coastal Securities, Inc. Galleria Galleria USA, Inc. GAO Government Accountability Office Colonial The Colonial BancGroup, Inc. GM General Motors Company Acronyms and abbreviations I Appendix B I april 28, 2011 GMAC GMAC Inc. GSE Government-sponsored enterprise HAFA Home Affordable Foreclosure Alternatives program HAMP Home Affordable Modification Program HFA Housing Finance Agency HHF Hardest Hit Fund HPDP Home Price Decline Protection program HPF Homeownership Preservation Foundation HSC HAMP Solution Center HUD Department of Housing and Urban Development HUD OIG Department of Housing and Urban Development Office of the Inspector General QFI qualifying financial institution RD-HAMP Rural Development Home Affordable Modification Program RHS Rural Housing Service RMA request for modification and affidavit RMBS residential mortgage-backed securities The Rule Interim Final Rule on TARP Standards for Compensation and Corporate Governance SBA Small Business Administration SBLF Small Business Lending Fund SEC Securities and Exchange Commission Secret Service Secret Service SEO senior executive officer Shay Financial Shay Financial Services, Inc. ILFC International Lease Finance Corporation IPO initial public offering IRS Internal Revenue Service SIGTARP IRS-CI Internal Revenue Service Criminal Investigation Division Special Inspector General for the Troubled Asset Relief Program SPA Servicer Participation Agreement Legacy Legacy Bancorp, Inc. Special Master LPS Lender Processing Services Office of the Special Master for TARP Executive Compensation LTV loan-to-value ratio SPV special purpose vehicle MBS mortgage-backed securities SSFI Systemically Significant Failing Institutions program MCP mandatorily convertible preferred shares Star AIG Star Life Insurance Co., Ltd. Metropolitan Metropolitan Bank Group, Inc. TALF Term Asset-Backed Securities Loan Facility MHA Making Home Affordable program TARP Troubled Asset Relief Program Nan Shan Nan Shan Life Insurance Company Ltd. TBW Taylor, Bean and Whitaker Mortgage Corporation NC Bancorp NC Bancorp, Inc. TCW The TCW Group, Inc. New Chrysler Chrysler Group LLC TIP Targeted Investment Program NHMC Nations Housing Modification Center TOTAL FHA TOTAL Scorecard North American North American Financial Holdings, Inc. TPP trial period plan The Notice Notice 2010-2 Treasury Department of the Treasury NPV net present value Treaty Oak Treaty Oak Bancorp, Inc. NRSRO nationally recognized statistical rating organization TRUPS trust preferred securities Old Chrylser Chrysler Group LLC UAW United Auto Workers OFS Office of Financial Stability UCSB Unlocking Credit for Small Businesses OMB Office of Management and Budget UP Home Affordable Unemployment Program Omni Omni National Bank UPB unpaid principal balance Orion Orion Bank USDA Department of Agriculture PPIF Public-Private Investment Fund USPIS Postal Inspection Service PPIP Public-Private Investment Program VA Department of Veterans Affairs PRA Principal Reduction Alternative program VEBA UAW Retiree Medical Benefits Trust PSA Pooling and Servicing Agreement Veritex Veritex Holdings QA quality assurance 225 226 Appendix C I Reporting Requirements I april 28, 2011 Reporting Requirements This appendix provides Treasury’s responses to data call questions regarding the reporting requirements of the Special Inspector General for the Troubled Asset Relief Program outlined in EESA Section 121, as well as a cross-reference to related data presented in this report and prior reports. Italic style indicates narrative taken verbatim from source documents. # 1 EESA Section EESA Reporting Requirement Section 121(c)(A) A description of the categories of troubled assets purchased or otherwise procured by the Treasury Secretary. Treasury Response to SIGTARP Data Call SIGTARP Report Section Treasury’s authority to make new financial commitments under TARP ended on October 3, 2010. Section 2: “TARP Overview” Below are program descriptions from Treasury’s www.treasury.gov/initiatives/financialstability/Pages/default.aspx website, as of 3/31/2011: Appendix D: “Transaction Detail” CPP: Treasury created the Capital Purchase Program (CPP) in October 2008 to stabilize the financial system by providing capital to viable financial institutions of all sizes throughout the nation. With a strengthened capital base, financial institutions have an increased capacity to lend to U.S. businesses and consumers and to support the U.S. economy. SSFI: Systemically Significant Failing Institution Program (SSFI) was established to provide stability and prevent disruptions to financial markets from the failure of institutions that are critical to the functioning of the nation’s financial system. AGP: The Asset Guarantee Program (AGP) provides government assurances for assets held by financial institutions that are critical to the functioning of the nation’s financial system, which face a risk of losing the critical confidence that is needed for them to continue to lend to other banks. TIP: Treasury created the Targeted Investment Program (TIP) to stabilize the financial system by making investments in institutions that are critical to the functioning of the financial system. This program focuses on the complex relationships and reliance of institutions within the financial system. Investments made through the TIP seek to avoid significant market disruptions resulting from the deterioration of one financial institution that can threaten other financial institutions and impair broader financial markets and pose a threat to the overall economy. TALF: The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business ABS at more normal interest rate spreads… Under the TALF, the Federal Reserve Bank of New York (FRBNY) will provide non-recourse funding to any eligible borrower owning eligible collateral... The U.S. Treasury’s Troubled Assets Relief Program (TARP) may purchase $4.3 billion of subordinated debt in an SPV created by the FRBNY. The SPV will purchase and manage any assets received by the FRBNY in connection with any TALF loans. Residual returns from the SPV will be shared between the FRBNY and the U.S. Treasury. PPIP: The Legacy Securities Public-Private Investment Program (“S-PPIP”) is designed to purchase troubled legacy securities that are central to the problems currently impacting the U.S. financial system. Under this program, Treasury will invest equity and debt in multiple Public-Private Investment Funds (“PPIFs”) established with private sector fund managers and private sector investors for the purpose of purchasing eligible assets. PPIF managers will invest in securities backed directly by mortgages that span the residential credit spectrum (e.g., prime, Alt-A, subprime mortgages) as well as the commercial mortgage market. CDCI: In February 2010, Treasury announced the Community Development Capital Initiative (CDCI) to improve access to credit for small businesses. Through this TARP program, Treasury will invest lower-cost capital in Community Development Financial Institutions (CDFIs) that lend to small businesses in the country’s hardest-hit communities. Reporting Requirements I Appendix C I april 28, 2011 # EESA Section EESA Reporting Requirement Treasury Response to SIGTARP Data Call SIGTARP Report Section SBLF: [SBLF] was established on September 27, 2010, to allow Treasury to make capital investments in eligible institutions in order to increase the availability of credit for small businesses. UCSB: The Treasury Department will begin making direct purchases of securities backed by SBA loans to get the credit market moving again, and it will stand ready to purchase new securities to ensure that community banks and credit unions feel confident in extending new loans to local businesses. AIFP: The objective of [AIFP] is to prevent a significant disruption of the American automotive industry, which would pose a systemic risk to financial market stability and have a negative effect on the economy of the United States... [Through AIFP, Treasury has provided] loans or equity investments to General Motors, GMAC, Chrysler, and Chrysler Financial in order to avoid a disorderly bankruptcy of one or more auto companies; such an event would pose a systemic risk to the country’s financial system. Treasury’s loans to the automobile industry forged a path for these companies to go through orderly restructurings and achieve viability. ASSP: [ASSP was created to] provide up to $5 billion in financing, giving suppliers the confidence they need to continue shipping parts, pay their employees and continue their operations. AWCP: The Treasury Department announced an innovative new program to give consumers who are considering new car purchases the confidence that even while Chrysler and GM were restructuring in bankruptcy, their warrantees will be honored. This program is part of the Administration’s broader program to stabilize the auto industry and stand behind a restructuring effort that will result in stronger, more competitive and viable American car companies. HAMP (a program under MHA): The Home Affordable Modification Program has a simple goal: reduce the amount homeowners owe per month to sustainable levels to stabilize communities. This program will bring together lenders, investors, servicers, borrowers, and the government, so that all stakeholders share in the cost of ensuring that responsible homeowners can afford their monthly mortgage payments – helping to reach up to 3 to 4 million at-risk borrowers in all segments of the mortgage market, reducing foreclosures, and helping to avoid further downward pressures on overall home prices. 2 3 4 Section 121(c)(B) Section 121(c)(C) Section 121(c)(D) A listing of the troubled assets purchased in each such category described under Section 121(c)(A). Treasury’s authority to make new financial commitments under TARP ended on October 3, 2010. An explanation of the reasons the Treasury Secretary deemed it necessary to purchase each such troubled asset. Treasury’s authority to make new financial commitments under TARP ended on October 3, 2010. A listing of each financial institution from which such troubled assets were purchased. See #2. Information on all transactions as well as additional information about these programs and related purchases is available in the transaction reports and monthly 105(a) reports posted at www.treasury.gov/initiatives/financial-stability/briefing-room/reports/Pages/Home.aspx. Information regarding all transactions through the end of March 2011 is available at the aforementioned link in a transaction report dated April 4, 2011. Appendix D: “Transaction Detail” Section 2: “TARP Overview” Appendix C: “Reporting Requirements” of prior SIGTARP Quarterly Reports to Congress See #2 227 228 Appendix C I Reporting Requirements I april 28, 2011 # 5 EESA Section EESA Reporting Requirement Section 121(c)(E) A listing of and detailed biographical information on each person or entity hired to manage such troubled assets. Treasury Response to SIGTARP Data Call On January 18, 2011, the Treasury engaged Perella Weinberg Partners LP (Perella Weinberg) as a financial agent to provide certain services relating to the management and disposition of Ally Financial investments acquired pursuant to the Emergency Economic Stability Act of 2008 (EESA). Perella Weinberg is a global financial services firm providing corporate advisory and asset management services. Perella Weinberg, acting as the Treasury’s transaction structuring agent, will perform various services related to the management and disposition of such investments, including: • Analyzing, reviewing and documenting financial, corporate, and business information related to potential transactions, • Reporting on the potential performance of designated investments and their disposition given a range of market scenarios and transaction structure, • Analyzing and reviewing disposition alternatives and structures including the use of underwriters, brokers or other capital market advisors for the best means and structure to dispose of assets, and, • Maintaining a compliance program designed to detect and prevent violations of Federal securities laws, and identifying, documenting, and enforcing controls to mitigate conflicts of interest. SIGTARP Report Section Section 2: “Public-Private Investment Program” Appendix C: “Reporting Requirements” of prior SIGTARP Quarterly Reports to Congress Additionally, Perella Weinberg is required to permit the Treasury’s internal and external auditors, or other governmental oversight entities, to audit books and records related to their services provided to the Treasury under the terms of their Financial Agency Agreement (FAA) with the Treasury. The FAA is available on [Treasury’s] website at www.treasury.gov/ initiatives/financial-stability/about/procurement/faa/Financial_Agency_Agreements/Website%20FAA_Perella%20Weinberg.pdf 6 7 Section 121(c)(F) Section 121(c)(G) A current estimate of the total amount of troubled assets purchased pursuant to any program established under Section 101, the amount of troubled assets on the books of Treasury, the amount of troubled assets sold, and the profit and loss incurred on each sale or disposition of each such troubled asset. The transaction reports capture detailed information about troubled asset purchases, price paid, and the amount of troubled assets currently on Treasury’s books. The latest transaction reports are available on Treasury’s website at www.treasury.gov/initiatives/financialstability/briefing- room/reports/Pages/Home.aspx. Information regarding all transactions through the end of March 2011 is available at the aforementioned link in a transaction report dated April 4, 2011. A listing of the insurance contracts issued under Section 102. Treasury’s authority to make new financial commitments under TARP ended on October 3, 2010. As such, Treasury cannot issue any new insurance contracts after this date. Treasury published its most recent valuation of TARP investments as of February 28, 2011, on March 10, 2011, in its February 105(a) report that is available at the following link: www.treasury.gov/initiatives/financial-stability/briefing-room/reports/105/Pages/default. aspx Table C.1; Section 2: “TARP Overview” Appendix D: “Transaction Detail” Information on the repayments of Treasury’s investments under the CPP and proceeds from the sale of warrants are available within Treasury’s press releases, transactions reports and Section 105(a) Monthly Congressional Reports at the following links: www.treasury.gov/initiatives/financial-stability/briefing-room/Pages/press-releases.aspx www.treasury.gov/initiatives/financial-stability/briefing-room/reports/Pages/Home.aspx Section 2: “TARP Overview” Section 2: “Targeted Investment Program and Asset Guarantee Program” 229 Reporting Requirements I Appendix C I april 28, 2011 Table C.1 EESA # Section 8 Section 121(f) EESA Reporting Requirement A detailed statement of all purchases, obligations, expenditures, and revenues associated with any program established by the Secretary of the Treasury under Sections 101 and 102. SIGTARP Report Section Treasury Response to SIGTARP Data Call Treasury’s authority to make new financial commitments under TARP ended on October 3, 2010. Treasury provides information about TARP obligations, expenditures and revenues in separate transaction reports available on Treasury’s public website at www.treasury.gov/ initiatives/financial-stability/briefing-room/reports/Pages/Home.aspx. Information regarding all transactions through the end of March 2011 is available at the aforementioned link in a transaction report dated April 4, 2011. Information on obligations and expenditures is also available in the TARP budget as of April 1, 2011. Table C.1; Section 2: “TARP Overview” Section 3: “TARP Operations and Administration” Appendix D: “Transaction Detail” Sources: Treasury, response to SIGTARP data call, 4/6/2011; Program Descriptions: Treasury, “Programs,” www.treasury.gov/initiatives/financial-stability/investment-programs/Pages/default.aspx, accessed 4/7/2011; ASSP: “Treasury Announces Auto Suppliers Support Program,” 3/19/2009, www.treasury.gov/press-center/press-releases/Pages/tg64.aspx, accessed 4/7/2011; AWCP: “Obama Administration’s New Warrantee Commitment Program,” no date, www.whitehouse.gov/assets/documents/Warrantee_Commitment_Program.pdf, accessed 4/7/2011; TALF: Federal Reserve, “Term Asset-Backed Securities Loan Facility (TALF) Frequently Asked Questions,” no date, www.federalreserve.gov/newsevents/press/monetary/monetary20090303a2.pdf, accessed 4/7/2011; SBLF: Small Business Lending Act, P.L. 111-240, 9/27/2010; MHA “Making Home Affordable Updated Detailed Description Update,” 3/26/2010, www.treasury.gov/initiatives/financial-stability/housing-programs/ mha/Pages/default.aspx, accessed 4/7/2011. TOTAL AMOUNT OF TROUBLED ASSETS PURCHASED AND HELD ON TREASURY’S BOOKS, AS OF 3/31/2011 ($ BILLIONS) Expendedb On Treasury’s Booksc $204.89 $204.89 $25.80 69.84 67.84 58.69 Obligationsa Capital Purchase Program (“CPP”) Systemically Significant Failing Institutions (“SSFI”) Home Affordable Modification Program (“HAMP”) 45.62 1.36 1.36 Targeted Investment Program (“TIP”) 40.00 40.00 — Automotive Industry Financing Program (“AIFP”) 81.76 79.69 50.12 Asset Guarantee Program (“AGP”) 5.00 — — 4.30 0.10 0.10 — — — Unlocking Credit for Small Businesses (“UCSB”) 0.37 0.37 0.37 Community Development Capital Initiative (“CDCI”) 0.57 0.21 0.21 Consumer and Business Lending Initiative (“CBLI”) Term Asset-Backed Securities Loan Facility (“TALF”) Small Business Lending Program Legacy Securities Public-Private Investment Program (“PPIP”) Total 22.41 16.03 15.19 $474.75 $410.49 $151.83 Notes: Numbers affected by rounding. a For purposes of this table, “Obligations” refers to “Face Value Obligations” on the Treasury TARP/Financial Stability Plan Budget Table (“TARP Budget”) as of 4/4/2011. b “Expended” refers to “Face Value Disbursed/Outlays,” defined as “TARP cash that has left the Treasury, according to the TARP Budget.” c “On Treasury’s Books” calculated as “Face Value Disbursed/Outlays” net of repayments per the Transactions Report if they do not appear to be already netted out. Sources: Repayments data: Treasury, Transactions Report, 3/31/2011; Treasury, Transactions Report — Housing Programs, 3/30/2011; all other data: Treasury, response to SIGTARP data call, 4/6/2011. $3,500,000 $12,720,000 $6,514,000 $2,986,000 Preferred Stock w/ Exercised Warrants Preferred Stock Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants 1st Enterprise Bank, Los Angeles, CA2, c 1st Enterprise Bank, Los Angeles, CA2, 10a, c 1st FS Corporation, Hendersonville, NC 1st Source Corporation, South Bend, IN4, m 1st United Bancorp, Inc., Boca Raton, FL2, 4, 7 AB&T Financial Corporation, Gastonia, NC Adbanc, Inc, Ogallala, NE2 Alarion Financial Services, Inc., Ocala, FL2 Alaska Pacific Bancshares, Inc., Juneau, AK Alliance Bancshares, Inc., Dalton, GA2 2/13/2009 12/11/2009 11/14/2008 1/23/2009 3/13/2009 1/23/2009 1/30/2009 1/23/2009 2/6/2009 6/26/2009 12/19/2008 $70,000,000 $3,674,000 $2,492,000 $1,800,000 $6,000,000 $52,000,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Alpine Banks of Colorado, Glenwood Springs, CO2 AmeriBank Holding Company, Preferred Stock w/ Exercised Warrants Collinsville, OK2 Preferred Stock w/ Exercised Warrants Allied First Bancorp, Inc., Oswego, IL2 AMB Financial Corp., Munster, Preferred Stock w/ IN2 Exercised Warrants Preferred Stock w/ Warrants Alliance Financial Services Inc., Saint Paul, MN8 American Express Company, New York, NY4 American Premier Bancorp, Arcadia, CA2, 4, 7 American State Bancshares, Inc., Great Bend, KS2 6/26/2009 4/24/2009 3/27/2009 1/30/2009 3/6/2009 1/9/2009 5/29/2009 1/9/2009 $8,152,000 $525,000,000 $2,000,000 $7,400,000 Preferred Stock w/ Warrants Annapolis Bancorp, Inc., Annapolis, MD Avenue Financial Holdings, Inc., Preferred Stock w/ Nashville, TN2 Exercised Warrants 1/30/2009 Associated Banc-Corp, Green Preferred Stock w/ 11/21/2008 Bay, WI Warrants Preferred Stock w/ Exercised Warrants Anchor BanCorp Wisconsin Inc., Madison, WI 8/21/2009 2/27/2009 Atlantic Bancshares, Inc., 12/29/2009 Bluffton, SC2, 10 1/30/2009 $5,000,000 Preferred Stock w/ Warrants AmFirst Financial Services, Inc., McCook, NE8 $110,000,000 $21,000,000 Preferred Stock w/ Warrants Subordinated Debentures w/ Exercised Warrants AmeriServ Financial, Inc, Johnstown, PA $3,388,890,000 12/19/2008 11/21/2008 Ameris Bancorp, Moultrie, GA $12,000,000 Subordinated Debentures w/ Exercised Warrants $3,652,000 $26,918,000 Alliance Financial Corporation, Preferred Stock w/ Syracuse, NY4 Warrants $4,781,000 $10,000,000 $111,000,000 $16,369,000 $6,000,000 $4,400,000 $12,000,000 Preferred Stock w/ Warrants 1st Constitution Bancorp, Cranbury, NJ4, g 12/23/2008 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 table d.1 1/26/2011 6/17/2009 5/13/2009 11/18/2009 12/29/2010 10/27/2010 Capital Repayment Date (continued) $1,800,000 $3,388,890,000 $26,918,000 $10,000,000 $111,000,000 $12,000,000 Capital Repayment Amount6 — — — — — — Remaining Capital Amount 1/26/2011 7/29/2009 6/17/2009 11/18/2009 3/9/2011 Final Disposition Date R R R R R Note15 $90,000 $340,000,000 $900,000 $500,000 $3,750,000 Final Disposition Proceeds $14.85 $4.40 $0.99 $2.37 $10.16 $45.20 $33.35 $7.80 $2.25 $20.04 $0.45 $8.50 Stock Price as of 3/31/2011 $2,572.81 $17.35 $21.47 $50.26 $241.46 $54,345.86 $158.25 $5.10 $6.00 $502.46 $2.29 $40.80 Market Capitalization as of 3/31/2011 (in millions) $19.77 $4.08 $2.23 $2.40 $11.17 $4.08 $6.55 $8.87 $7.77 Strike Price as of 3/31/2011a 3,983,308 299,706 7,399,103 1,312,500 698,554 175,772 80,153 276,815 231,782 ($4.92) $0.32 ($1.24) ($0.03) ($1.01) $3.72 ($4.30) ($8.42) $0.73 Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $793,157 $122,725 $58,625,000 $832,183 — $622,260 $2,263,333 $5,806,667 $686,700 $162,682 $74,367,308 $263,776 $408,864 $6,231,166 $359,986 $388,742 $538,360 $266,212 $485,792 $731,777 $1,415,365 $360,694 $370,903 $10,730,000 $1,229,949 $834,265 $1,106,667 Interest/ Dividends Paid to Treasury Continued on next page. OUT IN OUT OUT OUT IN OUT OUT IN In or Out of the Moneye 230 Appendix D I Transaction Detail I april 28, 2011 Preferred Stock w/ Exercised Warrants Bancorp Financial, Inc., Oak Brook, IL2, 10 7/10/2009 $8,600,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants BancStar, Inc., Festus, MO2 2/20/2009 4/3/2009 BancTrust Financial Group, 12/19/2008 Inc., Mobile, AL $3,000,000 Bank of America Corporation, Preferred Stock w/ 10/28/2008 Charlotte, NC1b, 4, c Warrants Bank of Commerce, Charlotte, Preferred Stock w/ NC2 Exercised Warrants Preferred Stock w/ Warrants Bank of the Carolinas Corporation, Mocksville, NC 12/5/2008 4/17/2009 $15,500,000 BankFirst Capital Corporation, Preferred Stock w/ Macon, MS2 Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants BankGreenville, Greenville, SC2 1/30/2009 1/23/2009 2/13/2009 Banner Corporation, Walla 11/21/2008 Walla, WA $1,706,000 $10,800,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants BB&T Corp., Winston-Salem, 11/14/2008 NC4 BCB Holding Company, Inc., Theodore, AL2 2/13/2009 Bern Bancshares, Inc., Bern, KS2 $985,000 $40,000,000 Preferred Stock w/ Warrants 6/12/2009 Preferred Stock w/ Exercised Warrants $2,892,000 Preferred Stock w/ Exercised Warrants Berkshire Bancorp, Inc., Wyomissing, PA2 1/30/2009 Berkshire Hills Bancorp, Inc., 12/19/2008 Pittsfield, MA4 Preferred Stock w/ Exercised Warrants Beach Business Bank, Manhattan Beach, CA2 BCSB Bancorp, Inc., 12/23/2008 Baltimore, MD4 $6,000,000 $3,133,640,000 Preferred Stock w/ Warrants 1/16/2009 4/3/2009 $18,751,000 Preferred Stock w/ Warrants Bar Harbor Bankshares, Bar Harbor, ME5, 9 2/6/2009 $795,000 Preferred Stock w/ Exercised Warrants Banner County Ban Corporation, Harrisburg, NE2 $124,000,000 $1,000,000 $12,639,000 Preferred Stock w/ Exercised Warrants $75,000,000 $13,179,000 $28,000,000 $2,672,000 Bankers’ Bank of the West Bancorp, Inc., Denver, CO2 Preferred Stock w/ Warrants Preferred Stock w/ Warrants Bank of Marin Bancorp, Novato, CA4, k 3/13/2009 Bank of the Ozarks, Inc., 12/12/2008 Little Rock, AR4 Preferred Stock w/ Exercised Warrants Bank of George, Las Vegas, NV2 Bank of Commerce Holdings, 11/14/2008 Redding, CA $17,000,000 $15,000,000,000 1/9/2009 Preferred Stock w/ Warrants $10,000,000,000 Bank of America Corporation, Preferred Stock w/ Charlotte, NC1a, 1b, 4, c Warrants 8/14/2009 1/16/2009 $1,004,000 Preferred Stock w/ Exercised Warrants Bank Financial Services, Inc., Eden Prarie, MN2 $50,000,000 $48,000,000 Preferred Stock w/ Exercised Warrants $30,000,000 $13,669,000 $21,100,000 Investment Amount BancPlus Corporation, Ridgeland, MS2, 4, 7, 30 - 9/29/2010, 30a Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants BancIndependent, Inc., Sheffield, AL2 3/13/2009 Bancorp Rhode Island, Inc., 12/19/2008 Providence, RI4 Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 5/27/2009 1/26/2011 6/17/2009 2/24/2010 11/04/2009 3/31/2009 12/09/2009 12/09/2009 9/29/2010 8/05/2009 Capital Repayment Date (continued) $40,000,000 $10,800,000 $3,133,640,000 $18,751,000 $75,000,000 $28,000,000 $15,000,000,000 $10,000,000,000 $48,000,000 $30,000,000 Capital Repayment Amount6 — — — — — — — — — — Remaining Capital Amount 6/24/2009 7/22/2009 7/28/2010 11/24/2009 3/03/2010 3/03/2010 9/29/2010 9/30/2009 Final Disposition Date R R R R A A R R Note15 $1,040,000 $67,010,402 $250,000 $2,650,000 $186,342,969 $124,228,646 $2,400,000 $1,400,000 Final Disposition Proceeds $20.83 $13.25 $27.45 $30.24 $2.36 $43.71 $2.28 $37.32 $4.21 $13.33 $2.46 $30.87 Stock Price as of 3/31/2011 $294.02 $42.29 $19,103.58 $115.82 $270.04 $747.14 $8.88 $197.83 $71.53 $134,915.00 $44.23 $144.72 Market Capitalization as of 3/31/2011 (in millions) $8.83 $10.89 $4.16 $27.17 $6.29 $10.26 Strike Price as of 3/31/2011a 183,465 1,707,989 475,204 154,610 405,405 730,994 $4.42 ($8.53) ($1.88) $10.16 ($2.08) ($7.80) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $107,799 $877,778 $145,826 $667,625 $1,129,500 $173,508 $92,703,517 $1,036,514 $87,784 $13,846,667 $109,303 $1,741,124 $717,532 $3,354,167 $1,039,677 $451,111 $279,991 $1,914,861 $340,171 $1,293,750,000 $82,202 $5,388,889 $874,907 $4,207,399 $941,667 $1,150,559 $2,210,460 Interest/ Dividends Paid to Treasury Continued on next page. IN OUT OUT IN OUT OUT In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 231 Investment Description Birmingham Bloomfield Preferred Stock w/ Bancshares, Inc, Birmingham, Exercised Warrants MI2, c Institution $4,797,000 $10,000,000 $5,586,000 $154,000,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Blue Ridge Bancshares, Inc., Independence, MO2 Blue River Bancshares, Inc., Shelbyville, IN2 Blue Valley Ban Corp, Overland Park, KS BNB Financial Services Corporation, New York, NY2 BNC Bancorp, Thomasville, NC BNC Financial Group, Inc., New Canaan, CT2 BNCCORP, Inc., Bismarck, ND2 BOH Holdings, Inc., Houston, TX2 Boscobel Bancorp, Inc, Boscobel, WI8 Boston Private Financial Holdings, Inc., Boston, MA4 Bridge Capital Holdings, San Jose, CA4 Bridgeview Bancorp, Inc., Bridgeview, IL2 3/6/2009 3/6/2009 12/5/2008 4/17/2009 12/5/2008 2/27/2009 1/16/2009 3/6/2009 5/15/2009 11/21/2008 12/23/2008 12/19/2008 $11,000,000 $15,000,000 $607,000 $4,640,000 $4,767,000 Brotherhood Bancshares, Inc., Preferred Stock w/ Exercised Warrants Kansas City, KS2 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock Preferred Stock w/ Exercised Warrants Business Bancshares, Inc., Clayton, MO2 2 Butler Point, Inc., Catlin, IL C&F Financial Corporation, West Point, VA Cache Valley Banking Company, Logan, UT2, 10a 7/17/2009 4/24/2009 3/13/2009 1/9/2009 12/18/2009 Cache Valley Banking 12/23/2008 Company, Logan, UT2 $2,400,000 Subordinated Debentures w/ Exercised Warrants Brogan Bankshares, Inc., Kaukauna, WI8 5/15/2009 $20,000,000 $6,000,000 Preferred Stock Broadway Financial Corporation, Los Angeles, CA3, 10a, c $9,000,000 $38,000,000 $23,864,000 $20,093,000 $7,500,000 $21,750,000 $5,000,000 $12,000,000 $5,000,000 12/4/2009 - 11/24/2009, c Broadway Financial 11/14/2008 Corporation, Los Angeles, CA3a Preferred Stock $31,260,000 Preferred Stock w/ Exercised Warrants Blackridge Financial, Inc., Fargo, ND2 5/22/2009 $10,000,000 Preferred Stock w/ Exercised Warrants Blackhawk Bancorp, Inc., Beloit, WI2 3/13/2009 $6,400,000 Subordinated Debentures w/ Exercised Warrants Biscayne Bancshares, Inc., Coconut Grove, FL8, 10 $1,744,000 $1,635,000 Investment Amount 6/19/2009 Birmingham Bloomfield 12/18/2009 Bancshares, Inc, Birmingham, Preferred Stock MI2, 10a, c 4/24/2009 Purchase Date CPP Transaction Detail, as oF 3/31/2011 $15,000,000 2/23/2011 $8,864,000 $104,000,000 3/16/2011 Remaining Capital Amount — $8,864,000 — $50,000,000 $104,000,000 Capital Repayment Amount6 6/16/2010 1/13/2010 Capital Repayment Date (continued) 2/1/2011 Final Disposition Date A Note15 $6,352,500 Final Disposition Proceeds $22.98 $2.35 $9.34 $7.07 $8.14 $7.50 Stock Price as of 3/31/2011 $71.82 $4.10 $136.99 $540.21 $73.75 $21.32 Market Capitalization as of 3/31/2011 (in millions) $17.91 $8.63 $29.37 Strike Price as of 3/31/2011a 167,504 543,337 111,083 $5.07 ($0.49) ($21.87) Amount “In the Current Outstanding Money” or “Out of the Money”e Warrantsa $825,796 $2,100,000 $63,530 $1,478,313 $945,878 $352,380 $810,417 $2,393,156 $2,613,582 $11,022,222 $468,624 $1,058,208 $909,542 $514,185 $3,429,917 $440,542 $211,458 $529,105 $942,850 $471,576 $1,047,611 $865,081 $262,184 Interest/ Dividends Paid to Treasury Continued on next page. IN OUT OUT In or Out of the Moneye 232 Appendix D I Transaction Detail I april 28, 2011 12/22/2009 $2,250,000 Preferred Stock w/ Exercised Warrants CenterBank, Milford, OH2, b 12/12/2008 5/1/2009 Preferred Stock w/ Warrants $55,000,000 Preferred Stock w/ Warrants Center Financial Corporation, Los Angeles, CAb 1/9/2009 Centerstate Banks of Florida 11/21/2008 Inc., Davenport, FL5, 9 $3,564,000 Preferred Stock w/ Warrants Center Bancorp, Inc., Union, NJ 2/6/2009 $27,875,000 $10,000,000 $11,560,000 Preferred Stock w/ Exercised Warrants $24,300,000 CedarStone Bank, Lebanon, TN2 Preferred Stock w/ Exercised Warrants $1,753,000 $2,644,000 $38,970,000 Preferred Stock w/ Warrants CBS Banc-Corp., Russellville, AL2 Preferred Stock $9,201,000 $18,980,000 Cecil Bancorp, Inc., Elkton, 12/23/2008 MD 3/27/2009 CBB Bancorp, Cartersville, 12/29/2009 GA2, 10a, c Preferred Stock w/ Exercised Warrants Catskill Hudson Bancorp, Inc, Preferred Stock w/ Rock Hill, NY2, 10a, c Exercised Warrants 2/27/2009 CBB Bancorp, Cartersville, GA2, c Catskill Hudson Bancorp, Inc, Preferred Stock w/ Rock Hill, NY2, c Exercised Warrants 12/5/2008 2/20/2009 $4,114,000 Preferred Stock w/ Warrants Cathay General Bancorp, Los Angeles, CA 11/21/2008 Preferred Stock w/ Exercised Warrants $3,500,000 Cascade Financial Corporation, Preferred Stock w/ Everett, WA Warrants 1/16/2009 CB Holding Corp., Aledo, IL2 $3,000,000 Preferred Stock Carver Bancorp, Inc, New York, NY3, 4, 30 - 8/27/2010 2/13/2009 5/29/2009 $258,000,000 Preferred Stock w/ Warrants Carrollton Bancorp, Baltimore, MD $4,000,000 2/6/2009 $16,000,000 Preferred Stock w/ Warrants Preferred Stock w/ Warrants Carolina Bank Holdings, Inc., Greensboro, NC Carolina Trust Bank, Lincolnton, NC $6,251,000 Cardinal Bancorp II, Inc., Washington, MO8 10/23/2009 1/9/2009 $4,000,000 Subordinated Debentures w/ Exercised Warrants $3,555,199,000 Preferred Stock w/ Exercised Warrants Capital Pacific Bancorp, 12/23/2008 Portland, OR2 $5,100,000 $41,279,000 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Capital One Financial 11/14/2008 Corporation, McLean, VA4 4/10/2009 Capital Commerce Bancorp, Inc., Milwaukee, WI2 $4,700,000 Preferred Stock w/ Warrants 1/23/2009 Capital Bank Corporation, 12/12/2008 Raleigh, NC35 CalWest Bancorp, Rancho Santa Margarita, CA2 1/23/2009 $4,656,000 $1,037,000 Calvert Financial Corporation, Preferred Stock w/ Ashland, MO2 Exercised Warrants 1/23/2009 Preferred Stock w/ Exercised Warrants $3,300,000 Preferred Stock w/ Exercised Warrants California Oaks State Bank, Thousand Oaks, CA2, 4, 7 Capital Bancorp, Inc., 12/23/2008 Rockville, MD2, 4, 7 $4,000,000 California Bank of Commerce, Preferred Stock w/ Lafayette, CA2 Exercised Warrants 2/27/2009 Preferred Stock w/ Exercised Warrants $44,000,000 Preferred Stock w/ Warrants Cadence Financial Corporation, Starkville, MS33, m 1/9/2009 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 9/30/2009 8/27/2010 6/17/2009 1/28/2011 12/30/2010 12/8/2010 3/4/2011 Capital Repayment Date (continued) $27,875,000 $18,980,000 $3,555,199,000 $41,279,000 $4,700,000 $3,300,000 $38,000,000 Capital Repayment Amount6 — — — — — — — Remaining Capital Amount 10/28/2009 12/3/2009 12/30/2010 12/8/2010 Final Disposition Date R — A — R R Note15 $212,000 $148,731,030 $235,000 $165,000 — Final Disposition Proceeds $7.00 $7.34 $9.59 $2.59 $17.05 $0.42 $4.50 $3.19 $3.85 $51.96 $3.80 Stock Price as of 3/31/2011 $210.19 $292.82 $156.23 $9.58 $1,340.45 $5.15 $11.58 $8.08 $13.04 $23,832.18 $324.87 Market Capitalization as of 3/31/2011 (in millions) $9.54 $8.65 $6.63 $20.96 $6.77 $6.72 $6.90 $6.71 $8.26 Strike Price as of 3/31/2011a 432,390 86,705 261,538 1,846,374 863,442 205,379 86,957 357,675 749,619 ($2.20) $0.94 ($4.04) ($3.91) ($6.35) ($2.22) ($3.71) ($2.86) ($4.46) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $1,196,303 $219,443 $5,981,250 $1,050,000 $393,296 $516,989 $1,500,930 $385,009 $271,580 $533,981 $28,308,333 $1,428,900 $1,531,581 $922,656 $405,000 $1,480,000 $687,708 $467,489 $105,174,638 $304,973 $3,973,104 $517,281 $396,164 $116,515 $337,219 $428,733 $3,984,063 Interest/ Dividends Paid to Treasury Continued on next page. OUT IN OUT OUT OUT OUT OUT OUT OUT In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 233 $11,385,000 $6,056,000 $7,500,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Common Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Central Bancorp, Inc., Garland, TX2 Central Bancorp, Inc., Somerville, MA Central Bancshares, Inc., Houston, TX2 Central Community Corporation, Temple, TX2 Central Federal Corporation, Fairlawn, OH Central Jersey Bancorp, Oakhurst, NJ4 Central Pacific Financial Corp., Honolulu, HI37, l Central Valley Community Bancorp, Fresno, CA Central Virginia Bankshares, Inc., Powhatan, VA Centric Financial Corporation, Preferred Stock w/ Harrisburg, PA2, 10 Exercised Warrants Centrix Bank & Trust, Bedford, Preferred Stock w/ NH2 Exercised Warrants 2/27/2009 12/5/2008 1/30/2009 2/20/2009 12/5/2008 12/23/2008 1/9/2009 1/30/2009 1/30/2009 12/18/2009 2/6/2009 1/9/2009 Preferred Stock Citizens Bancshares Corporation, Atlanta, GA3, 4, $3,000,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Citizens Commerce Bancshares, Inc., Versailles, KY2 Citizens Community Bank, South Hill, VA2 Citizens South Banking Corporation, Gastonia, NCg 12/23/2008 Citizens First Corporation, 12/19/2008 Bowling Green, KY4 Citizens Republic Bancorp, Inc., Flint, MI 2/6/2009 12/12/2008 12/12/2008 $20,500,000 $300,000,000 $8,779,000 $6,300,000 Preferred Stock w/ Exercised Warrants Citizens Bank & Trust Company, Covington, LA2 $2,400,000 $7,462,000 $24,990,000 $10,400,000 $26,440,000 $25,000,000,000 $2,330,000,000 3/20/2009 3/6/2009 30 - 8/13/2010 Preferred Stock w/ Exercised Warrants Citizens Bancshares Co., Chillicothe, MO2 5/29/2009 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Citizens Bancorp, Nevada 12/23/2008 City, CA2 1/16/2009 Citizens & Northern Corporation, Wellsboro, PA4 Common Stock w/ Warrants Chicago Shore Corporation, Chicago, IL2 7/31/2009 Contingent Value Rights Preferred Stock w/ Exercised Warrants Chambers Bancshares, Inc., Danville, AR8 5/29/2009 Citigroup Inc., New York, 10/28/2008 NY11, 23 - 5/26/2010 $19,817,000 Subordinated Debentures w/ Exercised Warrants Century Financial Services Corporation, Santa Fe, NM8 6/19/2009 $7,000,000 $10,000,000 Subordinated Debentures w/ Exercised Warrants CIT Group Inc., New York, 12/31/2008 NY16 $32,668,000 Centrue Financial Corporation, Preferred Stock w/ St. Louis, MO Warrants $7,000,000 $135,000,000 $11,300,000 $7,225,000 $22,000,000 $5,800,000 $10,000,000 $22,500,000 $15,000,000 Preferred Stock w/ Exercised Warrants Centra Financial Holdings, Inc., Morgantown, WV2, 4, 7 1/16/2009 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 2/16/2011 8/13/2010 8/4/2010 2/8/2010 11/24/2010 3/31/2009 Capital Repayment Date (continued) $2,212,308 $7,462,000 $26,440,000 $25,000,000,000 — $11,300,000 $15,000,000 Capital Repayment Amount6 $6,566,692 — — — — — — Remaining Capital Amount 9/1/2010 1/25/2011 12/1/2010 4/15/2009 Final Disposition Date — R A R R Note15 $400,000 $54,621,849 $319,659 $750,000 Final Disposition Proceeds $4.45 $0.89 $8.27 $16.81 $4.42 $42.55 $0.50 $1.55 $6.15 $20.80 $1.30 Stock Price as of 3/31/2011 $51.22 $353.41 $16.28 $204.76 $128,704.10 $8,530.23 $3.02 $4.07 $58.37 $824.70 $5.37 Market Capitalization as of 3/31/2011 (in millions) $7.17 $2.56 $5.18 $9.64 $6.48 $6.64 $10.00 $3.22 Strike Price as of 3/31/2011a 450,314 17,578,125 254,218 508,320 263,542 79,067 79,288 336,568 ($2.72) ($1.67) $3.09 ($9.14) ($4.93) ($0.49) $10.80 ($1.92) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $2,229,375 $13,875,000 $946,489 $350,617 $180,259 $85,383 $535,813 $628,033 $223,571 $2,049,100 $932,291,667 $43,687,500 $588,146 $2,845,008 $1,389,011 $571,690 $827,719 $369,717 $450,656 $714,583 $2,362,500 $1,084,486 $612,118 $2,381,347 $645,371 $1,097,222 $2,411,625 $172,938 Interest/ Dividends Paid to Treasury Continued on next page. OUT OUT IN OUT OUT OUT IN OUT In or Out of the Moneye 234 Appendix D I Transaction Detail I april 28, 2011 $16,015,000 CoastalSouth Bancshares, Preferred Stock w/ Inc., Hilton Head Island, SC2, 10 Exercised Warrants 12/5/2008 8/28/2009 $28,000,000 $76,898,000 $2,260,000 $2,250,000,000 $5,000,000 $20,400,000 $17,680,000 $3,976,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Colonial American Bank, West Conshohocken, PA2 Colony Bankcorp, Inc., Fitzgerald, GA Columbia Banking System, Inc., Tacoma, WA4, 9 Columbine Capital Corp., Buena Vista, CO2 Commonwealth Bancshares, Inc., Louisville, KY8 Commonwealth Business Bank, Los Angeles, CA2 Community 1st Bank, Roseville, CA2 Community Bancshares of Kansas, Inc., Goff, KS2 Community Bancshares of Mississippi, Inc., Brandon, MS2, 4, 7, 30 - 9/29/2010, 30a Community Bancshares, Inc., Kingman, AZ2, 10 Community Bank of the Bay, Oakland, CA3, 4, 30 - 9/29/2010 Community Bank Shares of Indiana, Inc., New Albany, IN Community Bankers Trust Corporation, Glen Allen, VA Community Business Bank, West Sacramento, CA2 3/27/2009 1/9/2009 11/21/2008 2/27/2009 11/14/2008 Comerica Inc., Dallas, TX4 Commerce National Bank, Newport Beach, CA4 2/13/2009 1/9/2009 5/22/2009 1/23/2009 1/16/2009 3/6/2009 9/11/2009 7/24/2009 1/16/2009 5/29/2009 12/19/2008 2/27/2009 Community Financial 12/19/2008 Corporation, Staunton, VA $20,000,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Community First Bancshares Inc., Union City, TN2 Community First Bancshares, Inc., Harrison, AR2 3/20/2009 4/3/2009 $12,725,000 $6,970,000 Preferred Stock w/ Exercised Warrants Community Financial Shares, Inc., Glen Ellyn, IL2 5/15/2009 $12,643,000 $19,468,000 $1,747,000 $3,872,000 $52,000,000 $500,000 $2,550,000 $7,701,000 $574,000 $10,000,000 Preferred Stock w/ Exercised Warrants ColoEast Bankshares, Inc., Lamar, CO2 $16,500,000 Preferred Stock w/ Warrants Codorus Valley Bancorp, Inc., York, PA $64,450,000 $3,000,000 1/9/2009 Preferred Stock w/ Warrants Preferred Stock w/ Warrants Coastal Banking Company, Inc., Fernandina Beach, FL CoBiz Financial Inc., Denver, 12/19/2008 CO $9,950,000 Preferred Stock w/ Exercised Warrants Clover Community Bankshares, Inc., Clover, SC2 3/27/2009 $400,000,000 Preferred Stock w/ Warrants City National Corporation, Beverly Hills, CA4 11/21/2008 $9,439,000 Investment Amount Preferred Stock Investment Description City National Bancshares Corporation, Newark, NJ2, 3 Institution 4/10/2009 Purchase Date CPP Transaction Detail, as oF 3/31/2011 9/29/2010 9/29/2010 10/7/2009 3/17/2010 8/11/2010 3/3/2010 12/30/2009 Capital Repayment Date (continued) Remaining Capital Amount $1,747,000 $52,000,000 $5,000,000 $2,250,000,000 $76,898,000 $200,000,000 — — — — — — $200,000,000 $200,000,000 Capital Repayment Amount6 9/29/2010 5/6/2010 9/1/2010 Final Disposition Date — R A R Note15 $2,600,000 $183,673,472 $3,301,647 $18,500,000 Final Disposition Proceeds $3.14 $1.16 $11.00 $9.20 $36.72 $19.17 $4.15 $10.83 $6.95 $1.65 $57.05 Stock Price as of 3/31/2011 $13.70 $24.91 $36.42 $24.10 $6,503.33 $756.75 $35.04 $44.87 $256.30 $4.27 $3,031.47 Market Capitalization as of 3/31/2011 (in millions) $5.40 $3.40 $7.56 $8.60 $8.40 $9.38 $10.79 $7.26 Strike Price as of 3/31/2011a 351,194 780,000 386,270 87,209 500,000 263,859 895,968 205,579 ($2.26) ($2.24) $3.44 $0.60 ($4.25) $1.45 ($3.84) ($5.61) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $1,294,515 $2,074,028 $569,865 $1,362,635 $426,196 $1,242,511 $1,665,595 $76,189 $317,962 $2,975,700 $52,911 $139,020 $340,423 $2,961,955 $36,111 $150,937,500 $242,235 $6,621,772 $2,940,000 $43,313 $1,093,028 $1,732,500 $6,946,278 $1,235,449 $967,361 $267,050 $23,916,667 $281,859 Interest/ Dividends Paid to Treasury Continued on next page. OUT OUT IN IN OUT IN OUT OUT In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 235 $9,000,000 Community Partners Bancorp, Preferred Stock w/ Middletown, NJg Warrants 12/23/2008 1/30/2009 $10,650,000 $2,400,000 $19,891,000 $2,639,000 $9,000,000 $1,173,000 Preferred Stock w/ Warrants Crosstown Holding Company, Preferred Stock w/ Blaine, MN2 Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Crescent Financial Corporation, Cary, NC CSRA Bank Corp., Wrens, GA CVB Financial Corp, Ontario, CA4, 9 D.L. Evans Bancorp, Burley, ID2 Deerfield Financial Corporation, Deerfield, WI8 Delmar Bancorp, Delmar, MD2 DeSoto County Bank, Horn Lake, MS2, c 2/20/2009 1/9/2009 1/23/2009 3/27/2009 12/5/2008 2/27/2009 5/15/2009 12/4/2009 2/13/2009 $11,750,000 $12,000,000 Preferred Stock w/ Warrants Preferred Stock w/ Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Discover Financial Services, Riverwoods, IL4 DNB Financial Corporation, Downingtown, PA Duke Financial Group, Inc., Minneapolis, MN8 Eagle Bancorp, Inc., Bethesda, MD5, b East West Bancorp, Pasadena, CA4, 9 1/16/2009 3/13/2009 1/30/2009 6/19/2009 12/5/2008 12/5/2008 $306,546,000 $38,235,000 $1,224,558,000 $146,053,000 Preferred Stock w/ Exercised Warrants Dickinson Financial Corporation II, Kansas City, MO2 $20,445,000 Subordinated Debentures w/ Exercised Warrants Diamond Bancorp, Inc., Washington, MO8 $1,508,000 $130,000,000 $7,525,000 $638,000 5/22/2009 Preferred Stock $24,900,000 Preferred Stock w/ Exercised Warrants Crazy Woman Creek Bancorp, Inc., Buffalo, WY2 6/5/2009 DeSoto County Bank, Horn 12/29/2009 Lake, MS2, 10a, c $3,100,000 Preferred Stock w/ Exercised Warrants Covenant Financial Corporation, Clarksdale, MS2 1/30/2009 2 $5,000,000 Preferred Stock w/ Exercised Warrants Country Bank Shares, Inc., Milford, NE2 2/13/2009 $3,285,000 Preferred Stock w/ Exercised Warrants Corning Savings and Loan Association, Corning, AR2 1/9/2009 $15,600,000 Preferred Stock w/ Exercised Warrants Congaree Bancshares, Inc., Cayce, SC2 $24,000,000 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Community West 12/19/2008 Bancshares, Goleta, CA 1/9/2009 Community Trust Financial Corporation, Ruston, LA2 $4,400,000 $2,600,000 Preferred Stock w/ Exercised Warrants Community Investors Bancorp, Inc., Bucyrus, OH2 2/6/2009 Subordinated Debentures w/ Exercised Warrants $1,050,000 Community Holding Company Preferred Stock w/ of Florida, Inc., Miramar Exercised Warrants Beach, FL2 Community Pride Bank 11/13/2009 Corporation, Ham Lake, MN8, 10 $17,806,000 Preferred Stock w/ Exercised Warrants Community First Inc., Columbia, TN2 2/27/2009 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 12/29/2010 12/23/2009 4/21/2010 9/2/2009 8/26/2009 Capital Repayment Date (continued) Remaining Capital Amount — — $306,546,000 — $15,000,000 $23,235,000 $1,224,558,000 $32,500,000 $97,500,000 $32,500,000 Capital Repayment Amount6 1/26/2011 7/7/2010 10/28/2009 Final Disposition Date R R R Note15 $14,500,000 $172,000,000 $1,307,000 Final Disposition Proceeds $21.96 $14.05 $9.70 $24.12 $9.31 $4.05 $4.67 $4.97 Stock Price as of 3/31/2011 $3,263.17 $277.18 $25.86 $13,145.40 $987.58 $39.14 $27.90 $37.88 Market Capitalization as of 3/31/2011 (in millions) $15.15 $7.44 $9.46 $4.48 $4.49 $4.33 Strike Price as of 3/31/2011a 1,517,555 385,434 186,311 833,705 521,158 311,972 $6.81 $6.61 $0.24 ($0.43) $0.18 $0.64 Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $31,676,420 $3,336,896 $408,316 $1,199,479 $67,690,844 $2,631,197 $2,968,429 $213,309 $587,238 $387,483 $2,132,064 $4,739,583 $180,940 $1,196,414 $2,303,250 $335,553 $257,361 $837,268 $69,753 $152,159 $1,681,333 $2,746,800 $448,253 $918,750 $303,868 $115,426 $1,908,453 Interest/ Dividends Paid to Treasury Continued on next page. IN IN IN OUT IN IN In or Out of the Moneye 236 Appendix D I Transaction Detail I april 28, 2011 $8,750,000 Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants ECB Bancorp, Inc., Engelhard, NC Emclaire Financial Corp., Emlenton, PA Encore Bancshares Inc., Houston, TX Enterprise Financial Services Corp., St. Louis, MO Enterprise Financial Services Group, Inc., Allison Park, PA2 Equity Bancshares, Inc., Wichita, KS2 1/16/2009 12/23/2008 12/5/2008 12/19/2008 6/12/2009 1/30/2009 $2,993,000 $4,609,000 $17,000,000 $17,243,000 $442,000 $8,752,000 $30,000,000 $12,000,000 $700,000 $3,035,000 $9,294,000 $7,289,000 $3,942,000 Preferred Stock w/ Exercised Warrants Preferred Stock Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants F & C Bancorp, Inc., Holden, MO8, c F & M Bancshares, Inc., Trezevant, TN2, c F & M Bancshares, Inc., Trezevant, TN2, 10a F & M Financial Corporation, Salisbury, NC2 F&M Financial Corporation, Clarksville, TN2 F.N.B. Corporation, Hermitage, PA4, b Farmers & Merchants Bancshares, Inc., Houston, TX2 Farmers & Merchants Financial Corporation, Argonia, KS2 Farmers Bank, Windsor, VA2 Farmers Capital Bank Corporation, Frankfort, KY Farmers Enterprises, Inc., Great Bend, KS8 Farmers State Bankshares, Inc., Holton, KS2 FBHC Holding Company, Boulder, CO8, 10, 38 FC Holdings, Inc., Houston, TX2 FCB Bancorp, Inc., Louisville, KY2 5/22/2009 1/30/2009 11/6/2009 2/6/2009 2/13/2009 1/9/2009 3/6/2009 3/20/2009 1/23/2009 1/9/2009 6/19/2009 3/20/2009 12/29/2009 6/26/2009 12/19/2008 12/19/2008 FFW Corporation, Wabash, IN2 $7,000,000 $6,657,000 $36,282,000 $48,200,000 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Fidelity Federal Bancorp, 11/13/2009 Evansville, IN2, 10 Fidelity Financial Corporation, Preferred Stock w/ 12/19/2008 Exercised Warrants Wichita, KS2 Fidelity Southern Corporation, Preferred Stock w/ 12/19/2008 Atlanta, GAg Warrants Fidelity Bancorp, Inc, Baton Rouge, LA8 Fidelity Bancorp, Inc., 12/12/2008 Pittsburgh, PA 5/29/2009 $21,042,000 $11,000,000 $100,000,000 $3,535,000 $43,000,000 Subordinated Debentures w/ Exercised Warrants Exchange Bank, Santa 12/19/2008 Rosa, CA2 Preferred Stock w/ Exercised Warrants $4,000,000 $35,000,000 $34,000,000 $7,500,000 $17,949,000 $24,000,000 Preferred Stock w/ Warrants Eastern Virginia Bankshares, Inc., Tappahannock, VA 1/9/2009 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 3/9/2011 9/9/2009 Capital Repayment Date (continued) $650,000 $100,000,000 Capital Repayment Amount6 — — Remaining Capital Amount Final Disposition Date Note15 Final Disposition Proceeds $8.00 $9.10 $7.51 $10.54 $14.07 $12.14 $17.25 $12.20 $3.60 Stock Price as of 3/31/2011 $86.21 $27.86 $55.66 $1,265.00 $210.04 $139.61 $25.13 $34.77 $21.52 Market Capitalization as of 3/31/2011 (in millions) $3.05 $8.65 $20.09 $11.52 $16.20 $14.01 $22.45 $18.57 $9.63 Strike Price as of 3/31/2011a 2,370,512 121,387 223,992 651,042 324,074 364,026 50,111 144,984 373,832 $4.95 $0.45 ($12.58) ($0.98) ($2.13) ($1.87) ($5.20) ($6.37) ($6.03) Amount “In the Current Outstanding Money” or “Out of the Money”e Warrantsa $5,194,889 $4,262,309 — $761,250 $565,900 $856,209 $1,091,897 $156,090 $154,592 $73,447 $1,666,816 $3,150,000 $983,191 $45,819 $1,164,030 $3,333,333 $1,884,681 $1,876,163 $738,121 $434,649 $4,465,669 $973,712 $365,150 $3,772,222 $3,730,556 $804,167 $1,867,195 $2,220,000 Interest/ Dividends Paid to Treasury Continued on next page. IN IN OUT OUT OUT OUT OUT OUT OUT In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 237 $3,742,000 $17,000,000 $65,000,000 $7,350,000 $3,345,000 $10,000,000 $295,400,000 Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock Preferred Stock w/ Warrants Mandatorily Convertible Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Financial Security Corporation, Basin, WY2 Financial Services of Winger, Inc., Winger, MN8, 10 First Advantage Bancshares Inc., Coon Rapids, MN2 First Alliance Bancshares, Inc., Cordova, TN2 First American Bank Corporation, Elk Grove Village, IL8 First American International Corp., Brooklyn, NY3, 4, 30 - 8/13/2010 First Bancorp, Troy, NC First BanCorp, San Juan, PR28 - 7/20/2010, i First BancTrust Corporation, Paris, IL2 First Bank of Charleston, Inc., Preferred Stock w/ Charleston, WV2 Exercised Warrants First Bankers Trustshares, Inc., Preferred Stock w/ Quincy, IL2 Exercised Warrants 2/13/2009 7/31/2009 5/22/2009 6/26/2009 7/24/2009 3/13/2009 1/9/2009 1/16/2009 2/20/2009 2/6/2009 1/16/2009 Preferred Stock w/ 12/31/2008 First Banks, Inc., Clayton, MO Exercised Warrants $25,000,000 $10,958,000 $2,200,000 $23,184,000 $4,500,000 First California Financial Group, Preferred Stock w/ Inc, Westlake Village, CA Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock Preferred Stock w/ Warrants First Capital Bancorp, Inc., Glen Ellen, VA First Choice Bank, Cerritos, CA2, 4, 7, 30 - 9/24/2010, 30a, c First Choice Bank, Cerritos, CA2, 4, 10a, 30 - 9/24/2010, c First Citizens Banc Corp, Sandusky, OH First Colebrook Bancorp, Inc., Preferred Stock w/ Colebrook, NH2 Exercised Warrants First Community Bancshares, Inc, Overland Park, KS2, b 12/11/2009 12/19/2008 4/3/2009 2/13/2009 12/22/2009 1/23/2009 3/20/2009 5/15/2009 $41,500,000 $11,350,000 $22,000,000 First Community Corporation, Preferred Stock w/ 11/21/2008 Lexington, SC Warrants Preferred Stock w/ Exercised Warrants 12/11/2009 First Community Financial Partners, Inc., Joliet, IL2 First Community Bankshares Inc., Bluefield, VA5 Preferred Stock w/ Warrants 11/21/2008 $10,685,000 $14,800,000 Preferred Stock w/ Warrants First Community Bank 12/23/2008 Corporation of America, Pinellas Park, FL39- 3/11/2011 $2,032,000 First Business Bank, N.A., San Preferred Stock Diego, CA2, 10a, c 4/10/2009 Preferred Stock w/ Exercised Warrants $2,211,000 First Business Bank, N.A., San Preferred Stock w/ Diego, CA2, c Exercised Warrants 3/6/2009 $2,836,000 $100,000,000 Preferred Stock w/ Warrants $424,174,000 $50,000,000 $3,422,000 $1,177,000 $37,515,000 First Busey Corporation, Urbana, ILb 2 $5,000,000 Preferred Stock w/ Warrants Financial Institutions, Inc., Warsaw, NY4 12/23/2008 $3,408,000,000 Preferred Stock w/ Warrants Fifth Third Bancorp, Cincinnati, OH4, m 12/31/2008 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 7/8/2009 9/24/2010 9/24/2010 8/13/2010 3/30/2011 2/23/2011 2/2/2011 Capital Repayment Date (continued) — Remaining Capital Amount $41,500,000 $2,836,000 $2,200,000 $17,000,000 $25,010,000 — — — — — $12,505,000 $25,010,000 $3,408,000,000 Capital Repayment Amount6 9/24/2010 03/16/2011 Final Disposition Date — R — R Note15 $110,000 $280,025,936 Final Disposition Proceeds $6.73 $14.18 $0.30 $4.18 $3.83 $3.75 $5.08 $5.00 $13.26 $17.52 $13.89 Stock Price as of 3/31/2011 $22.03 $253.38 $1.64 $32.22 $11.38 $105.64 $439.91 $106.52 $223.06 $235.22 $12,743.46 Market Capitalization as of 3/31/2011 (in millions) $8.69 $35.26 $7.02 $7.41 $6.55 $6.26 $13.07 $0.73 $15.82 $14.88 Strike Price as of 3/31/2011a 195,915 88,273 228,312 469,312 250,947 599,042 573,833 5,842,259 616,308 378,175 ($1.96) ($21.08) ($6.72) ($3.23) ($2.72) ($2.51) ($7.99) ($4.27) ($2.56) $2.64 Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $1,412,156 $1,267,417 $1,308,403 $744,982 $604,950 $466,657 $2,389,240 $300,643 $1,022,747 $2,694,444 $342,326 $9,708,333 $6,037,238 $1,133,903 $369,117 $795,676 $6,611,111 $6,825,000 $1,204,167 $6,537,225 $305,118 $111,032 $468,035 $546,514 $4,192,649 $355,946,667 Interest/ Dividends Paid to Treasury Continued on next page. OUT OUT OUT OUT OUT OUT OUT OUT OUT IN In or Out of the Moneye 238 Appendix D I Transaction Detail I april 28, 2011 $80,000,000 $3,756,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Subordinated Debentures w/ Exercised Warrants First Express of Nebraska, Inc., Gering, NE2 First Federal Bancshares of Arkansas, Inc., Harrison, AR First Financial Bancorp, Cincinnati, OH5, 9 First Financial Bancshares, Inc., Lawrence, KS8, 10 2/6/2009 3/6/2009 12/23/2008 6/12/2009 First Guaranty Bancshares, Inc., Hammond, LA2 8/28/2009 $12,000,000 $4,797,000 $69,600,000 $193,000,000 $13,900,000 $17,836,000 $184,011,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants First M&F Corporation, Kosciusko, MS4, 30 - 9/29/2010 First Manitowoc Bancorp, Inc., Manitowoc, WI2, 4, 7 First Menasha Bancshares, Inc., Neenah, WI2 First Merchants Corporation, Muncie, IN27 First Midwest Bancorp, Inc., Itasca, IL First National Corporation, Strasburg, VA2 First NBC Bank Holding Company, New Orleans, LA2 First Niagara Financial Group, Preferred Stock w/ Lockport, NY5, 9 Warrants First Northern Community Bancorp, Dixon, CA 2/27/2009 1/16/2009 2/13/2009 2/20/2009 12/5/2008 3/13/2009 3/20/2009 11/21/2008 3/13/2009 3/13/2009 First Place Financial Corp., Warren, OH First PacTrust Bancorp, Inc., 11/21/2008 Chula Vista, CA4 $30,000,000 Preferred Stock w/ Warrants First Litchfield Financial 12/12/2008 Corporation, Litchfield, CT4 Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants $72,927,000 $19,300,000 $17,390,000 $46,400,000 $10,000,000 Preferred Stock w/ Warrants 3/13/2009 Trust Preferred Securities w/ Warrants $6,398,000 Preferred Stock w/ Exercised Warrants $3,223,000 Preferred Stock First Intercontinental Bank, Doraville, GA2 $866,540,000 8/28/2009 Preferred Stock w/ Warrants $20,699,000 First Independence Corporation, Detroit, MI2, 3 First Horizon National 11/14/2008 Corporation, Memphis, TN4, g, o $7,570,000 First Gothenburg Bancshares, Preferred Stock w/ Exercised Warrants Inc., Gothenburg, NE2 2/27/2009 Preferred Stock w/ Exercised Warrants $8,700,000 Preferred Stock w/ Exercised Warrants First Freedom Bancshares, Inc., Lebanon, TN2, 10 12/22/2009 $20,000,000 Preferred Stock w/ Warrants 1/9/2009 $65,000,000 Preferred Stock w/ Warrants First Financial Holdings Inc., Charleston, SCb First Financial Service Corporation, Elizabethtown, KY $16,500,000 $5,000,000 $7,500,000 12/5/2008 9/11/2009 9/17/2010, 30a Subordinated Debentures w/ Exercised Warrants First Eagle Bancshares, Inc., Hanover Park, IL4, 8, 30 - $37,000,000 Preferred Stock w/ Warrants First Defiance Financial Corp., Defiance, OH 12/5/2008 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 12/15/2010 5/27/2009 5/27/2009 9/29/2010 4/7/2010 12/22/2010 2/24/2010 9/17/2010 Capital Repayment Date (continued) $19,300,000 $184,011,000 $12,000,000 $30,000,000 $10,000,000 $866,540,000 $80,000,000 $7,500,000 Capital Repayment Amount6 — — — — — — — — Remaining Capital Amount 1/5/2011 6/24/2009 5/27/2009 4/7/2010 3/9/2011 6/2/2010 9/17/2010 Final Disposition Date R R R R R A R Note15 $1,003,227 $2,700,000 $600,000 $1,488,046 $79,700,000 $3,116,284 $375,000 Final Disposition Proceeds $2.23 $15.91 $4.50 $13.58 $11.79 $8.26 $4.08 $11.21 $3.61 $11.31 $16.69 $2.72 $14.34 Stock Price as of 3/31/2011 $37.85 $154.79 $41.02 $2,842.73 $878.86 $213.64 $37.40 $2,954.07 $17.06 $186.92 $968.87 $13.18 $139.44 Market Capitalization as of 3/31/2011 (in millions) $2.98 $10.31 $7.39 $22.18 $17.55 $8.77 $13.89 $20.17 $7.69 $10.08 Strike Price as of 3/31/2011a 3,670,822 280,795 352,977 1,305,230 991,453 513,113 215,983 241,696 321,847 550,595 ($0.75) $5.60 ($2.89) ($10.39) ($9.29) ($4.69) ($10.28) ($8.86) ($4.97) $4.26 Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $7,009,095 $1,994,333 $1,671,372 $4,753,618 $1,849,652 $1,456,180 $21,176,389 $1,450,000 $10,069,444 $524,353 $237,983 $2,383,333 $659,722 $670,279 $235,906 $91,227,406 $1,650,754 $811,711 $525,990 $1,600,000 $7,131,944 $510,550 $4,677,778 $570,625 $551,813 $639,738 $4,059,722 Interest/ Dividends Paid to Treasury Continued on next page. OUT IN OUT OUT OUT OUT OUT OUT OUT IN In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 239 1/30/2009 $30,000,000 $6,000,000 $8,559,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants First ULB Corp., Oakland, CA2, 4, 7 First United Corporation, Oakland, MD First Vernon Bancshares, Inc., Preferred Stock w/ Vernon, AL2, 7, 10, 30 - 9/29/2010, 30a Exercised Warrants First Western Financial, Inc., Denver, CO2, c 1/23/2009 1/30/2009 6/12/2009 2/6/2009 $266,657,000 $20,471,000 $9,495,000 $70,000,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Florida Bank Group, Inc., Tampa, FL2 Florida Business BancGroup, Inc., Tampa, FL2 1/30/2009 7/24/2009 2/20/2009 Flushing Financial Corporation, Preferred Stock w/ 12/19/2008 Lake Success, NY5, 9 Warrants $15,000,000 $1,300,000 $3,100,000 $5,800,000 Foresight Financial Group, Inc., Preferred Stock w/ Rockford, IL2 Exercised Warrants Preferred Stock w/ Exercised Warrants Fort Lee Federal Savings Bank, Fort Lee, NJ2 Fortune Financial Corporation, Preferred Stock w/ Exercised Warrants Arnold, MO2 FPB Bancorp, Inc., Port St. Lucie, FL 2/13/2009 5/15/2009 5/22/2009 4/3/2009 12/5/2008 Preferred Stock w/ Warrants $51,500,000 Preferred Stock w/ Warrants FNB United Corp., Asheboro, NC 2/27/2009 $12,000,000 Preferred Stock w/ Exercised Warrants FNB Bancorp, South San Francisco, CA2 $125,000,000 Preferred Stock w/ Warrants Flagstar Bancorp, Inc., Troy, MI 1/9/2009 $33,000,000 Preferred Stock w/ Warrants Preferred Stock w/ Warrants Firstbank Corporation, Alma, MI $11,881,000 FirstMerit Corporation, Akron, OH4 Preferred Stock 1/30/2009 First Western Financial, Inc., 12/11/2009 Denver, CO2, 10a, c $17,969,000 6/5/2009 Preferred Stock w/ Exercised Warrants $13,533,000 Subordinated Debentures w/ Exercised Warrants First Trust Corporation, New Orleans, LA8 3/6/2009 $4,900,000 $731,000 Preferred Stock w/ Exercised Warrants 3/6/2009 First Texas BHC, Inc., Fort Worth, TX2 $5,500,000 First Southwest Preferred Stock w/ Bancorporation, Inc., Alamosa, Exercised Warrants CO2 Preferred Stock w/ Exercised Warrants $10,900,000 Preferred Stock w/ Exercised Warrants First Southern Bancorp, Inc., Boca Raton, FL2, 4, 7 1/30/2009 First State Bank of Mobeetie, Mobeetie, TX2, 4, 7 $50,000,000 First South Bancorp, Inc., Lexington, TN8 7/17/2009 2/27/2009 $7,400,000 $33,000,000 Preferred Stock w/ Warrants Subordinated Debentures w/ Exercised Warrants First Security Group, Inc., Chattanooga, TN $2,417,000 $2,600,000 $15,349,000 Preferred Stock w/ 12/23/2008 First Sound Bank, Seattle, WA Warrants 1/9/2009 Preferred Stock Preferred Stock w/ Exercised Warrants First Resource Bank, Exton, PA2, c First Resource Bank, Exton, 12/11/2009 PA2, 10a, c Preferred Stock w/ Exercised Warrants First Reliance Bancshares, Inc., Florence, SC2 3/6/2009 $4,596,000 $4,579,000 Preferred Stock w/ Exercised Warrants First Priority Financial Corp., Malvern, PA2, c Preferred Stock Investment Amount Investment Description Institution First Priority Financial Corp., 12/18/2009 Malvern, PA2, 10a, c 2/20/2009 Purchase Date CPP Transaction Detail, as oF 3/31/2011 10/28/2009 4/22/2009 9/29/2010 4/22/2009 4/14/2010 6/16/2010 Capital Repayment Date (continued) $70,000,000 $125,000,000 $6,000,000 $4,900,000 $731,000 $10,900,000 Capital Repayment Amount6 — — — — — — Remaining Capital Amount 12/30/2009 5/27/2009 9/29/2010 4/22/2009 4/14/2010 6/16/2010 Final Disposition Date R R R R R R Note15 $900,000 $5,025,000 $245,000 $245,000 $37,000 $545,000 Final Disposition Proceeds $0.31 $0.31 $14.90 $1.50 $17.07 $6.30 $3.09 $0.12 $0.89 Stock Price as of 3/31/2011 $0.64 $3.48 $466.85 $830.43 $1,856.69 $49.21 $19.05 $0.25 $14.61 Market Capitalization as of 3/31/2011 (in millions) $4.75 $3.50 $6.20 $8.55 $13.79 $9.73 $6.01 Strike Price as of 3/31/2011a 183,158 2,207,143 6,451,379 578,947 326,323 114,080 823,627 ($4.44) ($3.20) ($4.70) ($2.25) ($10.70) ($9.61) ($5.12) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $273,889 $315,374 $87,185 $1,430,625 $2,589,305 $1,286,200 $3,004,167 $1,027,813 $1,180,793 $27,221,235 $1,788,194 $3,368,750 $1,644,260 $417,770 $2,312,500 $66,021 $1,046,896 $1,432,134 $45,087 $207,327 $818,468 $6,618,777 $330,944 $1,402,500 $431,639 $1,624,166 $761,839 Interest/ Dividends Paid to Treasury Continued on next page. OUT OUT OUT OUT OUT OUT OUT In or Out of the Moneye 240 Appendix D I Transaction Detail I april 28, 2011 $5,097,000 $3,000,000 $35,000,000 $4,000,000 $2,443,320 $3,076,000 $9,000,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock Preferred Stock w/ Warrants Franklin Bancorp, Inc., Washington, MO2 Freeport Bancshares, Inc., Freeport, IL8 Fremont Bancorporation, Fremont, CA8 Fresno First Bank, Fresno, CA2 Frontier Bancshares, Inc., Austin, TX4, 7, 8m, c Frontier Bancshares, Inc., Austin, TX4, 8, c Fulton Financial Corporation, Lancaster, PA4 Gateway Bancshares, Inc., Ringgold, GA2 Georgia Commerce Bancshares, Inc., Atlanta, GA2, 4, 7 Georgia Primary Bank, Atlanta, GA2 Germantown Capital Corporation, Inc., Germantown, TN2 Gold Canyon Bank, Gold Canyon, AZ2, 10 Goldwater Bank, N.A., Scottsdale, AZ2 Grand Capital Corporation, Tulsa, OK2 Grand Financial Corporation, Hattiesburg, MS8 Grand Mountain Bancshares, Inc., Granby, CO2 GrandSouth Bancorporation, Greenville, SC2, c GrandSouth Bancorporation, Greenville, SC2, 10a, c Subordinated Great River Holding Company, Debentures w/ Baxter, MN8 Exercised Warrants Preferred Stock w/ Warrants FPB Financial Corp., Hammond, LA2, 4, c Great Southern Bancorp, Springfield, MO 1/23/2009 5/22/2009 5/8/2009 6/26/2009 1/23/2009 4/24/2009 4/24/2009 12/23/2008 5/8/2009 2/6/2009 5/1/2009 3/6/2009 6/26/2009 1/30/2009 4/24/2009 9/25/2009 5/29/2009 1/9/2009 12/11/2009 7/17/2009 12/5/2008 Green Bankshares, Inc., 12/23/2008 Greeneville, TN $651,000 $9,993,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Green City Bancshares, Inc., Green City, MO2, 4, 7 Greer Bancshares Incorporated, Greer, SC2 2/27/2009 2/27/2009 1/30/2009 $2,400,000 Preferred Stock w/ Exercised Warrants Green Circle Investments, Inc., Clive, IA2 $72,278,000 $58,000,000 $8,400,000 $6,319,000 $2,568,000 $1,607,000 $4,967,000 $4,500,000 $8,700,000 $6,000,000 $376,500,000 $3,000,000 $1,968,000 $3,240,000 Preferred Stock w/ Exercised Warrants FPB Financial Corp., Hammond, LA2, 4, 7, c 1/23/2009 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 7/14/2010 2/16/2011 7/14/2010 10/6/2010 11/24/2009 6/16/2010 12/16/2009 Capital Repayment Date (continued) $651,000 $8,700,000 $376,500,000 $1,400,000 $1,600,000 $2,240,000 $1,000,000 Capital Repayment Amount6 — — — — $1,400,000 — $2,240,000 Remaining Capital Amount 7/14/2010 2/16/2011 9/8/2010 10/6/2010 6/16/2010 Final Disposition Date R R R R R Note15 $33,000 $435,000 $10,800,000 $150,000 $162,000 Final Disposition Proceeds $2.79 $21.45 $11.11 Stock Price as of 3/31/2011 $36.80 $288.59 $2,212.43 Market Capitalization as of 3/31/2011 (in millions) $17.06 $9.57 Strike Price as of 3/31/2011a 635,504 909,091 ($14.27) $11.88 Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $975,831 $49,037 $257,240 $5,942,858 $6,363,889 $759,575 $1,402,169 — $284,682 $394,217 $145,750 $53,860 $525,721 — $961,471 $578,608 $29,335,625 $258,192 $187,635 $4,804,455 $445,368 $480,748 $221,722 Interest/ Dividends Paid to Treasury Continued on next page. OUT IN In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 241 $14,000,000 $17,000,000 Preferred Stock w/ Exercised Warrants Guaranty Capital Corporation, Subordinated Belzoni, MS3, 4, 8, 30 - 7/30/2010 Debentures Guaranty Federal Bancshares, Preferred Stock w/ Inc., Springfield, MO Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Common Stock w/ Warrants Guaranty Bancorp, Inc., Woodsville, NH2 GulfSouth Private Bank, Destin, FL10, 21 Gulfstream Bancshares, Inc., Stuart, FL2 Hamilton State Bancshares, Hoschton, GA2 2/20/2009 9/25/2009 1/30/2009 9/25/2009 6/26/2009 2/20/2009 Hampton Roads Bankshares, 12/31/2008 Inc., Norfolk, VA31 - 9/30/2010, i $7,000,000 $81,698,000 Preferred Stock w/ Exercised Warrants HCSB Financial Corporation, Loris, SC Heartland Bancshares, Inc., Franklin, IN2, 10 3/6/2009 9/11/2009 Heartland Financial USA, Inc., Preferred Stock w/ 12/19/2008 Dubuque, IA Warrants $1,900,000 $10,000,000 $18,400,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Hometown Bancshares, Inc., Corbin, KY2 HomeTown Bankshares Corporation, Roanoke, VA2, 10 2/20/2009 2/13/2009 9/18/2009 HopFed Bancorp, Hopkinsville, Preferred Stock w/ 12/12/2008 KYg Warrants $3,250,000 Preferred Stock w/ Exercised Warrants Hometown Bancorp of Alabama, Inc., Oneonta, AL2 $50,000,000 Preferred Stock w/ Warrants Home Bancshares, Inc., Conway, ARf 1/16/2009 Preferred Stock w/ Warrants $26,000,000 $4,000,000 1/30/2009 HMN Financial, Inc., 12/23/2008 Rochester, MN $6,700,000 Preferred Stock w/ Exercised Warrants Hilltop Community Bancorp, Inc., Summit, NJ2, 4, 7 $2,359,000 $3,091,000 Preferred Stock w/ Highlands Independent Bancshares, Inc., Sebring, FL2 Exercised Warrants Preferred Stock Preferred Stock w/ Exercised Warrants 3/6/2009 Highlands Bancorp, Inc. 12/22/2009 (Highlands State Bank), Vernon, NJ2, 10a, 13 - 8/31/2010, c 5/8/2009 Highlands Bancorp, Inc. (Highlands State Bank), Vernon, NJ2, 13 - 8/31/2010, c $25,000,000 $21,000,000 Preferred Stock w/ Warrants Heritage Oaks Bancorp, Paso Preferred Stock w/ Robles, CA Warrants 3/20/2009 HF Financial Corp., Sioux 11/21/2008 Falls, SD4 $40,000,000 $24,000,000 Heritage Financial Corporation, Preferred Stock w/ Olympia, WA4, b Warrants 11/21/2008 $10,103,000 Preferred Stock w/ Warrants 9/25/2009 Heritage Commerce Corp., 11/21/2008 San Jose, CA $12,895,000 Preferred Stock w/ Warrants Hawthorn Bancshares, Inc., 12/19/2008 Lee’s Summit, MOg Preferred Stock w/ Exercised Warrants $30,255,000 Preferred Stock w/ Warrants 3/13/2009 Heritage Bankshares, Inc., Norfolk, VA2, 4, 10 $425,000 Preferred Stock w/ Exercised Warrants Haviland Bancshares, Inc., Haviland, KS2, 4, 7 6/26/2009 $3,400,000,000 Preferred Stock w/ Warrants Hartford Financial Services Group, Inc., Hartford, CT4 7/17/2009 $6,800,000 Harbor Bankshares Preferred Stock Corporation, Baltimore, MD2, 3 $80,347,000 $7,000,000 $7,500,000 $7,500,000 $6,920,000 $825,000 Preferred Stock w/ Exercised Warrants Gregg Bancshares, Inc., Ozark, MO2 2/13/2009 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 4/21/2010 6/3/2009 12/22/2010 3/16/2011 12/29/2010 3/31/2010 7/30/2010 Capital Repayment Date (continued) $4,000,000 $25,000,000 $24,000,000 $2,606,000 $425,000 $3,400,000,000 $14,000,000 Capital Repayment Amount6 — — — $7,497,000 — — — Remaining Capital Amount 4/21/2010 6/30/2009 12/29/2010 9/21/2010 Final Disposition Date R R R A — Note15 $200,000 $650,000 $21,000 $713,687,430 Final Disposition Proceeds $9.20 $22.75 $2.75 $11.16 $3.49 $14.17 $4.65 $17.00 $1.25 $9.03 $26.93 $0.84 $6.01 Stock Price as of 3/31/2011 $67.49 $647.85 $12.07 $77.89 $87.54 $221.96 $121.98 $279.11 $4.67 $40.40 $11,976.69 $701.13 $15.99 Market Capitalization as of 3/31/2011 (in millions) $11.10 $23.66 $4.68 $5.15 $13.04 $12.96 $20.10 $21.09 $17.10 $0.40 $5.55 Strike Price as of 3/31/2011a 248,692 158,472 833,333 611,650 138,037 462,963 609,687 91,714 265,471 1,325,858 459,459 ($1.90) ($0.91) ($1.93) ($1.66) $1.13 ($8.31) ($3.10) ($19.84) ($8.07) $0.44 $0.46 Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $2,001,000 $351,326 $207,675 $351,880 $5,201,389 $2,462,778 $267,050 $617,712 $374,585 $666,667 $947,916 $2,503,333 $1,466,667 $750,692 $8,805,229 $543,949 $1,090,702 $3,260,817 $41,524 $129,861,111 $282,744 $2,510,844 $757,702 $668,760 $757,380 $1,735,417 $913,299 $749,042 $45,190 Interest/ Dividends Paid to Treasury Continued on next page. OUT OUT OUT OUT IN OUT OUT OUT OUT IN IN In or Out of the Moneye 242 Appendix D I Transaction Detail I april 28, 2011 $2,295,000 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants IBC Bancorp, Inc., Chicago, IL3, 4, 8, 30 - 9/10/2010 Iberiabank Corporation, Lafayette, LA5, 9 IBT Bancorp, Inc., Irving, TX IBW Financial Corporation, Washington, DC2, 3a - 11/13/2009, 5/15/2009 12/5/2008 3/27/2009 3/13/2009 Preferred Stock w/ Exercised Warrants Illinois State Bancorp, Inc., Chicago, IL2, c 5/22/2009 Illinois State Bancorp, Inc., 12/29/2009 Chicago, IL2, 10a, c Preferred Stock w/ Warrants Independent Bank Corp., Rockland, MA4 1/9/2009 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Indiana Community Bancorp, 12/12/2008 Columbus, IN $25,000,000 Preferred Stock w/ Warrants Preferred Stock w/ Warrants International Bancshares Corporation, Laredo, TX Intervest Bancshares Corporation, New York, NY 12/19/2008 12/23/2008 12/23/2008 5/8/2009 $25,000,000,000 $10,449,000 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants JPMorgan Chase & Co., New 10/28/2008 York, NY4 Katahdin Bankshares Corp., Houlton, ME2 $470,000 Preferred Stock w/ Exercised Warrants KS Bancorp, Inc., Smithfield, NC2 3/20/2009 8/21/2009 $4,000,000 $2,500,000,000 Preferred Stock w/ Exercised Warrants Kirksville Bancorp, Inc., Kirksville, MO2 11/14/2008 KeyCorp, Cleveland, OH4 Preferred Stock w/ Warrants 1/30/2009 $4,000,000 Investors Financial Corporation Subordinated of Pettis County, Inc., Sedalia, Debentures w/ Exercised Warrants MO8 $216,000,000 $27,000,000 Preferred Stock w/ Warrants Intermountain Community Bancorp, Sandpoint, ID 2/27/2009 $83,586,000 Preferred Stock w/ Warrants $21,500,000 $1,312,000 $74,426,000 $78,158,000 $1,065,000 Integra Bank Corporation, Evansville, IN 4/24/2009 Indiana Bank Corp., Dana, IN2 Mandatorily Convertible Independent Bank Corporation, 12/12/2008 Preferred Stock w/ Ionia, MI22, I, j Warrants Preferred Stock w/ Exercised Warrants Independence Bank, East Greenwich, RI2 1/9/2009 $4,000,000 $6,272,000 $6,900,000 Preferred Stock w/ Exercised Warrants Idaho Bancorp, Boise, ID 1/16/2009 $6,000,000 Preferred Stock w/ Exercised Warrants ICB Financial, Ontario, CA2 3/6/2009 2 $6,000,000 Preferred Stock w/ Exercised Warrants Preferred Stock $90,000,000 Subordinated Debentures IA Bancorp, Inc., Iselin, NJ2, 10 9/18/2009 30 - 9/3/2010, 4 $5,976,000 Preferred Stock w/ Exercised Warrants 2/6/2009 2 $1,552,000 Preferred Stock w/ Exercised Warrants Hyperion Bank, Philadelphia, PA2 $4,205,000 $1,398,071,000 Preferred Stock w/ Warrants Huntington Bancshares, Columbus, OH4 11/14/2008 $5,000,000 $4,000,000 Preferred Stock w/ Exercised Warrants HPK Financial Corporation, 11/13/2009 Chicago, IL2, 10a, c 5/1/2009 $5,983,000 Preferred Stock w/ Exercised Warrants 2/27/2009 HPK Financial Corporation, Chicago, IL2, c $25,000,000 Preferred Stock w/ Warrants Howard Bancorp, Inc., Ellicott Preferred Stock w/ City, MD2 Exercised Warrants Horizon Bancorp, Michigan City, IN4 12/19/2008 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 3/30/2011 6/17/2009 4/22/2009 9/3/2010 3/31/2009 9/10/2010 12/22/2010 11/10/2010 Capital Repayment Date (continued) Remaining Capital Amount $2,500,000,000 $25,000,000,000 $78,158,000 $6,000,000 $90,000,000 $4,205,000 $1,398,071,000 — — — — — — — $6,250,000 $18,750,000 Capital Repayment Amount6 12/10/2009 5/27/2009 5/20/2009 1/19/2011 Final Disposition Date A R — R — R Note15 $950,318,243 $2,200,000 $1,200,000 $49,100,000 Final Disposition Proceeds $8.88 $46.10 $2.55 $18.34 $1.45 $0.28 $15.55 $3.20 $27.01 $60.13 $6.64 $27.30 Stock Price as of 3/31/2011 $8,443.97 $183,639.81 $53.87 $1,241.65 $12.19 $5.89 $53.20 $25.97 $574.12 $1,617.32 $5,739.39 $90.20 Market Capitalization as of 3/31/2011 (in millions) $10.64 $5.42 $24.43 $6.20 $1.69 $17.09 $7.23 $8.90 $17.68 Strike Price as of 3/31/2011a 35,244,361 691,882 1,326,238 653,226 7,418,876 188,707 346,154 23,562,994 212,104 ($1.76) ($2.87) ($6.09) ($4.75) ($1.41) ($1.54) ($4.03) ($2.26) $9.62 Amount “In the Current Outstanding Money” or “Out of the Money”e Warrantsa $323,367 $48,825 $297,222,222 $1,162,587 $795,138,889 $174,325 $1,118,056 $23,160,000 $1,222,500 $1,950,340 $2,338,125 $129,369 $2,430,000 $1,118,094 $121,842 $826,501 $124,306 $634,925 $453,067 $235,605 $1,450,000 $427,216 $443,498 $171,356 $147,185,809 $720,139 $641,251 $2,611,979 Interest/ Dividends Paid to Treasury Continued on next page. OUT OUT OUT OUT OUT OUT OUT OUT IN In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 243 Investment Description LCNB Corp., Lebanon, OH $21,900,000 $6,500,000 $5,645,000 Preferred Stock w/ Exercised Warrants Liberty Bancshares, Inc., Springfield, MO2 Liberty Bancshares, Inc., Fort Preferred Stock w/ Worth, TX2, 10 Exercised Warrants Liberty Financial Services, Inc., Preferred Stock New Orleans, LA3, 4, 30 - 9/24/2010 Liberty Shares, Inc., Hinesville, Preferred Stock w/ GA2 Exercised Warrants Lincoln National Corporation, Radnor, PA4 1/23/2009 2/13/2009 12/4/2009 2/6/2009 2/20/2009 7/10/2009 $13,795,000 Madison Financial Corporation, Preferred Stock w/ Exercised Warrants Richmond, KY2 Preferred Stock w/ Exercised Warrants 4/24/2009 3/13/2009 $2,639,000 $3,000,000 $2,060,000 Subordinated Debentures w/ Exercised Warrants Manhattan Bancshares, Inc., Manhattan, IL8 Marine Bank & Trust Company, Preferred Stock w/ Vero Beach, FL2 Exercised Warrants Market Bancorporation, Inc., New Market, MN2 6/19/2009 3/6/2009 2/20/2009 Preferred Stock w/ Exercised Warrants $1,700,000 Preferred Stock w/ Warrants Manhattan Bancorp, El Segundo, CA4 12/5/2008 $57,000,000 Preferred Stock w/ Warrants MainSource Financial Group, Inc., Greensburg, IN 1/16/2009 Mainline Bancorp, Inc., 12/29/2009 Ebensburg, PA2 2, 4 $4,500,000 $3,370,000 Mackinac Financial Corporation,Preferred Stock w/ Manistique, MI Warrants Preferred Stock w/ Exercised Warrants $11,000,000 M&T Bank Corporation Preferred Stock w/ 11/14/2008 (Provident Bancshares Corp.), Warrants Baltimore, MD 12/23/2008 Magna Bank, Memphis, TN $151,500,000 Preferred Stock w/ Warrants 12/23/2008 $11,735,000 $600,000,000 Preferred Stock M&T Bank Corporation, Buffalo, NYd 6/26/2009 $15,000,000 M&F Bancorp, Inc., Durham, NC2, 3, 4, 10, 30 - 8/20/2010 Preferred Stock w/ Warrants $3,072,000 LSB Corporation, North 12/12/2008 Andover, MA4 Lone Star Bank, Houston, TX Preferred Stock w/ Exercised Warrants 2/6/2009 $25,223,000 Preferred Stock w/ 12/12/2008 LNB Bancorp Inc., Lorain, OH Warrants 2 $950,000,000 Preferred Stock w/ Warrants $17,280,000 $57,500,000 Preferred Stock w/ Exercised Warrants $5,498,000 Preferred Stock Liberty Bancshares, Inc., Jonesboro, AR2 1/30/2009 $5,830,000 $13,400,000 Preferred Stock w/ Exercised Warrants $3,000,000 Legacy Bancorp, Inc., Milwaukee, WI3, 25 Leader Bancorp, Inc., 12/23/2008 Arlington, MA2, 4, 7 1/9/2009 4 Preferred Stock w/ Warrants $56,044,000 Preferred Stock w/ Exercised Warrants Lakeland Financial Corporation, Preferred Stock w/ Warsaw, IN5 Warrants 2/27/2009 Layton Park Financial Group, 12/18/2009 Milwaukee, WI2 $59,000,000 Preferred Stock w/ Warrants Lakeland Bancorp, Inc., Oak Ridge, NJ4 $2,453,000 $1,998,000 Investment Amount 2/6/2009 Preferred Stock Preferred Stock w/ Lafayette Bancorp, Inc., Oxford, MS2, 4, 7, 30 - 9/29/2010, 30a, c Exercised Warrants Institution Lafayette Bancorp, Inc., 12/29/2009 Oxford, MS2, 4, 10a, 30 - 9/29/2010, c 2/20/2009 Purchase Date CPP Transaction Detail, as oF 3/31/2011 9/16/2009 11/24/2009 8/20/2010 11/18/2009 6/30/2010 9/24/2010 11/24/2010 10/21/2009 6/9/2010 3/16/2011 8/4/2010 9/29/2010 9/29/2010 Capital Repayment Date (continued) — — Remaining Capital Amount — — — — — — — $1,700,000 — $3,455,000 $10,340,000 $11,735,000 $15,000,000 $950,000,000 $5,645,000 $5,830,000 $13,400,000 $56,044,000 $20,000,000 $19,000,000 $20,000,000 $39,000,000 $2,453,000 $1,998,000 Capital Repayment Amount6 10/14/2009 12/16/2009 9/16/2010 11/24/2010 9/29/2010 Final Disposition Date R — R A — R — R Note15 $63,364 $560,000 $216,620,887 $292,000 $100,000 Final Disposition Proceeds $5.40 $10.01 $6.02 $88.47 $5.69 $30.04 $11.70 $22.68 $10.38 Stock Price as of 3/31/2011 $21.54 $201.56 $20.59 $10,646.21 $44.87 $9,486.60 $78.27 $367.35 $263.81 Market Capitalization as of 3/31/2011 (in millions) $14.95 $4.35 $55.76 $73.86 $6.74 $9.26 $21.20 $9.32 Strike Price as of 3/31/2011a 571,906 379,310 407,542 1,218,522 561,343 217,063 198,269 949,571 ($4.94) $1.67 $32.71 $14.61 ($1.05) $2.44 $1.48 ($4.03) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $138,778 $235,713 $366,572 $66,347 $5,929,583 $276,588 $1,400,682 $169,422 $994,583 $9,489,792 $71,908,333 $674,763 $700,000 — $2,743,002 $46,180,555 $1,399,560 $461,009 $410,216 $2,393,731 $6,459,007 $355,079 $609,961 $524,833 $189,388 $3,596,156 $5,529,306 $267,134 Interest/ Dividends Paid to Treasury Continued on next page. OUT IN IN IN OUT IN IN OUT OUT In or Out of the Moneye 244 Appendix D I Transaction Detail I april 28, 2011 MB Financial Inc., Chicago, ILb 12/5/2008 $196,000,000 Preferred Stock w/ Warrants $7,186,000 $2,040,000 Metropolitan Bank Group, Inc. Preferred Stock w/ (NC Bancorp, Inc.), Chicago, Exercised Warrants IL2, 41 - 3/30/2011 Metropolitan Capital Bancorp, Preferred Stock w/ Inc., Chicago, IL2, c Exercised Warrants 6/26/2009 6/26/2009 4/10/2009 $10,189,000 $20,000,000 Midland States Bancorp, Inc., Preferred Stock w/ Effingham, IL2, 4, 7 Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Mandatorily Convertible Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants MidSouth Bancorp, Inc., Lafayette, LAb Midtown Bank & Trust Company, Atlanta, GA2 Midwest Banc Holdings, Inc., Melrose Park, IL14, 20, i Midwest Regional Bancorp, Inc., Festus, MO2, 4, 7 MidWestOne Financial Group, Inc., Iowa City, IA Mid-Wisconsin Financial Services, Inc., Medford, WI2 Millennium Bancorp, Inc., Edwards, CO2 1/30/2009 1/23/2009 1/9/2009 2/27/2009 12/5/2008 2/13/2009 2/6/2009 2/20/2009 4/3/2009 $7,260,000 $10,000,000 $16,000,000 $700,000 $89,388,000 $5,222,000 $22,000,000 Middleburg Financial Corporation, Middleburg, VA5 $10,000,000 Preferred Stock w/ Warrants Preferred Stock w/ Warrants Mid Penn Bancorp, Inc., Millersburg, PA 12/19/2008 $2,348,000 $74,706,000 Metropolitan Bank Group, Inc., Preferred Stock w/ Chicago, IL2, 41 - 3/30/2011 Exercised Warrants 1/16/2009 Metropolitan Capital Bancorp, Preferred Stock 11/20/2009 Inc., Chicago, IL2, 10a, c $45,000,000 Preferred Stock w/ Warrants MetroCorp Bancshares, Inc., Houston, TX $7,700,000 Preferred Stock w/ Exercised Warrants Metro City Bank, Doraville, GA2 1/30/2009 12/11/2009 Meridian Bank, Devon, PA2, 10a, c Preferred Stock $6,335,000 $6,200,000 Preferred Stock w/ Exercised Warrants Meridian Bank, Devon, PA2, c 2/13/2009 $1,881,000 Preferred Stock w/ Exercised Warrants Merchants and Planters Bancshares, Inc., Toone, TN2 $3,510,000 Merchants and Manufacturers Preferred Stock w/ Bank Corporation, Joliet, IL2 Exercised Warrants 6/19/2009 3/6/2009 $3,500,000 Preferred Stock w/ Exercised Warrants Mercantile Capital Corp., Boston, MA2 2/6/2009 $21,000,000 Preferred Stock w/ Warrants $9,698,000 $11,800,000 Mercantile Bank Corporation, Grand Rapids, MI Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants $6,000,000 $1,700,000 Preferred Stock w/ Exercised Warrants $1,715,000,000 Preferred Stock w/ Exercised Warrants 5/15/2009 Medallion Bank, 12/22/2009 Salt Lake City, UT2, 10a, c 2/27/2009 Medallion Bank, Salt Lake City, UT2, c McLeod Bancshares, Inc., 11/20/2009 Shorewood, MN2 Maryland Financial Bank, Towson, MD2 3/27/2009 $35,500,000 $20,300,000 Investment Amount Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Marquette National Corporation, Chicago, IL2 12/19/2008 Marshall & Ilsley Corporation, 11/14/2008 Milwaukee, WI Subordinated Debentures w/ Exercised Warrants Investment Description Market Street Bancshares, Inc., Mt. Vernon, IL8 Institution 5/15/2009 Purchase Date CPP Transaction Detail, as oF 3/31/2011 11/10/2009 12/23/2009 12/23/2009 Capital Repayment Date (continued) $700,000 $10,189,000 $22,000,000 Capital Repayment Amount6 — — — Remaining Capital Amount 11/10/2009 12/23/2009 Final Disposition Date R R Note15 $35,000 $509,000 Final Disposition Proceeds $14.84 $0.01 $14.46 $17.75 $8.89 $6.65 $9.74 $20.96 $7.99 Stock Price as of 3/31/2011 $127.98 $0.19 $140.70 $122.92 $30.94 $88.41 $83.74 $1,130.94 $4,235.65 Market Capitalization as of 3/31/2011 (in millions) $12.08 $0.31 $14.37 $15.85 $20.52 $8.75 $5.11 $29.05 $18.62 Strike Price as of 3/31/2011a 198,675 4,282,020 104,384 104,101 73,099 771,429 616,438 506,024 13,815,789 $2.76 ($0.31) $0.09 $1.90 ($11.63) ($2.10) $4.63 ($8.09) ($10.63) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $343,053 $1,082,431 $1,620,000 $28,294 $824,289 $275,105 $2,100,000 $508,989 $986,944 $1,077,778 $350,494 $332,256 $3,454,185 $4,139,688 $856,786 $1,050,738 $199,041 $316,774 $386,269 $1,050,000 $1,826,730 $404,208 $21,505,556 $81,841 $193,175,694 $4,170,462 $2,980,548 Interest/ Dividends Paid to Treasury Continued on next page. IN OUT IN IN OUT OUT IN OUT OUT In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 245 Preferred Stock Monadnock Bancorp, Inc., 12/19/2008 Peterborough, NH2 $6,785,000 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Monarch Financial Holdings, Inc., Chesapeake, VA5, 9 Moneytree Corporation, Lenoir City, TN2 Monument Bank, Bethesda, MD2 2/6/2009 12/19/2008 3/13/2009 1/30/2009 Morgan Stanley, New York, 10/28/2008 NY4 $7,723,000 3/27/2009 $2,330,000 Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants NEMO Bancshares Inc., Madison, MO8 New Hampshire Thrift Bancshares, Inc., Newport, NH New York Private Bank & Trust Corporation, New York, NY2 6/19/2009 1/16/2009 1/9/2009 5/15/2009 $17,211,000 $1,576,000,000 Preferred Stock w/ Warrants Preferred Stock w/ Warrants Northern States Financial Corporation, Waukegan, IL Northern Trust Corporation, Chicago, IL4 11/14/2008 $1,230,000 $1,341,000 $4,227,000 $10,200,000 2/20/2009 Preferred Stock Preferred Stock w/ Exercised Warrants Northern State Bank, Closter, NJ2, c 12/12/2008 Northern State Bank, 12/18/2009 Closter, NJ2, 10a, c Preferred Stock w/ Warrants Northeast Bancorp, Lewiston, ME 1/9/2009 $14,964,000 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Nicolet Bankshares, Inc., 12/23/2008 Green Bay, WI2 North Central Bancshares, Inc., Fort Dodge, IA $52,372,000 Preferred Stock w/ Warrants NewBridge Bancorp, 12/12/2008 Greensboro, NC $267,274,000 $10,000,000 $10,000,000 Preferred Stock w/ Exercised Warrants 12/11/2009 $2,000,000 $24,664,000 NCAL Bancorp, Los Angeles, 12/19/2008 CA2 National Penn Bancshares, 12/12/2008 Inc., Boyertown, PA4, b Nationwide Bankshares, Inc., West Point, NE4, 7, 8 2/27/2009 $67,000,000 $150,000,000 Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Warrants Nara Bancorp, Inc., Los Angeles, CAb National Bancshares, Inc., Bettendorf, IA2 11/21/2008 $4,000,000 $32,382,000 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Naples Bancorp, Inc., Naples, FL2 3/27/2009 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants MS Financial, Inc., Kingwood, TX2 9/25/2009 MutualFirst Financial, Inc., 12/23/2008 Muncie, IN $3,300,000 Preferred Stock w/ Exercised Warrants Mountain Valley Bancshares, Inc., Cleveland, GA2 1/23/2009 $6,216,000 Preferred Stock w/ Exercised Warrants Moscow Bancshares, Inc., Moscow, TN2 1/16/2009 $13,000,000 Preferred Stock w/ Exercised Warrants Morrill Bancshares, Inc., Merriam, KS2 $10,000,000,000 $4,734,000 $9,516,000 $14,700,000 $1,834,000 Monarch Community Bancorp, Preferred Stock w/ Inc., Coldwater, MI Warrants $5,500,000 $5,116,000 Investment Amount Preferred Stock w/ Exercised Warrants 1/9/2009 Preferred Stock Investment Description Mission Valley Bancorp, Sun 12/23/2008 Valley, CA3, 4, 30 - 8/20/2010 Institution Mission Community Bancorp, San Luis Obispo, CA3 Purchase Date CPP Transaction Detail, as oF 3/31/2011 6/17/2009 12/29/2010 3/16/2011 6/17/2009 12/23/2009 8/20/2010 Capital Repayment Date (continued) $1,576,000,000 $2,000,000 $150,000,000 $10,000,000,000 $14,700,000 $5,500,000 Capital Repayment Amount6 — — — — — — Remaining Capital Amount 8/26/2009 12/29/2010 8/12/2009 2/10/2010 Final Disposition Date R R R R — Note15 $87,000,000 $100,000 $950,000,000 $260,000 Final Disposition Proceeds $50.75 $1.48 $14.50 $16.55 $4.96 $13.21 $7.74 $9.62 $9.20 $27.32 $8.39 $1.54 Stock Price as of 3/31/2011 $12,287.34 $6.33 $50.83 $22.36 $77.65 $76.27 $1,171.44 $365.40 $64.27 $42,226.67 $50.05 $3.15 Market Capitalization as of 3/31/2011 (in millions) $4.42 $9.33 $15.43 $3.06 $8.14 $15.30 $9.64 $7.77 $3.90 Strike Price as of 3/31/2011a 584,084 67,958 99,157 2,567,255 184,275 735,294 521,266 625,135 260,962 ($2.94) $5.17 $1.12 $1.90 $5.07 ($7.56) ($0.02) $1.43 ($2.36) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $46,623,333 $418,323 $199,128 $459,687 $1,071,000 $1,748,837 $5,695,455 $30,589,566 $1,040,278 $323,754 $1,174,778 $176,190 $16,958,333 $2,307,492 $7,481,667 $356,067 $3,472,070 $477,009 $249,792 $698,284 $1,474,074 $318,055,555 $526,811 $996,941 $743,167 $262,919 $190,517 $456,042 $537,180 Interest/ Dividends Paid to Treasury Continued on next page. OUT IN IN IN IN OUT OUT IN OUT In or Out of the Moneye 246 Appendix D I Transaction Detail I april 28, 2011 $13,500,000 $38,263,000 Oak Ridge Financial Services, Preferred Stock w/ Inc., Oak Ridge, NC Warrants Oak Valley Bancorp, Oakdale, Preferred Stock w/ CA Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants OceanFirst Financial Corp., Toms River, NJ5, 9 Ojai Community Bank, Ojai, CA2 Old Line Bancshares, Inc., Bowie, MD4 2/13/2009 1/30/2009 12/5/2008 1/16/2009 1/30/2009 12/5/2008 $3,216,000 $6,100,000 $195,045,000 $16,200,000 $11,600,000 $4,120,000 Preferred Stock Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants OneUnited Bank, Boston, MA2, 3 Oregon Bancorp, Inc., Salem, OR2 OSB Financial Services, Inc., Orange, TX8 Common Stock w/ Pacific Capital Bancorp, Santa Barbara, CA29 - 9/24/2010, i Warrants 4/24/2009 5/1/2009 11/21/2008 Pacific Coast Bankers’ 12/23/2008 Bancshares, San Francisco, CA2 Preferred Stock w/ Pacific Coast National Bancorp, San Clemente, CA2, 19 Exercised Warrants 12/19/2008 Pacific City Financial Preferred Stock w/ 12/19/2008 Corporation, Los Angeles, CA2 Exercised Warrants Preferred Stock w/ Exercised Warrants OneFinancial Corporation, Little Rock, AR8, 10 6/5/2009 Pascack Bancorp, Inc. (Pascack Community Bank), Westwood, NJ2, 13 - 2/10/2010 2/6/2009 $3,756,000 $6,000,000 $6,771,000 $3,727,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Patapsco Bancorp, Inc., 12/19/2008 Dundalk, MD2 Pathfinder Bancorp, Inc., Oswego, NY Pathway Bancorp, Cairo, NE 9/11/2009 3/27/2009 $31,762,000 $16,288,000 $100,000,000 $23,200,000 $6,500,000 $4,060,000 $12,063,000 Preferred Stock w/ Exercised Warrants 2 Preferred Stock w/ Warrants Parkvale Financial Corporation, Monroeville, PA 1/30/2009 Park National Corporation, 12/23/2008 Newark, OH 12/23/2008 Preferred Stock w/ Warrants 3/6/2009 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Park Bancorporation, Inc., Madison, WI2 Parke Bancorp, Inc., Sewell, NJg Preferred Stock w/ Warrants Pacific International Bancorp, Seattle, WA 12/12/2008 Pacific Commerce Bank, 12/23/2008 Los Angeles, CA2 Preferred Stock w/ Exercised Warrants $17,300,000 Subordinated Debentures w/ Exercised Warrants 5/8/2009 1/16/2009 $5,500,000 Preferred Stock w/ Exercised Warrants One Georgia Bank, Atlanta, GA2 4/17/2009 $2,816,000 Preferred Stock w/ Exercised Warrants Omega Capital Corp., Lakewood, CO2 $73,000,000 Preferred Stock w/ Warrants Old Second Bancorp, Inc., Aurora, IL $100,000,000 $7,000,000 $2,080,000 $10,500,000 1/16/2009 Preferred Stock w/ Warrants $7,700,000 Preferred Stock w/ Exercised Warrants Northwest Commercial Bank, Lakewood, WA2 2/13/2009 Old National Bancorp, 12/12/2008 Evansville, IN4 $1,992,000 Preferred Stock w/ Exercised Warrants Northwest Bancorporation, Inc., Spokane, WA2 $10,000,000 Preferred Stock w/ Exercised Warrants Northway Financial, Inc., Berlin, NH2 1/30/2009 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 2/11/2010 3/31/2009 7/15/2009 12/30/2009 Capital Repayment Date (continued) — $100,000,000 $7,000,000 $38,263,000 Capital Repayment Amount6 — — — — Remaining Capital Amount 5/8/2009 9/2/2009 2/3/2010 Final Disposition Date R R R Note15 $1,200,000 $225,000 $430,797 Final Disposition Proceeds $10.15 $9.75 $9.17 $66.82 $29.64 $1.00 $10.72 $9.37 $13.95 $5.99 $4.60 Stock Price as of 3/31/2011 $25.22 $54.42 $40.73 $1,028.96 $975.22 $14.06 $1,015.55 $36.47 $262.86 $46.21 $8.26 Market Capitalization as of 3/31/2011 (in millions) $6.58 $12.66 $7.41 $65.97 $20.00 $13.43 $5.78 $7.05 Strike Price as of 3/31/2011a 154,354 376,327 329,757 227,376 15,120 815,339 350,346 163,830 $3.57 ($2.91) $1.76 $0.85 $9.64 ($12.43) $0.21 ($2.45) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $77,852 $483,374 $377,867 $414,558 $3,405,592 $1,662,733 $10,722,222 $2,455,043 $300,625 $387,223 $18,088 $1,355,718 $358,065 $2,107,397 $930,338 $316,983 $93,823 $2,378,993 — $50,311 $5,769,028 $1,513,889 $213,889 $203,103 $1,828,122 $1,481,250 $786,042 $217,803 $575,430 $1,112,708 Interest/ Dividends Paid to Treasury Continued on next page. IN OUT IN IN IN OUT IN OUT In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 247 $28,685,000 $6,000,000 $9,960,000 Peapack-Gladstone Financial Preferred Stock w/ Corporation, Gladstone, NJ4, g Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Peninsula Bank Holding Co., Palo Alto, CA Penn Liberty Financial Corp., Wayne, PA2 4/17/2009 1/9/2009 1/30/2009 4/17/2009 2/13/2009 $39,000,000 $3,900,000 $12,325,000 $95,000,000 $87,631,000 $2,500,000 $11,949,000 Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Warrants Peoples Bancorp Inc., Marietta, OH4 Peoples Bancorp of North Carolina, Inc., Newton, NC Peoples Bancorporation, Inc., Easley, SC2 Peoples Bancshares of TN, Inc, Madisonville, TN2 PeoplesSouth Bancshares, Inc., Colquitt, GA2 PFSB Bancorporation, Inc., Pigeon Falls, WI2, 10 PGB Holdings, Inc., Chicago, IL3, 4, 30 - 8/13/2010 Pierce County Bancorp, Tacoma, WA2, 25 Pinnacle Bank Holding Company, Inc., Orange City, FL2 Pinnacle Financial Partners, Inc., Nashville, TNb 1/30/2009 12/23/2008 4/24/2009 3/20/2009 3/6/2009 9/11/2009 2/6/2009 1/23/2009 3/6/2009 12/12/2008 Plains Capital Corporation, 12/19/2008 Dallas, TX2 $22,252,000 $6,349,000 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Subordinated Debentures w/ Exercised Warrants Plumas Bancorp, Quincy, CA Popular, Inc., San Juan, PR12 Porter Bancorp Inc., Louisville, KYg Prairie Star Bancshares, Inc., Olathe, KS2 Premier Bancorp, Inc., Wilmette, IL3, 4, 8, 30 - 8/13/2010 Premier Bank Holding Company, Tallahassee, FL2 Premier Financial Bancorp, Inc., Huntington, WV Premier Financial Corp, Dubuque, IA8 7/17/2009 1/30/2009 12/5/2008 11/21/2008 4/3/2009 5/8/2009 3/20/2009 10/2/2009 5/22/2009 $9,500,000 $6,784,000 $2,800,000 $35,000,000 $935,000,000 Trust Preferred Securities w/ Warrants Plato Holdings Inc., Saint Paul, MN8, 10 $4,389,000 $6,800,000 $3,000,000 $1,500,000 $12,660,000 $25,054,000 $18,000,000 Preferred Stock w/ Peoples Bancorp, Lynden, WA Exercised Warrants 2 $3,690,000 Preferred Stock w/ Exercised Warrants Patterson Bancshares, Inc, Patterson, LA2 $26,038,000 Preferred Stock w/ Exercised Warrants Patriot Bancshares, Inc., Houston, TX2 12/19/2008 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 8/13/2010 8/13/2010 2/2/2011 3/2/2011 1/6/2010 Capital Repayment Date (continued) Remaining Capital Amount $6,784,000 $3,000,000 — — $21,000,000 $18,000,000 $7,172,000 $14,341,000 $7,172,000 $21,513,000 Capital Repayment Amount6 Final Disposition Date — — Note15 Final Disposition Proceeds $7.10 $7.89 $2.92 $2.15 $16.54 $6.68 $12.02 $7.10 $13.26 Stock Price as of 3/31/2011 $56.35 $89.01 $2,987.48 $10.27 $562.21 $37.01 $126.73 $13.14 $116.99 Market Capitalization as of 3/31/2011 (in millions) $5.31 $15.88 $6.70 $7.54 $26.64 $10.52 $18.66 $11.02 $28.63 Strike Price as of 3/31/2011a 628,588 330,561 20,932,836 237,712 267,455 357,234 313,505 81,670 150,296 $1.79 ($7.99) ($3.78) ($5.39) ($10.10) ($3.84) ($6.64) ($3.92) ($15.37) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $522,263 $967,344 $467,413 $660,215 $132,253 $3,908,333 $89,734,028 $622,344 $327,020 $10,294,783 $10,331,250 $284,999 $207,948 $227,917 $116,207 $1,304,198 $404,435 $1,247,696 $2,686,346 $3,943,333 $1,967,450 $992,154 $633,943 $2,631,411 $166,508 $2,704,136 Interest/ Dividends Paid to Treasury Continued on next page. IN OUT OUT OUT OUT OUT OUT OUT OUT In or Out of the Moneye 248 Appendix D I Transaction Detail I april 28, 2011 $41,400,000 $10,800,000 Preferred Stock w/ Warrants PremierWest Bancorp, Medford, ORg, j 2/13/2009 Presidio Bank, San Francisco, Preferred Stock w/ 11/20/2009 Exercised Warrants CA2, 10 $32,538,000 $38,237,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Providence Bank, Rocky Mount, NC2, 10 Provident Community Bancshares, Inc., Rock Hill, SC PSB Financial Corporation, Many, LA2, 4, 7, 30 - 9/29/2010, 30a Puget Sound Bank, Bellevue, WA2 Pulaski Financial Corp, Creve Coeur, MO QCR Holdings, Inc., Moline, IL 1/30/2009 10/2/2009 3/13/2009 2/27/2009 1/16/2009 1/16/2009 2/13/2009 $1,500,000 $3,500,000,000 $40,000,000 $10,900,000 $5,983,000 $15,000,000 $1,100,000 $25,000,000 $30,407,000 $108,676,000 Regions Financial Corporation, Preferred Stock w/ Birmingham, AL Warrants Preferred Stock w/ Exercised Warrants Ridgestone Financial Services, Preferred Stock w/ Inc., Brookfield, WI2 Exercised Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Reliance Bancshares, Inc., Frontenac, MO2 Rising Sun Bancorp, Rising Sun, MD2 River Valley Bancorporation, Inc., Wausau, WI8 Riverside Bancshares, Inc., Little Rock, AR8 Rogers Bancshares, Inc., Little Rock, AR2 Royal Bancshares of Pennsylvania, Inc., Narberth, PA S&T Bancorp, Indiana, PA 2/13/2009 2/27/2009 1/9/2009 6/12/2009 5/15/2009 1/30/2009 2/20/2009 1/16/2009 $12,700,000 $2,655,000 11/14/2008 2/27/2009 $9,982,000 2/13/2009 Preferred Stock w/ Exercised Warrants Regent Capital Corporation, Nowata, OK2 3/6/2009 $2,995,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Regent Bancorp, Inc., Davie, FL2 1/9/2009 $3,800,000 Regional Bankshares, Inc., Hartsville, SC2 Preferred Stock w/ Exercised Warrants Redwood Financial Inc., Redwood Falls, MN2 1/16/2009 $8,900,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Redwood Capital Bancorp, Eureka, CA2 6/19/2009 $6,229,000 $9,266,000 $4,000,000 $243,815,000 $3,262,000 Regents Bancshares, Inc., 10/23/2009 Vancouver, WA2, 10 Preferred Stock w/ Exercised Warrants RCB Financial Corporation, Rome, GA2, 10 Preferred Stock w/ Exercised Warrants $4,500,000 Preferred Stock w/ Warrants PrivateBancorp, Inc., Chicago, ILb 12/29/2009 Randolph Bank & Trust 10/30/2009 Company, Asheboro, NC2 $9,270,000 Preferred Stock Private Bancorporation, Inc., Minneapolis, MN2, 10a, c 2/27/2009 $4,960,000 Preferred Stock w/ Exercised Warrants Private Bancorporation, Inc., Minneapolis, MN2, c 1/23/2009 $25,083,000 Preferred Stock w/ Warrants Princeton National Bancorp, Inc., Princeton, IL $4,000,000 Preferred Stock w/ Exercised Warrants Premier Service Bank, Riverside, CA2 2/20/2009 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 9/29/2010 Capital Repayment Date (continued) $9,270,000 Capital Repayment Amount6 — Remaining Capital Amount 9/29/2010 Final Disposition Date R Note15 $464,000 Final Disposition Proceeds $21.57 $1.80 $7.26 $8.40 $7.50 $0.75 $15.29 $5.39 $2.19 Stock Price as of 3/31/2011 $603.68 $21.84 $9,132.47 $39.53 $82.19 $1.34 $1,091.06 $17.93 $21.98 Market Capitalization as of 3/31/2011 (in millions) $31.53 $4.13 $10.88 $10.99 $6.27 $7.77 $28.35 $24.27 $56.95 Strike Price as of 3/31/2011a 517,012 1,104,370 48,253,677 521,888 778,421 178,880 645,013 155,025 109,039 ($9.96) ($2.33) ($3.62) ($2.59) $1.23 ($7.02) ($13.06) ($18.88) ($54.76) Amount “In the Current Outstanding Money” or “Out of the Money”e Warrantsa $11,305,323 $358,971 $738,021 $161,508 $2,107,988 $195,637 $277,224 $3,827,111 $394,236,111 $163,955 $877,513 $284,616 $784,282 $342,826 $430,883 $776,654 $438,443 $3,834,322 $3,384,856 $510,257 $802,802 $543,091 $295,458 $24,889,448 $607,215 $2,271,405 — $1,046,500 $54,500 Interest/ Dividends Paid to Treasury Continued on next page. OUT OUT OUT OUT IN OUT OUT OUT OUT In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 249 $83,094,000 $2,900,000 Preferred Stock w/ Warrants Preferred Stock w/ Warrants Salisbury Bancorp, Inc., Lakeville, CT Sandy Spring Bancorp, Inc., Olney, MD4 Santa Clara Valley Bank, N.A., Preferred Stock w/ Santa Paula, CA2 Exercised Warrants 3/13/2009 12/5/2008 2/13/2009 30 - 9/29/2010, 30a Preferred Stock w/ Exercised Warrants $10,750,000 $23,393,000 $25,000,000 $1,700,000 Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Security State Bank HoldingCompany, Jamestown, ND8 Severn Bancorp, Inc., Annapolis, MD Shore Bancshares, Inc., Easton, MD4 Signature Bancshares, Inc., Dallas, TX4, 7, 8 Signature Bank, New York, NY4 Somerset Hills Bancorp, Bernardsville, NJ4 Sonoma Valley Bancorp, Sonoma, CA2, 25 Sound Banking Company, Morehead City, NC2 2/20/2009 5/1/2009 11/21/2008 1/9/2009 6/26/2009 12/12/2008 1/16/2009 2/20/2009 1/9/2009 $42,750,000 $17,299,000 Southern Community Financial Preferred Stock w/ Corp., Winston-Salem, NC Warrants Preferred Stock w/ Warrants 1/16/2009 12/5/2008 2/27/2009 Southern First Bancshares, Inc., Greenville, SCg Preferred Stock Southern Bancorp, Inc., Arkadelphia, AR3, 4, 30 - 8/6/2010 7/17/2009 $11,000,000 $12,900,000 Preferred Stock w/ Exercised Warrants $347,000,000 Preferred Stock w/ Warrants South Financial Group, Inc., Greenville, SC26 - 9/30/2010 SouthCrest Financial Group, Inc., Fayetteville, GA2 12/5/2008 $3,070,000 $8,653,000 $7,414,000 $120,000,000 $12,500,000 Preferred Stock w/ Exercised Warrants $18,000,000 $17,388,000 Security State Bancshares, Inc., Charleston, MO2 Security Federal Corporation, Preferred Stock w/ 12/19/2008 Warrants Aiken, SC4, 30 - 9/29/2010 6/26/2009 $6,815,000 1/9/2009 Security Capital Corporation, Batesville, MS2, 4, 7, 10, $5,803,000 Preferred Stock w/ Exercised Warrants Security California Bancorp, Riverside, CA2 2/13/2009 1/9/2009 $1,800,000 Preferred Stock w/ Exercised Warrants Seacoast Commerce Bank, Chula Vista, CA2 12/23/2008 $2,152,000 $50,000,000 Seacoast Banking Corporation Preferred Stock w/ of Florida, Stuart, FLb Warrants 12/19/2008 Preferred Stock w/ Exercised Warrants $64,779,000 Preferred Stock w/ Warrants SCBT Financial Corporation, Columbia, SC4 1/16/2009 Security Business Bancorp, San Diego, CA2 $4,000,000 SBT Bancorp, Inc., Simsbury, Preferred Stock w/ CT2 Exercised Warrants 3/27/2009 Security Bancshares of Pulaski Preferred Stock w/ County, Inc., Waynesville, MO2 Exercised Warrants $4,000,000 Preferred Stock w/ Warrants Santa Lucia Bancorp, 12/19/2008 Atascadero, CAg $1,549,000 Preferred Stock w/ Exercised Warrants Saigon National Bank, Westminster, CA2 12/23/2008 $8,816,000 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 8/6/2010 9/30/2010 5/20/2009 3/31/2009 12/15/2010 4/15/2009 9/29/2010 9/29/2010 5/20/2009 12/15/2010 7/21/2010 Capital Repayment Date (continued) Remaining Capital Amount $11,000,000 $130,179,219 $7,414,000 $120,000,000 $1,700,000 $25,000,000 $18,000,000 $17,388,000 $64,779,000 $41,547,000 — — — — — — — — — — $41,547,000 $41,547,000 Capital Repayment Amount6 9/30/2010 6/24/2009 3/10/2010 12/15/2010 9/29/2010 6/24/2009 2/23/2011 Final Disposition Date — R R A R R R R Note15 $400,000 $275,000 $11,320,751 $85,000 $522,000 $1,400,000 $4,450,000 Final Disposition Proceeds $7.99 $1.46 $8.80 $56.40 $9.75 $4.45 $10.92 $1.58 $33.28 $0.80 $18.46 $26.82 Stock Price as of 3/31/2011 $27.63 $24.58 $47.73 $2,289.45 $82.32 $44.80 $32.15 $147.74 $464.56 $1.60 $447.29 $45.27 Market Capitalization as of 3/31/2011 (in millions) $7.85 $3.95 $21.68 $6.30 $19.57 $6.36 $15.75 $19.13 $22.93 Strike Price as of 3/31/2011a 363,609 1,623,418 172,970 556,976 137,966 589,623 38,107 651,547 57,671 $0.14 ($2.49) ($11.93) ($1.85) ($8.65) ($4.78) ($14.95) ($0.67) $3.89 Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $1,701,069 $4,156,250 $855,556 $933,494 $16,386,111 $351,456 $347,164 $127,686 $1,816,667 $209,588 $333,333 $2,612,219 $1,414,005 $1,353,038 $1,600,000 $1,153,111 $780,025 $664,126 $235,292 $210,370 $388,889 $1,115,639 $410,567 $331,111 $158,928 $7,593,868 $847,316 — Interest/ Dividends Paid to Treasury Continued on next page. IN OUT OUT OUT OUT OUT OUT OUT IN In or Out of the Moneye 250 Appendix D I Transaction Detail I april 28, 2011 Preferred Stock w/ Exercised Warrants Spirit BankCorp, Inc., Bristow, Preferred Stock w/ OK2 Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Sovereign Bancshares, Inc., Dallas, TX2 St. Johns Bancshares, Inc., St. Louis, MO2 Standard Bancshares, Inc., Hickory Hills, IL2 State Bancorp, Inc., Jericho, NY State Bankshares, Inc., Fargo, ND2, 4 12/5/2008 3/13/2009 3/27/2009 3/13/2009 4/24/2009 12/5/2008 1/16/2009 $9,550,000 $10,973,000 $15,000,000 $8,500,000 $89,310,000 $3,500,000,000 $1,350,000,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Subordinated Debentures w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Warrants Stockmens Financial Corporation, Rapid City, SD2, 4, 7 Stonebridge Financial Corp., West Chester, PA2 Suburban Illinois Bancorp, Inc., Elmhurst, IL8 1/30/2009 2/6/2009 1/23/2009 6/19/2009 Summit State Bank, Santa 12/19/2008 Rosa, CA SunTrust Banks, Inc., Atlanta, Preferred Stock w/ 11/14/2008 GA4, c Warrants SunTrust Banks, Inc., Atlanta, Preferred Stock w/ 12/31/2008 GA4, c Warrants Trust Preferred Securities w/ Warrants Preferred Stock w/ Exercised Warrants Superior Bancorp Inc., Birmingham, AL17 Surrey Bancorp, Mount Airy, NC2, 4, 7 12/5/2008 1/9/2009 1/9/2009 $15,568,000 Preferred Stock w/ Warrants Stewardship Financial Corporation, Midland Park, NJg Sun Bancorp, Inc., Vineland, NJ4 $303,000,000 Sterling Financial Corporation, Common Stock w/ Spokane, WA24, i Warrants 12/5/2008 $2,000,000 $69,000,000 $10,000,000 $125,198,000 Preferred Stock w/ Warrants Sterling Bancshares, Inc., Houston, TX4 $42,000,000 $30,000,000 12/12/2008 Preferred Stock w/ Warrants Sterling Bancorp, New York, 12/23/2008 NY $11,019,000 Steele Street Bank Corporation, Denver, CO8, 10 9/25/2009 Preferred Stock w/ Warrants $24,900,000 Subordinated Debentures w/ Exercised Warrants Stearns Financial Services, Inc., St. Cloud, MN8 6/26/2009 StellarOne Corporation, 12/19/2008 Charlottesville, VA $2,000,000,000 Subordinated Debentures w/ Exercised Warrants $15,000,000 $50,000,000 $36,842,000 $60,000,000 $3,000,000 $2,760,000 Preferred Stock w/ Warrants State Street Corporation, 10/28/2008 Boston, MA5, 9 30 - 9/29/2010, 30a Preferred Stock w/ Exercised Warrants $30,000,000 Preferred Stock w/ Warrants Southwest Bancorp, Inc., Stillwater, OK 6/12/2009 2/13/2009 $18,215,000 Preferred Stock w/ Exercised Warrants SouthFirst Bancshares, Inc., Sylacauga, AL2 12/5/2008 State Capital Corporation, Greenwood, MS2, 4, 7, $70,000,000 Preferred Stock w/ Warrants Southern Missouri Bancorp, Inc., Poplar Bluff, MO $5,000,000 Preferred Stock w/ Exercised Warrants Southern Illinois Bancorp, Inc., Carmi, IL2 1/23/2009 $4,862,000 Investment Amount Preferred Stock w/ Exercised Warrants Investment Description Southern Heritage Bancshares, Inc., Cleveland, TN2 Institution 5/15/2009 Purchase Date CPP Transaction Detail, as oF 3/31/2011 12/29/2010 3/30/2011 3/30/2011 4/8/2009 3/16/2011 1/14/2011 5/5/2009 6/17/2009 9/29/2010 8/12/2009 Capital Repayment Date (continued) Remaining Capital Amount — — — $2,000,000 $1,350,000,000 $3,500,000,000 $89,310,000 $11,568,000 — — — — — $4,000,000 $11,568,000 $125,198,000 $2,000,000,000 $15,000,000 $12,500,000 $37,500,000 Capital Repayment Amount6 12/29/2010 5/27/2009 3/16/2011 6/9/2010 7/8/2009 9/29/2010 Final Disposition Date R R R A R R Note15 $100,000 $2,100,000 $778,000 $3,007,891 $60,000,000 $750,000 Final Disposition Proceeds $0.35 $28.84 $3.48 $6.98 $5.94 $16.75 $8.61 $10.01 $14.15 $44.94 $10.39 $14.19 $22.32 Stock Price as of 3/31/2011 $4.40 $15,449.30 $262.36 $33.12 $34.75 $1,037.13 $878.67 $308.97 $325.01 $22,568.42 $175.35 $275.83 $46.83 Market Capitalization as of 3/31/2011 (in millions) $5.38 $33.70 $44.15 $5.33 $11.24 $13.20 $12.19 $14.87 $11.87 $14.92 $12.53 Strike Price as of 3/31/2011a 1,923,792 6,008,902 11,891,280 239,212 133,475 97,541 516,817 302,623 465,569 703,753 114,326 ($5.03) ($4.86) ($15.31) $1.65 ($5.30) $3.55 ($2.18) ($0.72) ($1.48) ($0.73) $9.79 Amount “In the Current Outstanding Money” or “Out of the Money”e Warrantsa $214,972 $4,983,333 $567,986,111 $1,103,971 $916,111 $2,083,520 $634,609 $1,755,554 $1,020,833 $6,733,333 $2,486,571 $4,503,333 $3,233,333 $1,241,863 $3,418,016 $63,611,111 $1,330,709 $4,726,806 $4,042,386 $5,913,250 $314,283 $2,261,750 $1,908,267 $7,680,556 $251,954 $1,047,847 $561,653 $463,698 Interest/ Dividends Paid to Treasury Continued on next page. OUT OUT OUT IN OUT IN OUT OUT OUT OUT IN In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 251 $8,000,000 Preferred Stock w/ Exercised Warrants Syringa Bancorp, Boise, ID2 1/16/2009 TCB Holding Company, Texas Preferred Stock w/ Community Bank, Exercised Warrants The Woodlands, TX2 TCF Financial Corporation, Wayzata, MN4 1/16/2009 11/14/2008 $20,749,000 $5,000,000 $301,000 $15,000,000 $7,500,000 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants The First Bancshares, Inc., Hattiesburg, MS4, 30 - 9/29/2010 The Freeport State Bank, Harper, KS2 The Goldman Sachs Group, Inc., New York, NY4 The Landrum Company, Columbia, MO2 The Little Bank, Incorporated, Preferred Stock w/ Kinston, NC2 Exercised Warrants 1/9/2009 2/6/2009 2/6/2009 10/28/2008 5/22/2009 12/23/2008 $10,000,000,000 $25,000,000 Preferred Stock w/ Warrants The First Bancorp, Inc., Damariscotta, ME $9,090,000 Preferred Stock w/ Warrants The Elmira Savings Bank, FSB, Elmira, NY 12/19/2008 The Connecticut Bank and 12/19/2008 Trust Company, Hartford, CT 1/16/2009 $5,448,000 $3,000,000,000 The Baraboo Bancorporation, Preferred Stock w/ Baraboo, WI2 Exercised Warrants Preferred Stock w/ Warrants $34,000,000 Preferred Stock w/ Warrants The Bank of New York Mellon 10/28/2008 Corporation, New York, NY4 Preferred Stock w/ Warrants 2/13/2009 $4,021,000 The Bank of Kentucky Financial Corporation, Crestview Hills, KY4 2/6/2009 $45,220,000 Preferred Stock w/ Exercised Warrants The Bank of Currituck, Moyock, NC2, 34 Preferred Stock w/ Warrants $20,000,000 8/7/2009 The Bancorp, Inc., 12/12/2008 Wilmington, DE5, 9 $3,981,000 The ANB Corporation, Terrell, TX2 1/9/2009 Preferred Stock w/ Exercised Warrants $75,000,000 Texas Capital Bancshares, Inc., Preferred Stock w/ Dallas, TX4 Warrants Texas National Bancorporation, Preferred Stock w/ Jacksonville, TX2, 4, 7 Exercised Warrants $3,000,000 1/16/2009 $30,000,000 Tennessee Valley Financial Preferred Stock w/ Holdings, Inc., Oak Ridge, TN2 Exercised Warrants $2,000,000 12/23/2008 Tennessee Commerce 12/19/2008 Bancorp, Inc., Franklin, TN Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants TCNB Financial Corp., 12/23/2008 Dayton, OH2 $361,172,000 $11,730,000 TCB Corporation, Greenwood, SC8, 10 8/28/2009 Preferred Stock w/ Warrants $9,720,000 Subordinated Debentures w/ Exercised Warrants $104,823,000 $967,870,000 Preferred Stock w/ Warrants Synovus Financial Corp., Columbus, GA 12/19/2008 Preferred Stock w/ Warrants $13,644,000 Sword Financial Corporation, Horicon, WI8 5/8/2009 Taylor Capital Group, 11/21/2008 Rosemont, IL $235,000,000 Subordinated Debentures w/ Exercised Warrants $4,000,000 Preferred Stock w/ Warrants Preferred Stock w/ Exercised Warrants SV Financial, Inc., Sterling, IL2 4/10/2009 SVB Financial Group, Santa 12/12/2008 Clara, CA5, 9 $300,000,000 Preferred Stock w/ Warrants Susquehanna Bancshares, Inc, Lititz, PA4 12/12/2008 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 6/17/2009 9/29/2010 6/17/2009 12/22/2010 12/3/2010 3/10/2010 5/19/2010 5/13/2009 4/22/2009 12/23/2009 12/22/2010 4/21/2010 Capital Repayment Date (continued) Remaining Capital Amount — — — — — — — $10,000,000,000 $5,000,000 $3,000,000,000 — — — $17,000,000 $17,000,000 $1,742,850 $45,220,000 $3,981,000 $75,000,000 $361,172,000 $235,000,000 $100,000,000 $200,000,000 $100,000,000 Capital Repayment Amount6 7/22/2009 8/5/2009 9/8/2010 5/19/2010 3/11/2010 12/15/2009 6/16/2010 1/19/2011 Final Disposition Date R R - R R A A R R Note15 $1,100,000,000 $136,000,000 $4,753,985 $199,000 $6,709,061 $9,599,964 $6,820,000 $5,269,179 Final Disposition Proceeds $158.60 $8.60 $15.25 $17.25 $7.25 $29.87 $20.50 $9.23 $25.99 $4.90 $15.86 $10.51 $2.40 $56.93 $9.35 Stock Price as of 3/31/2011 $82,552.46 $26.37 $149.24 $33.12 $25.86 $37,096.63 $152.36 $306.40 $964.66 $59.75 $2,490.26 $188.18 $1,884.66 $2,420.15 $1,215.25 Market Capitalization as of 3/31/2011 (in millions) $13.71 $16.60 $11.70 $4.65 $18.56 $9.75 $10.75 $9.36 $14.86 Strike Price as of 3/31/2011a 54,705 225,904 116,538 175,742 274,784 461,538 1,462,647 15,510,737 3,028,264 ($5.11) ($1.35) $5.55 $2.60 $1.94 ($4.85) ($0.24) ($6.96) ($5.51) Amount “In the Current Outstanding Money” or “Out of the Money”e Warrantsa $876,542 $1,414,729 $318,055,555 $8,610 $411,806 $2,625,000 $979,700 $408,600 $2,352,652 $95,416,667 $3,284,305 $169,834 $2,813,689 $1,659,222 $295,308 $1,218,750 $146,242 $3,233,333 $233,744 $7,925,719 $690,832 $1,154,622 $11,705,236 $253,122 $104,314,878 $2,025,490 $12,109,028 $402,694 $23,722,222 Interest/ Dividends Paid to Treasury Continued on next page. OUT OUT IN IN IN OUT OUT OUT OUT In or Out of the Moneye 252 Appendix D I Transaction Detail I april 28, 2011 $541,000 $5,677,000 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants The Victory Bancorp, Inc., Limerick, PA2, 10a, c The Victory Bancorp, Inc. (The Victory Bank), Limerick, PA2, 13 - 12/4/2009, c Three Shores Bancorporation, Preferred Stock w/ Inc. (Seaside National Bank & Exercised Warrants Trust), Orlando, FL2, 13 - 12/4/2009 Preferred Stock w/ Warrants The State Bank of Bartley, Bartley, NE8, 10 TIB Financial Corp, Naples, FL32 - 9/30/2010 9/4/2009 12/11/2009 2/27/2009 1/23/2009 12/5/2008 Tidelands Bancshares, Inc, 12/19/2008 Mt. Pleasant, SC $4,000,000 $76,458,000 Preferred Stock w/ Warrants 2/6/2009 Preferred Stock w/ Exercised Warrants 2/27/2009 Preferred Stock w/ Warrants $298,737,000 $8,950,000 UCBH Holdings, Inc., San 11/14/2008 Francisco, CA14 1/30/2009 $50,236,000 Preferred Stock w/ Exercised Warrants UBT Bancshares, Inc., Marysville, KS2 Preferred Stock w/ Exercised Warrants U.S. Bancorp, Minneapolis, 11/14/2008 MN4 U.S. Century Bank, Miami, FL $6,599,000,000 Preferred Stock w/ Warrants 5/29/2009 8/7/2009 $12,000,000 Preferred Stock w/ Exercised Warrants Two Rivers Financial Group, Burlington, IA2 $215,000,000 Preferred Stock w/ Warrants Trustmark corporation, Jackson, MS4 $4,237,000 $2,795,000 11/21/2008 TriSummit Bank, 12/22/2009 Kingsport, TN2, 10a, g, c 2 TriState Capital Holdings, Inc., Preferred Stock w/ Pittsburgh, PA2 Exercised Warrants 4/3/2009 Preferred Stock $2,765,000 Preferred Stock Tri-State Bank of Memphis, Memphis, TN2, 3, 4, 30 - 8/13/2010 3/27/2009 4/3/2009 $23,000,000 Preferred Stock w/ Exercised Warrants Trinity Capital Corporation, Los Alamos, NM2 TriSummit Bank, Kingsport, TN2, c $15,540,000 Preferred Stock w/ Exercised Warrants $35,539,000 $3,700,000 Preferred Stock w/ Exercised Warrants Triad Bancorp, Inc., Frontenac, MO2 3/27/2009 Tri-County Financial 12/19/2008 Corporation, Waldorf, MD2 Warrants Treaty Oak Bancorp, Inc., Austin, TX2, 36 1/16/2009 $3,268,000 $2,117,000 Preferred Stock w/ Exercised Warrants Todd Bancshares, Inc., Hopkinsville, KY2 4/3/2009 12/12/2008 TowneBank, Portsmouth, VA $16,641,000 Preferred Stock w/ Exercised Warrants Titonka Bancshares, Inc, Titonka, IA2 $3,800,000 $14,448,000 $37,000,000 Preferred Stock w/ Warrants 4/17/2009 Timberland Bancorp, Inc., 12/23/2008 Hoquiam, WA $1,697,000 Subordinated Debentures w/ Exercised Warrants 1/9/2009 Preferred Stock w/ Exercised Warrants $12,000,000 The Queensborough Company, Preferred Stock w/ Exercised Warrants Louisville, GA2 2/20/2009 Tifton Banking Company, Tifton, GA2, 25a $5,450,000 The Private Bank of California, Preferred Stock w/ Los Angeles, CA2 Exercised Warrants $1,505,000 $7,579,200,000 Preferred Stock w/ Warrants The PNC Financial Services Group Inc., Pittsburgh, PA4 12/31/2008 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 6/17/2009 12/9/2009 8/13/2010 2/15/2011 9/30/2010 2/10/2010 Capital Repayment Date (continued) $6,599,000,000 $215,000,000 $2,795,000 $500,000 $12,119,637 $7,579,200,000 Capital Repayment Amount6 — — — — — — Remaining Capital Amount 7/15/2009 12/30/2009 9/30/2010 4/29/2010 Final Disposition Date R R — R A Note15 $139,000,000 $10,000,000 $40,000 $324,195,686 Final Disposition Proceeds $0.01 $26.43 $23.42 $0.20 $15.66 $5.61 $0.69 $19.36 $62.99 Stock Price as of 3/31/2011 $1.21 $50,888.80 $1,497.19 $0.60 $437.90 $39.52 $2.95 $228.79 $33,101.75 Market Capitalization as of 3/31/2011 (in millions) $5.71 $0.21 $21.31 $6.73 $3.79 Strike Price as of 3/31/2011a 7,847,732 3,098,341 538,184 370,899 571,821 ($5.70) ($0.01) ($5.65) ($1.12) ($3.10) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $7,509,920 $996,334 $745,312 $195,220,417 $1,119,067 $11,287,500 $524,290 $2,469,393 $190,215 $2,195,131 $1,825,605 $379,775 $192,415 $8,314,808 $441,450 $215,395 $952,236 $223,208 $1,195,973 $1,284,722 $637,729 $150,210 $199,292 $882,900 $590,014 $421,066,667 Interest/ Dividends Paid to Treasury Continued on next page. OUT OUT OUT OUT OUT In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 253 $3,194,000 $2,997,000 $2,179,000 $59,000,000 $33,900,000 Union Bank & Trust Company, Preferred Stock w/ Oxford, NC2, c Exercised Warrants Union Bank & Trust Company, Preferred Stock Oxford, NC2, 10a, c Preferred Stock w/ Exercised Warrants Union First Market Bankshares Corporation (Union Bankshares Preferred Stock w/ Corporation), Bowling Green, Warrants VA5, 9, 18 Union First Market Bankshares Corporation Preferred Stock (First Market Bank, FSB), Bowling Green, VA18 Preferred Stock w/ Exercised Warrants Preferred Stock w/ Warrants Union Financial Corporation, Albuquerque, NM2, 10 United American Bank, San Mateo, CA2 United Bancorp, Inc., Tecumseh, MI 5/1/2009 12/18/2009 12/29/2009 12/19/2008 2/6/2009 2/20/2009 1/16/2009 $20,649,000 $9,900,000 Preferred Stock w/ Unity Bancorp, Inc., Clinton, NJ Warrants Universal Bancorp, Bloomfield, Preferred Stock w/ IN2 Exercised Warrants University Financial Corp, Inc., Subordinated St. Paul, MN3, 4, 8, 30 - 7/30/2010 Debentures 1/16/2009 12/5/2008 5/22/2009 6/19/2009 6/12/2009 Virginia Company Bank, Newport News, VA2, 10 $71,000,000 $4,700,000 5/1/2009 Preferred Stock w/ Exercised Warrants $14,738,000 Village Bank and Trust Financial Preferred Stock w/ Corp, Midlothian, VA Warrants 6/26/2009 Preferred Stock w/ Warrants $3,000,000 Veritex Holdings, Inc. Preferred Stock w/ (Fidelity Resources Company), Exercised Warrants Dallas, TX2, 40 - 3/23/2011 Virginia Commerce Bancorp, 12/12/2008 Arlington, VA $300,000,000 Preferred Stock w/ Warrants Valley National Bancorp, Wayne, NJ4 $1,300,000 $16,019,000 11/14/2008 Preferred Stock w/ Exercised Warrants Valley Financial Group, Ltd., 12/18/2009 1st State Bank, Saginaw, MI2 1/9/2009 $5,500,000 Preferred Stock w/ Exercised Warrants Valley Community Bank, Pleasanton, CA2 1/30/2009 Preferred Stock w/ Warrants $7,700,000 Preferred Stock w/ Exercised Warrants Valley Financial Corporation, 12/12/2008 Roanoke, VA $10,000,000 Preferred Stock w/ Exercised Warrants Uwharrie Capital Corp, Albemarle, NC2 Valley Commerce Bancorp, Visalia, CA2 $2,861,000 12/23/2008 Preferred Stock w/ Exercised Warrants $5,658,000 Preferred Stock w/ United Financial Banking Companies, Inc., Vienna, VA2, 4 Exercised Warrants 12/5/2008 US Metro Bank, Garden Grove, CA2 $180,000,000 United Community Banks, Inc., Preferred Stock w/ Warrants Blairsville, GAf 2/6/2009 $14,400,000 Subordinated Debentures w/ Exercised Warrants United Bank Corporation, Barnesville, GA8 5/22/2009 $11,926,000 $10,300,000 Preferred Stock w/ Warrants United Bancorporation of 12/23/2008 Alabama, Inc., Atmore, AL 4, 30 - 9/3/2010, g $20,600,000 $8,700,000 $214,181,000 Preferred Stock w/ Warrants Umpqua Holdings Corp., Portland, OR5, 9 11/14/2008 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 12/23/2009 9/23/2009 6/3/2009 7/30/2010 12/15/2010 9/3/2010 11/18/2009 2/17/2010 Capital Repayment Date (continued) — $2,658,000 — — — Remaining Capital Amount $100,000,000 — $125,000,000 $100,000,000 $75,000,000 $225,000,000 $11,926,000 $3,000,000 $10,300,000 $59,000,000 $214,181,000 Capital Repayment Amount6 5/18/2010 12/23/2009 3/31/2010 Final Disposition Date A — R R Note15 $5,571,592 $450,000 $4,500,000 Final Disposition Proceeds $5.74 $2.95 $13.96 $4.87 $6.95 $2.33 $5.00 $3.75 $11.25 $11.44 Stock Price as of 3/31/2011 $166.97 $12.50 $2,255.78 $22.87 $50.19 $203.01 $11.63 $47.50 $292.65 $1,310.82 Market Capitalization as of 3/31/2011 (in millions) $3.95 $4.43 $6.97 $4.05 $12.28 $14.27 $9.92 Strike Price as of 3/31/2011a 2,696,203 499,029 344,742 764,778 1,099,542 108,264 311,492 $1.79 ($1.48) ($2.10) $2.90 ($9.95) ($9.27) ($6.17) Amount “In the Current Outstanding Money” or “Out of the Money”e Warrantsa $415,182 $7,721,250 $1,318,232 $284,762 $12,979,167 $82,068 $941,117 $629,476 $856,786 $1,168,722 $315,738 $1,022,886 $933,721 $2,265,655 $616,581 $17,500,000 $2,090,791 $872,639 $2,142,972 — $4,615,373 $1,821,889 $129,469 $485,022 $13,475,555 Interest/ Dividends Paid to Treasury Continued on next page. IN OUT OUT IN OUT OUT OUT In or Out of the Moneye 254 Appendix D I Transaction Detail I april 28, 2011 $25,000,000 $110,000,000 $12,000,000 $22,000,000 $26,380,000 Preferred Stock w/ Exercised Warrants Wachusett Financial Services, Preferred Stock w/ 12/11/2009 Inc., Clinton, MA2, 10 Exercised Warrants Preferred Stock w/ Warrants Wainwright Bank & Trust 12/19/2008 Company, Boston, MA4 Washington Banking Company, Preferred Stock w/ Oak Harbor, WA4, 9, b, n Warrants $36,000,000 $83,726,000 Westamerica Bancorporation, Preferred Stock w/ San Rafael, CA4 Warrants 2/13/2009 $250,000,000 Wintrust Financial Corporation, Preferred Stock w/ 12/19/2008 Warrants Lake Forest, IL4 12/12/2008 $62,158,000 $330,000,000 Wilmington Trust Corporation, Preferred Stock w/ 12/12/2008 Wilmington, DE Warrants Preferred Stock w/ Warrants $300,000,000 Preferred Stock w/ Warrants Whitney Holding Corporation, New Orleans, LA 12/19/2008 Wilshire Bancorp, Inc., Los Angeles, CA $4,700,000 $16,800,000 Preferred Stock w/ Exercised Warrants White River Bancshares Company, Fayetteville, AR2 2/20/2009 $4,567,000 $6,855,000 Western Reserve Bancorp, Inc, Preferred Stock w/ Medina, OH2 Exercised Warrants Preferred Stock Preferred Stock w/ Exercised Warrants $7,290,000 5/15/2009 Western Illinois Bancshares 12/29/2009 Inc., Monmouth, IL2, 10a, c Western Illinois Bancshares Inc., Monmouth, IL2, c Preferred Stock w/ Exercised Warrants Western Community 12/23/2008 Bancshares, Inc., Palm Desert, CA2 12/23/2008 Preferred Stock w/ Warrants Western Alliance 11/21/2008 Bancorporation, Las Vegas, NVb $140,000,000 $75,000,000 Preferred Stock w/ Warrants West Bancorporation, Inc., West Des Moines, IA 12/5/2008 4 12/31/2008 Wells Fargo & Company, San Francisco, CA4 $25,000,000,000 10/28/2008 Preferred Stock w/ WesBanco, Inc., Wheeling, WV Warrants $400,000,000 Webster Financial Corporation, Preferred Stock w/ Warrants Waterbury, CT4 11/21/2008 Preferred Stock w/ Warrants $5,625,000 Preferred Stock w/ Exercised Warrants Waukesha Bankshares, Inc., Waukesha, WI2, 10 6/26/2009 $6,633,000 Preferred Stock w/ Exercised Warrants $6,842,000 $200,000,000 1/30/2009 Preferred Stock WashingtonFirst Bankshares, 10/30/2009 Inc., Reston, VA2, 10a, c WashingtonFirst Bankshares, Inc. (WashingtonFirst Bank), Reston, VA2, 13 - 10/30/2009, c Preferred Stock w/ Warrants Washington Federal, Inc., 11/14/2008 Seattle, WA4 1/16/2009 1/30/2009 W.T.B. Financial Corporation, Spokane, WA2 Preferred Stock w/ Warrants VIST Financial Corp., 12/19/2008 Wyomissing, PAh $1,500,000 Preferred Stock w/ Exercised Warrants Vision Bank - Texas, Richardson, TX2 4/24/2009 Investment Amount Investment Description Institution Purchase Date CPP Transaction Detail, as oF 3/31/2011 — — — Remaining Capital Amount 12/22/2010 11/18/2009 9/2/2009 9/9/2009 12/23/2009 — — $250,000,000 $41,863,000 — — $41,863,000 $41,863,000 $75,000,000 $25,000,000,000 $200,000,000 — $100,000,000 $200,000,000 12/29/2010 $100,000,000 $300,000,000 $200,000,000 $26,380,000 $22,000,000 Capital Repayment Amount6 10/13/2010 3/3/2010 5/27/2009 1/12/2011 11/24/2009 Capital Repayment Date (continued) 2/8/2011 12/23/2009 5/20/2010 3/9/2010 3/2/2011 12/16/2009 Final Disposition Date A R A A R R Note15 $25,964,061 $950,000 $849,014,998 $15,623,222 $1,625,000 $568,700 Final Disposition Proceeds $36.75 $4.90 $4.52 $13.62 $8.22 $51.37 $7.98 $20.71 $31.71 $21.43 $17.34 $14.10 $8.65 Stock Price as of 3/31/2011 $1,284.05 $144.44 $411.19 $1,316.30 $675.43 $1,490.24 $138.88 $550.66 $167,416.02 $1,867.84 $1,948.69 $216.20 $56.82 Market Capitalization as of 3/31/2011 (in millions) $9.82 $26.66 $17.10 $13.34 $50.92 $11.39 $18.28 $10.19 Strike Price as of 3/31/2011a 949,460 1,856,714 2,631,579 787,107 246,640 474,100 3,282,276 367,984 ($4.92) ($22.14) ($3.48) ($5.12) $0.45 ($3.41) $3.15 ($1.54) Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e $25,104,167 $6,759,683 $35,887,500 $32,333,333 $1,589,583 $448,263 $1,058,736 $554,083 $15,633,333 $2,755,981 $3,825,000 $2,854,167 $1,440,972,222 $36,944,444 $485,041 $1,180,003 $5,361,111 $2,623,344 $1,023,611 $757,335 $12,239,791 $2,694,444 $147,832 Interest/ Dividends Paid to Treasury Continued on next page. OUT OUT OUT OUT IN OUT IN OUT In or Out of the Moneye Transaction detail I Appendix D I april 28, 2011 255 Preferred Stock w/ York Traditions Bank, York, PA2 Exercised Warrants 7/24/2009 $179,091,932,014 ($2,578,099,294) $23,273,796,012 Total Treasury CPP Investment Amount Outstanding Total Purchase Amount* $204,943,827,320 Total Losses*** Capital Repayment Amount6 Total Capital Repayment Amount** $1,400,000,000 $36,000,000 Capital Repayment Date (continued) Remaining Capital Amount Total Warrant Proceeds**** Final Disposition Date Note15 $7,433,206,477 Final Disposition Proceeds $23.06 $2.24 $2.24 $47.10 Stock Price as of 3/31/2011 $4,220.37 $36.46 $36.46 $404.68 Market Capitalization as of 3/31/2011 (in millions) $36.27 $7.30 $13.99 $45.08 Strike Price as of 3/31/2011a 5,789,909 273,534 385,990 175,105 ($13.21) ($5.46) ($11.75) $2.02 Current Amount “In the Outstanding Money” or “Out of Warrantsa the Money”e OUT OUT OUT IN In or Out of the Moneye $157,694,444 $480,131 $4,782,227 $5,423,299 $259,420 Interest/ Dividends Paid to Treasury 1b 1a This transaction was included in previous Transaction Reports with Merrill Lynch & Co., Inc. listed as the qualifying institution and a 10/28/2008 transaction date, footnoted to indicate that settlement was deferred pending merger. The purchase of Merrill Lynch by Bank of America was completed on 1/1/2009, and this transaction under the CPP was funded on 1/9/2009. The warrant disposition proceeds amount are stated pro rata in respect of the CPP investments in Bank of America Corporation that occurred on 10/28/2008 and 1/9/2009. The total gross disposition proceeds from CPP warrants on 3/3/2010 was $310,571,615, consisting of $186,342,969 and $124,228,646. Proceeds from the disposition of TIP warrants on 3/3/2010 appear on a following page of this report. 2 Privately-held qualified financial institution; Treasury received a warrant to purchase additional shares of preferred stock (unless the institution is a CDFI), which it exercised immediately. 3 To promote community development financial institutions (CDFIs), Treasury does not require warrants as part of its investment in certified CDFIs when the size of the investment is $50 million or less. 3a Treasury cancelled the warrants received from this institution due to its designation as a CDFI. 4 Repayment pursuant to Title VII, Section 7001(g) of the American Recovery and Reinvestment Act of 2009. 5 Redemption pursuant to a qualified equity offering. 6 This amount does not include accrued and unpaid dividends, which must be paid at the time of capital repayment. 7 The proceeds associated with the disposition of this investment do not include accrued and unpaid dividends. 8 Subchapter S corporation; Treasury received a warrant to purchase additional subordinated debentures (unless the institution is a CDFI), which it exercised immediately. 9 In its qualified equity offering, this institution raised more capital than Treasury’s original investment, therefore, the number of Treasury’s shares underlying the warrant was reduced by half. 10 This institution participated in the expansion of CPP for small banks. 10a This institution received an additional investment through the expansion of CPP for small banks. 11 Treasury made three separate investments in Citigroup Inc. (Citigroup) under the CPP, Targeted Investment Program (TIP), and Asset Guarantee Program (AGP) for a total of $49 billion. On 6/9/2009, Treasury entered into an agreement with Citigroup to exchange up to $25 billion of Treasury’s investment in Fixed Rate Cumulative Perpetual Preferred Stock, Series H (CPP Shares) “dollar for dollar” in Citigroup’s Private and Public Exchange Offerings. On 7/23/2009 and 7/30/2009, Treasury exchanged a total of $25 billion of the CPP shares for Series M Common Stock Equivalent (“Series M”) and a warrant to purchase shares of Series M. On 9/11/2009, Series M automatically converted to 7,692,307,692 shares of common stock and the associated warrant terminated on receipt of certain shareholder approvals. 12 On 8/24/2009, Treasury exchanged its Series C Preferred Stock issued by Popular, Inc. for a like amount of non tax-deductible Trust Preferred Securities issued by Popular Capital Trust III, administrative trustee for Popular, Inc. Popular, Inc. paid a $13 million exchange fee in connection with this transaction. 13 This institution converted to a bank holding company structure and Treasury exchanged its securities for a like amount of securities that comply with the CPP terms applicable to bank holding companies. The institution in which Treasury’s original investment was made is shown in parentheses. 14 As of the date of this report, this institution is in bankruptcy proceedings. 15 For final disposition of warrants, “R” represents proceeds from a repurchase of warrants by the financial institution, and “A” represents the proceeds to Treasury, before underwriting fees and selling expenses, from a sale by Treasury in a registered public offering of the warrants issued by the financial institution. 16 On 12/10/2009, the bankruptcy reorganization plan of CIT Group Inc. became effective and Treasury’s preferred stock and warrant investment were extinguished and replaced by Contingent Value Rights (CVRs). On 2/8/2010, the CVRs expired without value as the terms and conditions for distribution of common shares to holders of CVRs were not met. 17 On 12/11/2009, Treasury exchanged its Series A Preferred Stock issued by Superior Bancorp, Inc. for a like amount of non tax-deductible Trust Preferred Securities issued by Superior Capital Trust II, administrative trustee for Superior Bancorp. 18 On 2/1/2010, following the acquisition of First Market Bank (First Market) by Union Bankshares Corporation (the acquiror), the preferred stock and exercised warrants issued by First Market on 2/6/2009 were exchanged for a like amount of securities of the acquiror in a single series but with a blended dividend rate equivalent to those of Treasury’s original investment. 19 On 2/11/2010, Pacific Coast National Bancorp dismissed its bankruptcy proceedings with no recovery to any creditors or investors, including Treasury, and the investment was extinguished. 20 On 3/8/2010, Treasury exchanged its $84,784,000 of Preferred Stock in Midwest Banc Holdings, Inc. (MBHI) for $89,388,000 of Mandatory Convertible Preferred Stock (MCP), which is equivalent to the initial investment amount of $84,784,000, plus $4,604,000 of capitalized previously accrued and unpaid dividends. Subject to the fulfillment by MBHI of the conditions related to its capital plan, the MCP may be converted to common stock. 21 On 3/30/2010, Treasury exchanged its $7,500,000 of Subordinated Debentures in GulfSouth Private Bank for an equivalent amount of Preferred Stock, in connection with its conversion from a Subchapter S-Corporation, that comply with the CPP terms applicable to privately held qualified financial institutions. 22 On 4/16/2010, Treasury exchanged its $72,000,000 of Preferred Stock in Independent Bank Corporation (Independent) for $74,426,000 of Mandatory Convertible Preferred Stock (MCP), which is equivalent to the initial investment amount of $72,000,000, plus $2,426,000 of capitalized previously accrued and unpaid dividends. Subject to the fulfillment by Independent of the conditions related to its capital plan, the MCP may be converted to common stock. 23 Treasury received Citigroup common stock pursuant to the June 2009 Exchange Agreement between Treasury and Citigroup which provided for the exchange into common shares of the preferred stock that Treasury purchased in connection with Citigroup’s participation in the Capital Purchase Program (see note 11). On April 26, 2010, Treasury gave Morgan Stanley & Co. Incorporated (Morgan Stanley) discretionary authority as its sales agent to sell subject to certain parameters up to 1,500,000,000 shares of the common stock from time to time during the period ending on June 30, 2010 (or on completion of the sale). Completion of the sale under this authority occurred on May 26, 2010. On May 26, 2010, Treasury again gave Morgan Stanley discretionary authority as its sales agent to sell subject to certain parameters up to 1,500,000,000 shares of the common stock from time to time during the period ending on June 30, 2010 (or on completion of the sale). Completion of the sale under this authority occurred on June 30, 2010. On July 23, 2010, Treasury again gave Morgan Stanley discretionary authority as its sales agent to sell subject to certain parameters up to 1,500,000,000 shares of the common stock from time to time during the period ending on September 30, 2010 (or on completion of the sale). Completion of the sale under this authority occurred on September 30, 2010. On October 19, 2010, Treasury gave Morgan Stanley & Co. Incorporated (Morgan Stanley) discretionary authority, as its sales agent, to sell subject to certain parameters up to 1,500,000,000 shares of common stock from time to time during the period ending on December 31, 2010 (or upon completion of the sale), which plan was terminated on December 6, 2010. All such sales were generally made at the market price. On December 6, 2010, Treasury commenced an underwritten public offering of its remaining 2,417,407,607 shares. See “Capital Purchase Program - Citigroup, Inc., Common Stock Disposition” on following page for the actual number of shares sold by Morgan Stanley, the weighted average price per share and the total proceeds to Treasury from all such sales during those periods. 24 On 8/26/2010, Treasury completed the exchange of its $303,000,000 of Preferred Stock in Sterling Financial Corporation (Sterling) for a like amount of Mandatorily Convertible Preferred Stock (MCP), pursuant to the terms of the exchange agreement between Treasury and Sterling entered into on 4/29/2010. Since Sterling also fulfilled the conversion conditions set forth in the Certificate of Designations for the MCP, including those related to its capital plan, Treasury’s $303,000,000 of MCP was subsequently, as of 8/26/2010, converted into 378,750,000 shares of common stock. 25 As of the date of this report, the banking subsidiary of this institution has been placed in receivership and the subsidiary’s assets and liabilities were ordered to be sold to another bank. Total purchase amount includes the capitalization of accrued dividends referred to in Notes 20, 22, 28 and 29. Total repaid includes (i) the amount of $25 billion applied as repayment under the Capital Purchase Program from the total proceeds of $31.85 billion received pursuant to the sales of Citigroup, Inc. common stock as of December 6, 2010 (see Note 23 and “Capital Purchase Program - Citigroup Common Stock Disposition” on following pages) and (ii) the amount of $363,290,000 repaid by institutions that have completed exchanges for investments under the Community Development Capital Initiative (see Note 30 and “Community Development Capital Initiative” on following pages). *** Losses include (i) the investment amount for institutions that have completed bankruptcy proceedings (see Notes 16 and 19) and (ii) the investment amount less the amount of final proceeds for institutions where Treasury has completed a sale (see Notes 26 and 32), but excludes investment amounts for institutions that have pending receivership or bankruptcy proceedings (see Notes 14 and 25). **** Total warrant proceeds includes $7,566,000, which represents the total amount of warrants that were included in nine institutions’ exchange into the CDCI program (see Note 30a). * ** Notes: Numbers may not total due to rounding. Data as of 3/31/2011. Numeric notes were taken verbatim from Treasury’s 4/4/2011 Transactions Report. All amounts and totals reflect cumulative receipts since inception through 3/31/2011. Zions Bancorporation, Salt 11/14/2008 Lake City, UT Preferred Stock w/ Warrants $4,871,000 Preferred Stock w/ Warrants Yadkin Valley Financial Corporation, Elkin, NCc 4/24/2009 $13,312,000 Preferred Stock w/ Warrants Yadkin Valley Financial Corporation, Elkin, NCc 1/16/2009 $2,720,000 $52,625,000 Preferred Stock w/ Warrants WSFS Financial Corporation, Wilmington, DE Investment Amount 1/23/2009 Investment Description Worthington Financial Holdings, Preferred Stock w/ Exercised Warrants Inc., Huntsville, AL2 Institution 5/15/2009 Purchase Date CPP Transaction Detail, as oF 3/31/2011 256 Appendix D I Transaction Detail I april 28, 2011 As of the date of this report, this institution has been placed in receivership and the assets and liabilities were ordered to be sold to another bank. On 9/30/2010, Treasury completed the sale of all Preferred Stock and Warrants issued by South Financial Group, Inc. to Toronto-Dominion Bank (TD) at an aggregate purchase price of $130,179,218.75 for the Preferred Stock and $400,000 for the Warrants, pursuant to the terms of the agreement between Treasury and TD entered into on 5/18/2010. 27 On 6/30/2010, Treasury exchanged $46,400,000 of its Series A Preferred Stock in First Merchants Corporation for a like amount of non tax-deductible Trust Preferred Securities issued by First Merchants Capital Trust III. 28 On 7/20/2010, Treasury completed the exchange of its $400,000,000 of Preferred Stock in First BanCorp for $424,174,000 of Mandatorily Convertible Preferred Stock (MCP), which is equivalent to the initial investment amount of $400,000,000, plus $24,174,000 of capitalized previously accrued and unpaid dividends. Subject to the fulfillment by First BanCorp of certain conditions, including those related to its capital plan, the MCP may be converted to common stock. First BanCorp has agreed to have Treasury observers attend board of directors meetings. 29 On 8/31/2010, following the completion of the conditions related to Pacific Capital Bancorp’s (Pacific Capital) capital plan, Treasury exchanged its $180,634,000 of Preferred Stock in Pacific Capital for $195,045,000 of Mandatorily Convertible Preferred Stock (MCP), which is equivalent to the initial investment amount of $180,634,000, plus $14,411,000 of capitalized previously accrued and unpaid dividends. On 9/27/2010, following the completion of the conversion conditions set forth in the Certificate of Designations for the MCP, all of Treasury’s MCP was converted into 360,833,250 shares of common stock of Pacific Capital. Pacific Capital has agreed to have Treasury observers attend board of directors meetings. 30 This institution qualified to participate in the Community Development Capital Initiative (CDCI), and has completed an exchange of its Capital Purchase Program investment for an investment under the terms of the CDCI program. See “Community Development Capital Initiative” below. 30a At the time of this institution’s exchange into the CDCI program, the warrant preferreds were included in the total amount of preferred stock exchanged for Treasury’s CDCI investment. Therefore this disposition amount does not represent cash proceeds to Treasury. 31 On 9/30/2010, Treasury completed the exchange of its $ 80,347,000 of Preferred Stock in Hampton Roads Bankshares, Inc. (Hampton) for a like amount of Mandatorily Convertible Preferred Stock (MCP), pursuant to the terms of the exchange agreement between Treasury and Hampton entered into on 8/12/2010. Since Hampton also fulfilled the conversion conditions set forth in the Certificate of Designations for the MCP, Treasury’s $80,347,000 of MCP was subsequently converted into 52,225,550 shares of common stock. 32 On 9/30/2010, Treasury completed the sale of all Preferred Stock and Warrants issued by TIB Financial Corp. to North American Financial Holdings, Inc. (NAFH) at an aggregate purchase price of $12,119,637.37 for the Preferred Stock and $40,000 for the Warrants, pursuant to the terms of the agreement between Treasury and NAFH entered into on 9/24/2010. 33 On 3/4/2011, Treasury completed the sale to Community Bancorp LLC (“CBC”) of all Preferred Stock and Warrants issued by Cadence Financial Corporation (“Cadence”) to Treasury for an aggregate purchase price of $39,014,062.50, pursuant to the terms of the agreement between Treasury and CBC entered into on 10/29/2010. 34 On 12/3/2010, Treasury completed the sale of all Preferred Stock (including the Preferred Stock received upon the exercise of warrants) issued by The Bank of Currituck (“Currituck”) to Treasury for an aggregate purchase price of $1,742,850, pursuant to the terms of the agreement between Treasury and Currituck entered into on 11/5/2010. 35 Treasury entered into an agreement on 1/28/2011 with North American Financial Holdings, Inc. for the sale of all Preferred Stock and Warrants issued by Capital Bank Corporation to Treasury for an aggregate purchase price of $41,279,000. Since the conditions to closing of the sale were satisfied, the closing of the sale also occurred on 1/28/2011. 36 On 2/15/2011, Treasury completed the sale of all Preferred Stock (including the Preferred Stock received upon the exercise of warrants) issued by Treaty Oak Bancorp (“Treaty Oak”) to Treasury for (i) a cash payment of $500,000, (ii) the right to receive up to $150,000 in principal payments on a note payable by Carlile Bancshares, Inc. in favor of Treaty Oak, and (iii) a newly issued warrant to purchase 3,098,341 shares of Treaty Oak common stock, pursuant to the terms of the agreement between Treasury and Treaty Oak entered into on 2/15/2011. 37 On 2/18/2011, Treasury completed the exchange of its $135,000,000 of Preferred Stock (including accrued and unpaid dividends thereon) in Central Pacific Financial Corp. for not less than 5,620,117 shares of common stock, pursuant to an exchange agreement dated 2/17/2011. 38 On 3/9/2011, Treasury completed the sale of all Subordinated Debentures (including the Subordinated Debentures received upon the exercise of warrants) issued by FBHC Holding Company (“FBHC”) to Treasury for an aggregate purchase price of $650,000, pursuant to the terms of the agreement between Treasury and FBHC entered into on 3/9/2011. 39 Treasury entered into an agreement on 3/11/2011 with First Community Bank Corporation of America (FCBCA) for the sale of all Preferred Stock and Warrants issued by FCBCA for an aggregate purchase price of (i) $7.20 million plus (ii) 72% of the remaining cash assets after giving effect to the payment of defined acquisition expenses, debts, liabilities and distributions to other classes of security holders, which payments are not to exceed $3.58 million. Closing of the sale is subject to certain conditions including completion of the acquisition and merger of FCBCA by Community Bank of Manatee, a Florida chartered commercial bank. 40 As a result of the acquisition of Fidelity Resources Company (the acquired company) by Veritex Holdings, Inc. (the acquiror), the preferred stock and exercised warrants issued by the acquired company on 6/26/2009 were exchanged for a like amount of securities of the acquiror, pursuant to the terms of an agreement among Treasury, the acquired company and the acquiror entered into on 3/23/2011. 41 As a result of the acquisition of NC Bancorp, Inc. (the acquired company) by Metropolitan Bank Group, Inc. (the acquiror), Treasury exchanged $6,880,000 of its preferred stock in NC Bancorp, Inc. and $71,526,000 of its preferred stock in Metropolitan Bank Group, Inc. for $81,892,000 of a new series of preferred stock in Metropolitan Bank Group, Inc., which is equivalent to the combined initial investment amount of $78,406,000 plus $3,486,000 of capitalized previously accrued and unpaid dividends, pursuant to the terms of an agreement among Treasury, the acquired company and the acquiror entered into on 3/30/2011. Exercised warrants were also exchanged at the time of the agreement. Endnotes, continued Sources: Treasury, Transactions Report, 3/31/2011; Treasury, Dividend and Interest Report, 3/31/2011; Treasury, responses to SIGTARP data call, 4/6/2011; Market Data: Capital IQ, Inc. (a division of Standard & Poor’s), www.capitaliq.com, accessed 4/4/2011. b a According to Treasury, “if a Share Dividend is declared on a common stock of a bank in which Treasury holds outstanding warrants, Treasury is entitled to additional warrants. The ‘Update’ netted is the amount of new warrant shares that have been received as a result of the corporate action.” Thus, the strike price presented reflects these adjustments provided by Treasury. It appears that Treasury also adjusts the number of shares based on corporate actions as well. Those adjustments are also presented in the current number of outstanding warrants. Amounts are presented as of 10/3/2010. According to Treasury, these institutions executed Qualified Equity Offerings which “reduce the number of outstanding warrants held by Treasury.” c Treasury made more than one investment in these institutions. For purposes of this table, income (dividends and interest), is presented on a combined basis because it could not be split between the two transactions based on the data provided by Treasury. d According to Treasury, M&T acquired Provident, therefore “warrant details changed as per the conversion ratio.” The previous investment in Provident now reflects M&T market data above. e When a warrant’s underlying current stock price rises above the strike price, it is considered “In the Money,” otherwise it is considered “Out of the Money.” f According to Treasury, these institutions’ warrant was modified via Qualified Equity Offerings and Stock Dividend. g According to Treasury, these institutions’ warrants were increased via Stock Dividend. h According to Treasury, these institutions warrants were increased via Stock Issuance. i According to Treasury, these institutions converted their warrants from Preferred to Manditorily Convertible Preferred. j According to Treasury, these institutions executed a 1 to 10 reverse stock split. k According to Treasury, these institutions’ warrants increased via cash dividend. l According to Treasury, these institutions executed a 1 to 20 reverse stock split. m According to Treasury, these institutions’ warrants were sold back to Original QFI. n According to Treasury, these institutions’ warrants were sold back to Original QFI and QFI had a QEO. n According to Treasury, these institutions’ warrants were sold back to Original QFI and QFI had a stock dividend adjustment. 26 25a Transaction detail I Appendix D I april 28, 2011 257 5/26/2010 – 6/30/2010 7/23/2010 – 9/30/2010 10/19/2010 – 12/6/2010 12/6/2010 1 2 3 4 5 $4.3500 $4.2609 $3.9090 $3.8980 $4.1217 Pricing Mechanism6 Proceeds7 $10,515,723,090 $31,852,354,471 Total Proceeds $4,967,921,811 $5,863,489,587 $4,322,726,825 $6,182,493,158 2,417,407,607 1,165,928,228 1,500,000,000 1,108,971,857 1,500,000,000 Number of Shares Bainbridge Bancshares, Inc., Bainbridge, GA Bancorp of Okolona, Inc., Okolona, MS 9/24/2010 9/24/2010 9/29/2010 Carter Federal Credit Union, Springhill, LA 9/29/2010 Subordinated Debentures Subordinated Debentures Subordinated Debentures Community First Guam Federal Credit Union, Hagatna, GU Community Plus Federal Credit Union, Rantoul, IL Cooperative Center Federal Credit Union, Berkeley, CA D.C. Federal Credit Union, Washington, DC 9/24/2010 9/29/2010 9/24/2010 9/29/2010 Subordinated Debentures Preferred Stock Community Bank of the Bay, Oakland, CA 9/29/2010 1, 2 Preferred Stock Community Bancshares of Mississippi, Inc., Brandon, MS 9/17/2010 9/29/2010 2a Preferred Stock Citizens Bancshares Corporation, Atlanta, GA Preferred Stock Preferred Stock Subordinated Debentures Subordinated Debentures Subordinated Debentures 1 8/13/2010 CFBanc Corporation, Washington, DC Butte Federal Credit Union, Biggs, CA 9/24/2010 9/24/2010 9/17/2010 Subordinated Debentures Buffalo Cooperative Federal Credit Union, Buffalo, NY Carver Bancorp, Inc, New York, NY Subordinated Debentures Brewery Credit Union, Milwaukee, WI Brooklyn Cooperative Federal Credit Union, Brooklyn, NY 9/24/2010 9/30/2010 8/27/2010 Subordinated Debentures Border Federal Credit Union, Del Rio, TX 9/29/2010 Subordinated Debentures Preferred Stock BankAsiana, Palisades Park, NJ Bethex Federal Credit Union, Bronx, NY 9/29/2010 Preferred Stock Subordinated Debentures Preferred Stock Subordinated Debentures Subordinated Debentures Subordinated Debentures Investment Description 9/29/2010 BancPlus Corporation, Ridgeland, MS Atlantic City Federal Credit Union, Lander, WY 9/17/2010 9/29/2010 Alternatives Federal Credit Union, Ithaca, NY American Bancorp of Illinois, Inc., Oak Brook, IL 9/24/2010 Name of Institution Purchase Date 1 1 1, 2 Note Seller — — — — — $1,747,000 $54,600,000 — $7,462,000 — $18,980,000 — — — — — — — — $50,400,000 — — — — — — — — $2,313,000 — $4,379,000 — — — — — — — — — — — $30,514,000 — — — — — Additional Investment Purchase Details (continued) Amount from CPP CDCI Program Transaction detail, as of 3/31/2011 Table D.3 Source: Treasury, Transactions Report, 3/31/2011. 1 On 4/26/2010, Treasury gave Morgan Stanley & Co. Incorporated (Morgan Stanley) discretionary authority, as its sales agent, to sell subject to certain parameters up to 1,500,000,000 shares of common stock from time to time during the period ending on 6/30/2010 (or upon completion of the sale). Completion of the sale under this authority occurred on 5/26/2010. 2 On 5/26/2010, Treasury gave Morgan Stanley & Co. Incorporated (Morgan Stanley) discretionary authority, as its sales agent, to sell up to 1,500,000,000 shares of common stock from time to time during the period ending on 6/30/2010 (or upon completion of the sale). Completion of the sale under this authority occurred on 6/30/2010. 3 On 7/23/2010, Treasury gave Morgan Stanley & Co. Incorporated (Morgan Stanley) discretionary authority, as its sales agent, to sell subject to certain parameters up to 1,500,000,000 shares of common stock from time to time during the period ending on 9/30/2010 (or upon completion of the sale). Completion of the sale under this authority occurred on 9/30/2010. 4 On 10/19/2010, Treasury gave Morgan Stanley & Co. Incorporated (Morgan Stanley) discretionary authority, as its sales agent, to sell subject to certain parameters up to 1,500,000,000 shares of common stock from time to time during the period ending on 12/31/2010 (or upon completion of the sale), which plan was terminated on 12/6/2010. 5 On 12/6/2010, Treasury commenced an underwritten public offering of its remaining 2,417,407,607 shares. Closing of the offering is subject to the fulfillment of certain closing conditions. 6 The price set forth is the weighted average price for all sales of Citigroup, Inc. common stock made by Treasury over the course of the corresponding period. 7 Amount represents the gross proceeds to Treasury. Notes: Numbers may not total due to rounding. Data as of 3/31/2011. Numbered notes taken verbatim from 4/4/2011 Transactions Report. Date 4/26/2010 – 5/26/2010 Note CPP — Citigroup, Inc. Common Stock Disposition, as of 3/31/2011 Table D.2 $1,522,000 $2,799,000 $450,000 $2,650,000 $4,060,000 $54,600,000 $11,841,000 — $5,781,000 $18,980,000 $6,300,000 $1,000,000 $145,000 $300,000 $1,096,000 $3,260,000 $502,000 $5,250,000 $80,914,000 $3,297,000 $3,372,000 $2,500,000 $5,457,000 $2,234,000 Investment Amount Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Pricing Mechanism Date Remaining Amount Investment Amount Disposition Details Continued on next page. $11,500 $21,926 $3,400 $20,758 $30,676 $412,533 $111,454 $47,533 $82,247 $47,600 $7,833 $1,136 $2,250 $8,585 $24,631 $3,793 $39,667 $611,350 $38,612 $26,414 $19,583 $69,546 $17,500 Dividend/Interest Paid to Treasurya 258 Appendix D I Transaction Detail I april 28, 2011 Subordinated Debentures Episcopal Community Federal Credit Union, Los Angeles, CA Fairfax County Federal Credit Union, Fairfax, VA Faith Based Federal Credit Union, Oceanside, CA Fidelis Federal Credit Union, New York, NY 9/29/2010 9/24/2010 9/29/2010 9/29/2010 First Legacy Community Credit Union, Charlotte, NC Subordinated Debentures 9/29/2010 Kilmichael Bancorp, Inc., Kilmichael, MS 9/3/2010 Subordinated Debentures 8/6/2010 Southern Bancorp, Inc., Arkadelphia, AR Shreveport Federal Credit Union , Shreveport, LA 1, 2 Security Federal Corporation, Aiken, SC 9/29/2010 9/29/2010 1, 2 Preferred Stock Subordinated Debentures Preferred Stock Preferred Stock $11,000,000 — $18,000,000 $17,910,000 — Santa Cruz Community Credit Union, Santa Cruz, CA Subordinated Debentures 9/24/2010 Security Capital Corporation, Batesville, MS — Renaissance Community Development Credit Union, Subordinated Debentures Somerset, NJ 9/29/2010 9/29/2010 — $9,734,000 Subordinated Debentures Preferred Stock Pyramid Federal Credit Union, Tucson, AZ — PSB Financial Corporation, Many, LA Subordinated Debentures $6,784,000 — $3,000,000 9/24/2010 Prince Kuhio Federal Credit Union, Honolulu, HI 9/24/2010 Subordinated Debentures Subordinated Debentures Preferred Stock — — — — — $5,500,000 $11,735,000 — $5,645,000 — $4,551,000 — — $6,000,000 $4,205,000 — — $14,000,000 — — — — $6,245,000 $30,000,000 — $7,875,000 $5,146,000 $17,000,000 — — — — — Amount from CPP $22,800,000 — $4,000,000 — — — — — — — — — — — — — $4,836,000 — — — $5,689,000 — — — — — $3,881,000 — — — — — — — — — — — — — — — — — — Additional Investment Purchase Details (continued) 9/29/2010 Premier Bancorp, Inc., Wilmette, IL 8/13/2010 Phenix Pride Federal Credit Union, Phenix City, AL 9/29/2010 9/24/2010 Opportunities Credit Union, Burlington, VT 9/24/2010 PGB Holdings, Inc., Chicago, IL Northeast Community Federal Credit Union, San Francisco, CA 9/29/2010 8/13/2010 Subordinated Debentures North Side Community Federal Credit Union, Chicago, IL 9/24/2010 1 1 1 1 Subordinated Debentures Subordinated Debentures Neighborhood Trust Federal Credit Union, New York, NY Subordinated Debentures Preferred Stock Mission Valley Bancorp, Sun Valley, CA 8/20/2010 9/24/2010 1 Preferred Stock Lower East Side People’s Federal Credit Union, New York, NY M&F Bancorp, Inc., Durham, NC 9/24/2010 8/20/2010 Preferred Stock Liberty Financial Services, Inc., New Orleans, LA Subordinated Debentures Liberty County Teachers Federal Credit Union, Liberty, TX 9/24/2010 Preferred Stock Lafayette Bancorp, Inc., Oxford, MS 9/24/2010 Subordinated Debentures 9/29/2010 2a 1 1, 2 1 Independent Employers Group Federal Credit Union, Subordinated Debentures Hilo, HI Subordinated Debentures Preferred Stock 9/29/2010 IBC Bancorp, Inc., Chicago, IL IBW Financial Corporation, Washington, DC 9/10/2010 Subordinated Debentures 9/3/2010 Hope Federal Credit Union, Jackson, MS 9/17/2010 Subordinated Debentures Subordinated Debentures 1, 2 Hill District Federal Credit Union, Pittsburgh, PA Subordinated Debentures 1 Guaranty Capital Corporation, Belzoni, MS 9/29/2010 Genesee Co-op Federal Credit Union, Rochester, NY Subordinated Debentures Greater Kinston Credit Union, Kinston, NC 9/17/2010 9/29/2010 7/30/2010 Subordinated Debentures Gateway Community Federal Credit Union, Missoula, MT 9/24/2010 1 Subordinated Debentures Freedom First Federal Credit Union, Roanoke, VA 9/29/2010 Preferred Stock First Vernon Bancshares, Inc., Vernon, AL 9/29/2010 1 Preferred Stock 9/29/2010 First M&F Corporation, Kosciusko, MS Preferred Stock Subordinated Debentures 1 First Choice Bank, Cerritos, CA First Eagle Bancshares, Inc., Hanover Park, IL 9/24/2010 9/17/2010 1 1 Preferred Stock Subordinated Debentures Subordinated Debentures 8/13/2010 First American International Corp., Brooklyn, NY Subordinated Debentures East End Baptist Tabernacle Federal Credit Union, Bridgeport, CT 9/29/2010 Subordinated Debentures Investment Description Name of Institution Purchase Date 1 Note Seller CDCI Program Transaction detail, as of 3/31/2011 $33,800,000 $2,646,000 $22,000,000 $17,910,000 $2,828,000 $31,000 $2,500,000 $9,734,000 $273,000 $6,784,000 $153,000 $3,000,000 $1,091,000 $350,000 $325,000 $283,000 $10,336,000 $11,735,000 $898,000 $11,334,000 $435,000 $4,551,000 $3,154,000 $698,000 $6,000,000 $8,086,000 $4,520,000 $100,000 $14,000,000 $350,000 $300,000 $1,657,000 $9,278,000 $6,245,000 $30,000,000 $1,000,000 $7,875,000 $5,146,000 $17,000,000 $14,000 $30,000 $8,044,000 $100,000 $7,000 Investment Amount Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Pricing Mechanism Date Remaining Amount Investment Amount Disposition Details Continued on next page. $354,900 $19,992 $166,222 $135,320 $22,153 $234 $19,583 $73,546 $2,139 $0 $1,199 $30,333 $8,243 $2,742 $2,456 $2,217 $91,354 $114,090 $7,034 $88,783 $3,408 $34,385 $43,998 $5,274 $54,000 $107,926 $37,164 $756 $235,083 $2,644 $2,467 $12,980 $70,100 $15,959 $226,667 $7,556 $100,363 $40,310 $171,889 $106 $227 $63,011 $756 $53 Dividend/Interest Paid to Treasurya Transaction detail I Appendix D I april 28, 2011 259 Southside Credit Union, San Antonio, TX 9/29/2010 Subordinated Debentures Thurston Union of Low-Income People (TULIP) Cooperative Credit Union, Olympia, WA Tongass Federal Credit Union, Ketchikan, AK 9/24/2010 9/24/2010 Subordinated Debentures Preferred Stock Subordinated Debentures Union Settlement Federal Credit Union, New York, NY United Bancorporation of Alabama, Inc., Atmore, AL UNITEHERE Federal Credit Union (Workers United Federal Credit Union), New York, NY 9/24/2010 9/29/2010 9/3/2010 9/29/2010 Virginia Community Capital, Inc., Christiansburg, VA Subordinated Debentures 9/24/2010 Subordinated Debentures 9/29/2010 Subordinated Debentures UNO Federal Credit Union, New Orleans, LA Vigo County Federal Credit Union, Terre Haute, IN 9/24/2010 Subordinated Debentures Subordinated Debentures Union Baptist Church Federal Credit Union, Fort Wayne, IN University Financial Corp, Inc., St. Paul, MN Subordinated Debentures Tulane-Loyola Federal Credit Union, New Orleans, LA 9/24/2010 7/30/2010 Preferred Stock Tri-State Bank of Memphis, Memphis, TN 8/13/2010 Subordinated Debentures — — — $11,926,000 — $10,300,000 — — — $2,795,000 — — — $5,000,000 $15,750,000 — — Amount from CPP $1,915,000 $570,073,000 Total Purchase Amount $1,229,000 $743,000 $22,115,000 $57,000 $10,300,000 $295,000 $10,000 $424,000 $2,795,000 $1,600,000 $75,000 $7,922,000 $17,123,000 $15,750,000 $1,100,000 $1,709,000 Investment Amount — — — $10,189,000 — — — — — — — — — $12,123,000 — — — Additional Investment Purchase Details (continued) Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Par Pricing Mechanism Date Total Treasury CDCI Investment Amount Total Capital Repayment Amount Source: Treasury, Transactions Report, 3/31/2011; Treasury, Dividends and Interest Report, 3/31/2011; Treasury, response to SIGTARP data call, 4/6/2011. 2a 2 1 $570,073,000 — Remaining Amount Investment Amount Disposition Details This institution qualified to participate in the Community Development Capital Initiative (CDCI), and has exchanged its Capital Purchase Program investment for an equivalent amount of investment with Treasury under the CDCI program terms. Treasury made an additional investment in this institution at the time it entered the CDCI program. Treasury made an additional investment in this institution after the time it entered the CDCI program. a For the purpose of this table, income (dividends and interest) are presented in aggregate for each CDCI participant. Notes: Numbers affected by rounding. Data as of 3/31/2011. Numbered notes are taken verbatim from Treasury’s 4/4/2011 Transactions Report. 1, 2 1 1 Subordinated Debentures The Magnolia State Corporation, Bay Springs, MS 9/29/2010 Preferred Stock The First Bancshares, Inc., Hattiesburg, MS 9/29/2010 1, 2 Preferred Stock 9/29/2010 State Capital Corporation, Greenwood, MS Subordinated Debentures Southern Chautauqua Federal Credit Union, Lakewood, NY 9/29/2010 Subordinated Debentures Investment Description Name of Institution Purchase Date 1 Note Seller CDCI Program Transaction detail, as of 3/31/2011 $15,001 $9,286 $5,820 $371,348 $431 $92,700 $2,229 $78 $3,321 $28,261 $12,533 $588 $92,775 $129,374 $119,000 $8,311 $12,912 Dividend/Interest Paid to Treasurya 260 Appendix D I Transaction Detail I april 28, 2011 General Motors,b,c Detroit, MI GMAC (Ally), Detroit, MI $7,500,000,000 5/21/2009 Purchase 6/3/2009 $360,624,198 $30,100,000,000 General Motors Debt Obligation w/ Corporation Additional Note General Motors Debt Obligation w/ Corporation Additional Note $4,000,000,000 General Motors Debt Obligation w/ Corporation Additional Note Purchase 5/20/2009 Purchase $2,000,000,000 General Motors Debt Obligation w/ Corporation Additional Note Purchase 4/22/2009 5/27/2009 $13,400,000,000 General Motors Debt Obligation w/ Corporation Additional Note 12/31/2008 Purchase $884,024,131 12/30/2009 Purchase GMAC General Motors Debt Obligation Corporation $2,540,000,000 Trust Preferred Securities w/ Exercised Warrants 12/30/2009 Purchase GMAC 12/29/2008 Purchase $1,250,000,000 Convertible Preferred Stock w/ Exercised Warrants Purchase GMAC Convertible Preferred Stock w/ Exercised Warrants Amount $5,000,000,000 Description Preferred Stock w/ Exercised Warrants Seller 12/29/2008 Purchase GMAC Date Transaction Type Initial Investment AIFP TRANSACTION DETAIL, AS OF 3/31/2011 Table D.4 8 6 5 4 9 $7,072,488,605 $985,805,085 Transfer of debt to New GM Debt left at Old GM 7/10/2009 7/10/2009 7/10/2009 9 9 Exchange for preferred and common $22,041,706,310 stock in New GM 7 7 Exchange for preferred and common stock in New GM $4,000,000,000 7 $360,624,198 7/10/2009 7/10/2009 7/10/2009 $2,000,000,000 7 7/10/2009 Exchange for preferred and common stock in New GM Exchange for preferred and common stock in New GM 3 27 $884,024,131 2 3/1/2011 Exchange for preferred and common $13,400,000,000 stock in New GM 26 Exchange for 5/29/2009 equity interest in GMAC $3,000,000,000 Partial conversion of preferred stock for common stock $2,670,000,000 $5,000,000,000 Exchange for convertible preferred stock Note Exchange for amended and restated Trust Preferred Securities Amount Type $5,500,000,000 12/30/2009 12/30/2009 Date Exchange/Transfer/Other Details Partial conversion of 22, preferred 12/30/2010 26 stock for common stock 22 Note (continued) Motors Liquidation 29 Company 11, 12 10, 11, 25 General Motors Company General Motors Holdings LLC 10, 11, 24 27 3,26 21, 22 Amount/ Equity % 73.8% Type Partial Repayment $50,000,000 $4,676,779,986 $985,805,085 3/31/2011 $1,000,000,000 4/20/2010 Repayment Debt Obligation $35,084,421 $1,000,000,000 Partial repayment 12/18/2009 $1,761,495,577 $360,624,198 25 Partial repayment 7/10/2009 Partial 11/26/2010 disposition 11/18/2010 Partial 3/31/2010 repayment 60.8% Debt Partial $7,072,488,605 1/21/2010 Obligation repayment Common Stock $11,743,303,903 $2,667,000,000 Partial disposition 25 28 Note $2,139,406,778 3/2/2011 Disposition Date Amount/ Proceeds Preferred $2,100,000,000 12/15/2010 Repayment Stock Trust Preferred $2,670,000,000 Securities Common Stock Convertible Preferred $5,937,500,000 Stock Note Description General Motors Company GMAC (Ally) GMAC (Ally) GMAC (Ally) Obligor Treasury Investment After Exchange/Transfer/Other Debt Obligation None Debt Obligation Debt Obligation Debt Obligation Debt Obligation Common Stock Common Stock None None Remaining Investment Description $756,714,508 $2,202,940,632 Dividend/ Interest Paid to Treasurya Continued on next page. $935,805,085 — $4,676,779,986 $5,676,779,986 $5,711,864,407 $6,711,864,407 33.3% 36.9% — — Remaining Investment Amount/ Equity % Payment or Disposition1 Transaction detail I Appendix D I april 28, 2011 261 Chrylser,c Auburn Hills, MI Chrysler FinCo, Farmington Hills, MI $1,888,153,580 Debt Obligation w/ Additional Note $6,642,000,000 $81,344,932,551 Debt Obligation w/ Additional Note, Equity Total Initial Investment Amount Purchase New Chrysler 5/27/2009 — Purchase Old Chrysler 5/20/2009 Debt Obligation w/ Additional Note Purchase Old Chrysler 5/1/2009 $280,130,642 Purchase 4/29/2009 — Debt Obligation w/ Additional Note Purchase 4/29/2009 Chrysler Holding Purchase 1/2/2009 Debt Obligation w/ Additional Note $4,000,000,000 $1,500,000,000 Chrysler Holding Debt Obligation w/ Additional Note Amount Debt Obligation w/ Additional Note 1/16/2009 Description Chrysler Holding Purchase Chrysler FinCo Date Seller Transaction Type Initial Investment AIFP TRANSACTION DETAIL, AS OF 3/31/2011 18 17 16 15 14 13 Note Transfer of debt to New Chrysler Type $500,000,000 Amount 6/10/2009 Issuance of equity in New Chrysler — 23 19 Note Exchange/Transfer/Other Details Completion 4/30/2010 of bankruptcy ($1,888,153,580) proceeding; transfer of collateral security to liquidation trust 6/10/2009 Date (continued) 20 Chrysler Group LLC Chrysler Group LLC 19 Amount/ Equity % 7/14/2009 Repayment* Common equity 7/10/2009 Repayment 9.9% $29,161,881,226 $48,694,897,745 Total Payments Total Treasury Investment Amount $15,000,000 $7,844,409 Proceeds 12/29/2010 from sale of collateral Additional Note Proceeds* $9,666,784 $30,544,528 $280,130,642 $1,900,000,000 $15,000,000 Proceeds 9/9/2010 from sale of collateral Proceeds N/A 5/10/2010 from sale of collateral Debt Obligation w/ $7,142,000,000 additional note Rights to Recover Proceeds 20 $1,369,197,029 Debt Obligation w/ Additional Note Right to recover proceeds Right to recover proceeds Right to recover proceeds None None None N/A N/A N/A — — — — $1,413,554,739 $1,464,690,823 Debt Obligation w/ Additional Note Debt Obligation w/ Additional Note $1,496,500,945 Debt Obligation w/ Additional Note Remaining Investment Amount/ Equity % Payment or Disposition1 Remaining Investment Description $1,369,197,029 Additional Note $44,357,710 Partial repayment 6/17/2009 7/14/2009 Repayment $51,136,084 Partial repayment $31,810,122 Partial repayment 4/17/2009 5/18/2009 $3,499,055 Note Partial repayment Type Amount/ Proceeds 3/17/2009 Date Debt Obligation Terminaw/ $3,500,000,000 5/14/2010 tion and additional settlement note payment Note Description Old Carco Liquidation 23 Trust Chrysler Holding Obligor Treasury Investment After Exchange/Transfer/Other $693,709,634 $7,405,894 Dividend/ Interest Paid to Treasurya 262 Appendix D I Transaction Detail I april 28, 2011 (continued) Sources: Treasury, Transactions Report, 3/31/2011; Treasury, Dividends and Interest Report, 3/31/2011; Treasury, response to SIGTARP data call, 4/6/2011. 3 2 1 Payment amount does not include accrued and unpaid interest on a debt obligation, which must be paid at the time of principal repayment. Treasury committed to lend General Motors Corporation up to $1,000,000,000. The ultimate funding was dependent upon the level of investor participation in GMAC LLC’s rights offering. The amount has been updated to reflect the final level of funding. Pursuant to its rights under the loan agreement with Old GM reported on 12/29/2008, Treasury exchanged its $884 million loan to Old GM for a portion of Old GM’s common equity interest in GMAC. Treasury held a 35.4% common equity interest in GMAC until the transactions reported on 12/30/2009. (See footnote 22.) 4 This transaction is an amendment to Treasury’s 12/31/2008 agreement with Old GM (the “Old GM Loan”), which brought the total loan amount to $15,400,000,000. 5 This transaction was a further amendment to the Old GM Loan, which brought the total loan amount to $19,400,000,000. 6 This transaction was a further amendment to the Old GM Loan, which brought the total loan amount to $19,760,624,198. The $360,624,198 loan was used to capitalize GM Warranty LLC, a special purpose vehicle created by old GM. On 7/10/2009, the principal amount was included in the $7.07 billion of debt assumed by the new GM, as explained in footnote 10. 7 On 7/10/2009, the principal amount outstanding under the Old GM Loan and interest accrued thereunder were extinguished and exchanged for privately placed preferred and common equity in New GM. (See green lines in the table above.) 8 Under the terms of the $33.3 billion debtor-in-possession credit agreement dated 6/3/2009 with Old GM (the “GM DIP Loan”), Treasury’s commitment amount was $30.1 billion. The remaining $2.2 billion of the financing was provided by Canadian government entities. As of 7/9/2009, $30.1 billion of funds had been disbursed by Treasury. 9 On 7/10/2009, Treasury and Old GM amended the GM DIP Loan, and the principal amount and interest accrued thereunder were extinguished and exchanged for privately placed preferred and common equity in New GM, except for (i) $7.07 billion, which was assumed by New GM as a new obligation under the terms of a separate credit agreement between Treasury and New GM (see transactions marked by green lines in table above) and (ii) $986 million, which remained a debt obligation of Old GM. 10 In total, for the exchange of the Old GM Loan and the GM DIP Loan (other than as explained in footnote 9), Treasury received $2.1 billion in preferred shares and 60.8% of the common shares of New GM. 11 Pursuant to a corporate reorganization completed on or about 10/19/2009, the shareholders of New GM, including with respect to Treasury’s preferred and common stock, became shareholders of General Motors Holding Company (the ultimate parent company of New GM), which was renamed “General Motors Company” on an equal basis to their shareholdings in New GM, and New GM was converted to “General Motors LLC”. General Motors LLC is a wholly owned subsidiary of General Motors Holdings LLC, and General Motors Holdings LLC is a wholly owned subsidiary of General Motors Company. 12 Pursuant to a corporate reorganization completed on 10/19/2009, Treasury’s loan with New GM was assigned and assumed by General Motors Holdings LLC. 13 The loan was funded through Chrysler LB Receivables Trust, a special purpose vehicle created by Chrysler FinCo. The amount of $1,500,000,000 represents the maximum loan amount. The loan was incrementally funded until it reached the maximum amount of $1.5 billion on 4/9/2009. 14 This transaction was an amendment to Treasury’s 1/2/2009 agreement with Chrysler Holding. As of 4/30/2009, Treasury’s obligation to lend any funds committed under this amendment had terminated. No funds were disbursed. 15 The loan was used to capitalize Chrysler Warranty SPV LLC, a special purpose vehicle created by Old Chrysler. 16 This transaction was set forth in a credit agreement with Old Chrysler fully executed on 5/5/2009 following a term sheet executed on 5/1/2009 and made effective on 4/30/2009. Treasury’s commitment was $3.04 billion of the total $4.1 billion debtor-in-possession credit facility (the “Chrysler DIP Loan”). As of 6/30/2009, Treasury’s commitment to lend under the Chrysler DIP Loan had terminated. The remaining principal amount reflects the final amount of funds disbursed under the Chrylser DIP Loan. 17 This transaction was an amendment to Treasury’s commitment under the Chrysler DIP Loan, which increased Treasury’s commitment by an amount $756,857,000 to a total of $3.8 billion under the Chrysler DIP Loan. As of 6/30/2009, Treasury’s obligation to lend funds committed under the Chrysler DIP Loan had terminated. 18 This transaction, first reported based on a term sheet fully executed on 5/27/2009 for an amount up to $6.943 billion, was set forth in a credit agreement with New Chrysler fully executed on 6/10/2009. Under the terms of the credit agreement, Treasury made a new commitment to New Chrysler of up to $6.642 billion. The total loan amount is up to $7.142 billion including $500 million of debt assumed on 6/10/2009 from Chrysler Holding originally incurred under Treasury’s 1/2/2009 credit agreement with Chrysler Holding. The debt obligations are secured by a first priority lien on the assets of New Chrysler. When the sale to new Chrysler was completed, Treasury acquired the rights to 9.85% of the common equity in new Chrysler. 19 Pursuant to the agreement explained in footnote 18, $500 million of this debt obligation was assumed by New Chrysler. 20 Under loan agreement, as amended on 7/23/2009, Treasury was entitled to proceeds Chrysler Holdco received from Chrysler FinCo equal to the greater of $1.375 billion or 40% of the equity value of Chrysler FinCo. Pursuant to a termination agreement dated 5/14/2010, Treasury agreed to accept a settlement payment of $1.9 billion as satisfaction in full of all existing debt obligations (including additional notes and accrued and unpaid interest) of Chrysler Holdco, and upon receipt of such payment to terminate all such obligations. 21 Amount of the Treasury investment after exchange includes the exercised warrants from Treasury’s initial investment. 22 Under the terms of an agreement dated 12/30/2009, the convertible preferred shares will mandatorily convert to common stock under the conditions and the conversion price as set forth in the terms of the agreement. 23 On April 30, 2010, the Plan of Liquidation for the debtors of Old Chrysler approved by the respective bankruptcy court became effective (the “Liquidation Plan”). Under the Liquidation Plan, the loan Treasury had provided to Old Chrysler was extinguished without repayment, and all assets of Old Chrysler were transferred to a liquidation trust. Treasury retained the right to recover the proceeds from the liquidation from time to time of the specified collateral security attached to such loan. 24 On October 27, 2010, Treasury accepted an offer by General Motors Company (GM) to repurchase all of the approximately $2.1 billion preferred stock at a price per share of $25.50, which is equal to 102% of the liquidation preference, subject to the closing of the proposed initial public offering of GM’s common stock. The repurchase was completed on 12/15/2010. 25 On 11/17/2010, Treasury agreed to sell 358,546,795 shares of common stock at $32.7525 per share (which represents the $33 public sale price less underwriting discounts and fees) pursuant to an underwriting agreement. Following settlement, the net proceeds to Treasury were 11,743,303,903. On 11/26/2010, the underwriters exercised their option to purchase an additional 53,782,019 shares of common stock from Treasury at the same purchase price resulting in additional proceeds of $1,761,495,577. Treasury’s aggregate net proceeds from the sale of common stock pursuant to the underwriting agreement total $13,504,799,480. 26 On 12/30/2010, Treasury converted $5,500,000,000 of the total convertible preferred stock then outstanding and held by Treasury (including exercised warrants) into 531,850 shares of common stock of Ally. Following this conversion, Treasury holds $5,937,500 of convertible preferred stock. 27 On 3/1/2011, Treasury entered into an agreement with Ally Financial, Inc. (Ally) and certain other parties to amend and restate the $2,667,000,000 in aggregate liquidation preference of its Ally trust preferred securities so to facilitate a public underwritten offering. At the time of amendment and restatement, Treasury received all outstanding accrued and unpaid dividends and a distribution fee of $28,170,000. 28 On 3/2/2011, Treasury entered into an underwritten offering for all of its Ally trust preferred securities, the proceeds of which were $2,638,830,000, which together with the distribution fee referred to in footnote 27, provided total disposition proceeds to Treasury of $2,667,000,000. This amount does not include the accumulated and unpaid dividends on the trust preferred securities from the date of the amendment and restatement through but excluding the closing date that Treasury will receive separately at settlement. 29 On March 31, 2011, the Plan of Liquidation for Motors Liquidation Company (Old GM) became effective, Treasury’s $986 million loan to Old GM was converted to an administrative claim and the assets remaining with Old GM, including Treasury’s liens on certain collateral and other rights attached to the loan, were transferred to liquidation trusts. Under the Plan of Liquidation, Treasury retained the right to recover additional proceeds; however, any additional recovery is dependent on actual liquidation proceeds and pending litigation. a For the purpose of this table, income (dividends and interest) are presented in aggregate for each AIFP participant. b According to Treasury, the GM warrant was “Exchanged out of bankruptcy exit.” c This table includes AWCP transactions. Notes: Numbers may not total due to rounding. Data as of 3/31/2011. Numbered notes were taken verbatim from Treasury’s 4/4/2011 Transactions Report. GMAC refers to GMAC Inc., formerly known as GMAC LLC., and now known as Ally Financial, Inc. (“Ally”). “Old GM” refers to General Motors Corporation, which is now known as Motors Liquidation Company. “New GM” refers to General Motors Company, the company that purchased Old GM’s assets on 7/10/2009 in a sale pursuant to Section 363 of the Bankruptcy Code. See also footnote 11. “Chrysler FinCo” refers to Chrysler Financial Services Americas LLC. “Chrysler Holding” refers to CGI Holding LLC, the company formerly known as “Chrysler Holding LLC”. “Old Chrysler” refers to Old Carco LLC (fka Chrysler LLC). “New Chrysler” refers to Chrysler Group LLC, the company that purchased Old Chrysler’s assets on 6/10/2009 in a sale pursuant to Section 363 of the Bankruptcy Code. AIFP TRANSACTION DETAIL, AS OF 3/31/2011 Transaction detail I Appendix D I april 28, 2011 263 Initial Total Debt Obligation w/ Additional Note $5,000,000,000 $1,500,000,000 $3,500,000,000 N/A N/A 7/8/2009 7/8/2009 ($1,000,000,000) $2,500,000,000 Adjusted Investment Amount $413,076,735 $101,074,947 Adjusted Total Total Proceeds from Additional Notes $123,076,735 3/9/2010 4/7/2010 Payment7 Repayment5 Payment6 $123,076,735 $44,533,054 Additional Note None Total Repayments $413,076,735 $56,541,893 None $50,000,000 4/5/2010 $100,000,000 Additional Note Repayment 3/4/2010 $140,000,000 Debt Obligation w/ Additional Note 5 Debt Obligation w/ Additional Note Amount Partial repayment Partial repayment 11/20/2009 Remaining Investment Description 2/11/2010 Type Date Repayment4 $10,320,229 $21,629,701 Dividends/ Interest Paid to Treasury Purchase Purchase Citigroup Inc., New York, NY Bank of America Corporation, Charlotte, NC 12/31/2008 1/16/2009 1 $20,000,000,000 $20,000,000,000 Investment Amount $20,000,000,000 $— 12/9/2009 $20,000,000,000 12/23/2009 Total Capital Repayment $40,000,000,000 Par Par Pricing Capital Repayment Mechanism Amount Total Treasury TIP Investment Amount Total Investment $40,000,000,000 Preferred Stock w/ Warrants Trust Preferred Securities w/ Warrants Investment Description — — Warrants Warrants Remaining Capital Description Treasury Investment Remaining After Capital Repayment Capital Remaining Capital Repayment Amount Date2 Capital Repayment Details 3/3/2010 A 1/25/2011 A Final Disposition Date3 Warrants Warrants Final Disposition Description Final Disposition Strike Price Total Warrant Proceeds $1,446,025,527 $134,915 ($5.88) Dividends/ Interest Paid to Treasury $1,435,555,556 OUT $1,568,888,889 Amount “In Outstanding the Money” In or Out Warrant or “Out of of the Shares the Money” Money a Market and Warrants Data $4.42 $128,701.10 $10.61 188,501,414 $1,255,639,099.00 $13.33 $190,386,428 Final Disposition Proceeds Market Stock Capitalization Price (in millions) Sources: Treasury, Transactions Report, 3/31/2011; Treasury, Dividends and Interest Report, 3/31/2011, Treasury, response to SIGTARP data call, 4/6/2011; Market Data: Capital IQ, Inc. (a division of Standard & Poor’s), www.capitaliq.com, accessed 4/4/2011. Notes: Numbers may not total due to rounding. Data as of 3/31/2011. Numbered notes were taken verbatim from Treasury’s 4/4/2011 Transactions Report. 1 Treasury made three separate investments in Citigroup Inc. (“Citigroup”) under CPP, TIP, and AGP for a total of $49 billion. On 6/9/2009, Treasury entered into an agreement with Citigroup to exchange all of Treasury’s investments. On 7/30/2009, Treasury exchanged all of its Fixed Rate Cumulative Perpetual Preferred Stock, Series I (TIP Shares) “dollar for dollar” for Trust Preferred Securities. 2 Repayment pursuant to Title VII, Section 7001 of the American Recovery and Reinvestment Act of 2009. 3 For final disposition of warrants, “R” represents proceeds from a repurchase of warrants by the financial institution, and “A” represents the proceeds to Treasury, before underwriting fees and selling expenses, from a sale by Treasury in a registered public offering of the warrants issued by the financial institution. a When a warrant’s underlying current stock price rises above the strike price, it is considered “In the Money,” otherwise it is considered “Out of the Money.” Transaction Type Institution Name Note Date Seller TIP Transaction Detail, as of 3/31/2011 Table D.6 Sources: Treasury, Transactions Report, 3/31/2011; Treasury, response to SIGTARP data call, 4/11/2011. Notes: Numbers may not total due to rounding. Data as of 3/31/2011. Numbered notes were taken verbatim from Treasury’s 4/4/2011 Transactions Report. 1 The loan was funded through GM Supplier Receivables, LLC, a special purpose vehicle created by General Motors Corporation. The amount of $3,500,000,000 represents the maximum loan amount. The loan will be incrementally funded. The credit agreement was fully executed on 4/9/2009, but was made effective as of 4/3/2009. General Motors Company assumed GM Supplier Receivables LLC on 7/10/2009. 2 The loan was funded through Chrysler Receivables SPV LLC, a special purpose vehicle created by Chrysler LLC. The amount of $1,500,000,000 represents the maximum loan amount. The loan will be incrementally funded. The credit agreement was fully executed on 4/9/2009, but was made effective as of 4/7/2009. Chyrsler Group LLC assumed Chrysler Receivables SPV LLC on 6/10/2009. 3 Treasury issued notice to the institution of the permanent reduced commitment on 7/8/2009; the reduction was effective on 7/1/2009. 4 Does not include accrued and unpaid interest due on the amount of principal repayment, which interest must be paid at the time of principal repayment. 5 All outstanding principal drawn under the credit agreement was repaid. 6 Treasury’s commitment was $2.5 billion (see note 3). As of 4/5/2009, Treasury’s commitment to lend under the credit agreement had terminated and the borrower has paid its obligations with respect to the Additional Note. The final investment amount reflects the total funds disbursed under the loan, all of which have been repaid. 7 Treasury’s commitment was $1 billion (see note 3). As of 4/7/2009, Treasury’s commitment to lend under the credit agreement had terminated and the borrower has paid its obligations with respect to the Additional Note. The final investment amount reflects the total funds disbursed under the loan, all of which have been repaid. Chrysler Receivables SPV LLC, Purchase Wilmington, DE Debt Obligation w/ Additional Note Adjustment Amount Adjustment Details ($500,000,000) $1,000,000,000 2,7 4/9/2009 Purchase Investment Pricing Adjustment Amount Mechanism Date3 2,3 GM Supplier Receivables LLC, Wilmington, DE Institution Name Investment Description $290,000,000 4/9/2009 Date Transaction Type 1,6 1,3 Note Seller ASSP Transaction Detail, as of 3/31/2011 Table D.5 264 Appendix D I Transaction Detail I april 28, 2011 Date Total $— Citigroup 12/23/ Termination Inc.,New Termination ($5,000,000,000) Agreement 2009 York,NY $5,000,000,000 Preferred Stock w/ $4,034,000,000 Warrants Date Payment Type Remaining Premium Amount Payment or Disposition Remaining Payment Premium Amount Desc $446,000,000 $67,197,045 Warrant Auction Total Proceeds $2,246,000,000.00 Disposition None Warrants — — Exchange Trust Trust preferred Partial cancelPreferred Preferred stock 12/23/ lation for early Securities $4,034,000,000 ($1,800,000,000.00) Securities $2,234,000,000 for trust 2009 termination of w/ w/ preferred guarantee Warrants Warrants securities Amount Exchange 09/30/ trust Trust 2010 preferred Preferred 09/29/ securities Securities $2,246,000,000 2010 01/25/ for trust w/ 2011 preferred Warrants securities 06/09/ 2009 Date DescripType tion Exchange/Transfer/Other Details $4.42 Stock Price $128,701.10 Market Capitalization (in millions) In or Out of the Money a Market and Warrants Data Outstanding Amount “In the Strike Warrant Money” or “Out Price Shares of the Money” $442,964,764 Dividends/ Interest Paid to Treasury TALF LLC, Wilmington, DE Purchase TOTAL Debt Obligation w/ Additional Note Investment Description $4,300,000,000 $20,000,000,000 Investment Amount N/A Pricing Mechanism 7/19/2010 Adjusted Investment Date $4,300,000,000 Adjusted Investment Amount Source: Treasury, Transactions Report, 3/31/2011. Notes: Numbers may not total due to rounding. Data as of 3/31/2011. Numbered notes were taken verbatim from Treasury’s 4/4/2011 Transactions Report. 1 The loan was funded through TALF LLC, a special purpose vehicle created by The Federal Reserve Bank of New York. The amount of $20,000,000,000 represents the maximum loan amount. The loan will be incrementally funded. 2 On 7/19/2010, Treasury, the FRBNY and TALF LLC entered into an amendment of the credit agreement previously entered into on 3/3/2009, which amendment reduced Treasury’s maximum loan amount to $4,300,000,000. 3/3/2009 1-2 Transaction Type Institution Note Date Seller TALF Transaction Detail, as of 3/31/2011 Table D.8 Sources: Treasury, Transactions Report, 3/31/2011; Treasury, Dividends and Interest Report, 3/31/2011; Treasury, response to SIGTARP data call, 4/6/2011; Market Data: Capital IQ, Inc. (a division of Standard & Poor’s), www.capitaliq.com, accessed 4/4/2011. Notes: Numbers may not total due to rounding. Data as of 3/31/2011. Numbered notes taken verbatim from 4/4/2011 Transactions Report. 1 In consideration for the guarantee, Treasury received $4.03 billion of preferred stock, which pays 8% interest. 2 Treasury made three separate investments in Citigroup Inc. (“Citigroup”) under CPP, TIP, and AGP for a total of $49 billion. On 6/9/2009, Treasury entered into an agreement with Citigroup to exchange all of Treasury’s investments. On 7/30/2009, Treasury exchanged all of its Fixed Rate Cumulative Perpetual Preferred Stock Series G (AGP Shares), received as premium with the AGP agreement, “dollar for dollar” for Trust Preferred Securities. 3 On 12/23/2009, Treasury entered into a Termination Agreement with the other parties to the Master Agreement which served to terminate Treasury’s guarantee and obligations under the Master Agreement. In connection with the early termination of the guarantee, Treasury agreed to cancel $1.8 billion of the AGP Trust Preferred Securities, and the Federal Deposit Insurance Corporation (FDIC) and Treasury agreed that, subject to the conditions set out in the Termination Agreement, the FDIC may transfer $800 million of Trust Preferred Securities to Treasury at the close of Citigroup’s participation in the FDIC’s Temporary Liquidity Guarantee Program. 4 On 9/29/2010, Treasury entered into an agreement with Citigroup Inc. to exchange $2,234,000,000 in aggregate liquidation preference of its trust preferred securities for $2,246,000,000 in aggregate liquidation preference of trust preferred securities with certain modified terms. At the time of exchange, Citigroup Inc. paid the outstanding accrued and unpaid dividends. 5 On 9/30/2010, Treasury entered into underwritten offering of the trust preferred securities, the gross proceeds of which do not include accumulated and unpaid distributions from the date of the exchange through the closing date. a When a warrant’s underlying current stock price rises above the strike price, it is considered “In the Money,” otherwise it is considered “Out of the Money.” b AGP transaction is a guarantee, not a purchase. Treasury received a premium including preferred stock and warrants as part of this transaction. 3 Master Agreement Amount Citigroup 1,2,3, 01/16/ Inc.,New Guarantee 4,5 2009 York,NY Note Institution Transaction Name Type Description Guarantee Limit Description Premium Initial Investmentb AGP Transaction Detail, as of 3/31/2011 Table D.7 Transaction detail I Appendix D I april 28, 2011 265 Exchange Transfer Common Stock (non-TARP) 1/14/2011 1/14/2011 5 6 Common Stock 562,868,096 924,546,133 167,623,733 $3,375,328,432 $16,916,603,568 AIA Preferred Units ALICO Junior Preferred Interests $2,000,000,000 Investment Amount Preferred Stock (Series G) Investment Description Par Par Exchange Transaction Type Preferred Stock w/ Warrants Investment Description $40,000,000,000 Investment Amount Date $185,726,192 Total Par Par Par Par Par — $11,163,976,429 Remaining Recap Investment Amount Proceeds Pricing Mechanism $9,146,447,248 Payment $1,383,888,037 Payment $2,009,932,072 2/14/2011 3/8/2011 Payment $55,833,333 Payment $5,511,067,614 Payment Proceeds8 Final Disposition Transaction Type 3/15/2011 3/8/2011 Transaction Type Warrants (Series F) Warrants (Series E) Investment 2/14/2011 Date Final Disposition Par Pricing Mechanism See table below for exchange/transfer details in connection with the recapitalization conducted on 1/14/2011. 4/17/2009 Date Exchange Details Sources: Treasury, Transactions Report, 3/31/2011; Treasury, Dividend and Interest Report, 3/31/2011; Treasury, response to SIGTARP data call, 4/6/2011; Market Data: Capital IQ, Inc. (a division of Standard & Poor’s), www.capitaliq.com, accessed 4/4/2011. Notes: Numbers may not total due to rounding. Data as of 3/31/2011. Numbered notes were taken verbatim from Treasury’s 4/4/2011 Transactions Report. 1 On 4/17/2009, Treasury exchanged its Series D Fixed Rate Cumulative Preferred Shares for Series E Fixed Rate Non-Cumulative Preferred Shares with no change to Treasury’s initial investment amount. In addition, in order for AIG to fully redeem the Series E Preferred Shares, it has an additional obligation to Treasury of $1,604,576,000 to reflect the cumulative unpaid dividends for the Series D Preferred Shares due to Treasury through and including the exchange date. 2 The investment price reflects Treasury’s commitment to invest up to $30 billion less a reduction of $165 million representing retention payments AIG Financial Products made to its employees in March 2009. 3 This transaction does not include AIG’s commitment fee of an additional $165 million to be paid from its operating income over the life of the facility. A $55 million payment was received by Treasury on 12/17/2010. Additional payments are scheduled to be made in accordance with the Amended and Restated Purchase Agreement, dated as of 1/14/2011, between AIG and Treasury. 4 This transaction does not include AIG’s commitment fee of an additional $165 million to be paid from its operating income over the life of the facility. A $55 million payment was received by Treasury on 12/17/2010. Additional payments are scheduled to be made in accordance with the Amended and Restated Purchase Agreement, dated as of 1/14/2011, between AIG and Treasury. 5 On 1/14/2011, Treasury exchanged an amount equivalent to the $40 billion initial investment plus capitalized interest from the April 2009 exchange (see note 1 above) of Fixed Rate Non-Cumulative Perpetual Preferred Stock (Series E) for 924,546,133 shares of AIG Common Stock. 6 On 1/14/2011, Treasury received 562,868,096 shares of AIG Common Stock from the AIG Credit Facility Trust, which trust was established in connection with the credit facility between AIG and the Federal Reserve Bank of New York. This credit facility was repaid and terminated pursuant to this recapitalization transaction. The trust had received 562,868,096 shares of AIG common stock in exchange for AIG’s Series C Perpetual, Convertible Participating Preferred Stock, which was previously held by the trust for the benefit of the U.S. Treasury. 7 The amount of Treasury’s AIA Preferred Units and ALICO Junior Preferred Interests holdings do not reflect preferred returns on the securities that accrue quarterly. 8 Proceeds include amounts applied to pay (i) accrued preferred returns and (ii) redeem the outstanding liquidation amount. a When a warrant’s underlying current stock price rises above the strike price, it is considered “In the Money,” otherwise it is considered “Out of the Money.” N/A Exchange Preferred Stock (Series E) N/A Exchange Preferred Stock (Series F) Par Exchange 4,7,8 1/14/2011 Pricing Mechanism Treasury Holdings Post-Recapitalization $69,835,000,000 $29,835,000,000 Total $40,000,000,000 Preferred Stock w/ Warrants Investment Pricing Amount Mechanism Preferred Stock w/ Warrants Investment Description Transaction Type Investment Description Note Date Recapitalization AIG, New York, NY Purchase 4/17/2009 2,3 Transaction Type 11/25/2008 AIG, New York, NY Purchase Institution Purchase Detail 1 Note Date Seller SSFI (AIG) Transaction Detail, as of 3/31/2011 Table D.9 Pricing Mechanism $35.14 $35.14 63,136 63,136 Market Capitalization Stock Price (in millions) $0.00002 $50.00 Strike Price 150 2,689,938 Outstanding Warrant Shares $35.14 ($14.86) IN Out In or Out of the Money a Warrants and Market Data Amount “In the Money” or “Out of the Money” — — Dividends/ Interest Paid to Treasury 266 Appendix D I Transaction Detail I april 28, 2011 Floating Rate SBA 7a security due 2021 Floating Rate SBA 7a security due 2029 Floating Rate SBA 7a security due 2026 Floating Rate SBA 7a security due 2035 Floating Rate SBA 7a security due 2034 9/14/2010 9/14/2010 9/28/2010 9/28/2010 Floating Rate SBA 7a security due 2034 7/29/2010 9/14/2010 Floating Rate SBA 7a security due 2017 7/29/2010 Floating Rate SBA 7a security due 2020 Floating Rate SBA 7a security due 2034 7/14/2010 9/14/2010 Floating Rate SBA 7a security due 2025 7/14/2010 Floating Rate SBA 7a security due 2020 Floating Rate SBA 7a security due 2020 7/14/2010 8/31/2010 Floating Rate SBA 7a security due 2034 6/17/2010 Floating Rate SBA 7a security due 2024 Floating Rate SBA 7a security due 2020 6/17/2010 8/31/2010 Floating Rate SBA 7a security due 2033 5/25/2010 Floating Rate SBA 7a security due 2020 Floating Rate SBA 7a security due 2029 5/25/2010 Floating Rate SBA 7a security due 2020 Floating Rate SBA 7a security due 2033 5/11/2010 8/31/2010 Floating Rate SBA 7a security due 2035 5/11/2010 8/17/2010 Floating Rate SBA 7a security due 2020 5/11/2010 Floating Rate SBA 7a security due 2020 Floating Rate SBA 7a security due 2016 4/8/2010 Floating Rate SBA 7a security due 2019 Floating Rate SBA 7a security due 2034 4/8/2010 8/17/2010 Floating Rate SBA 7a security due 2022 3/19/2010 8/17/2010 Floating Rate SBA 7a security due 2025 Floating Rate SBA 7a security due 2022 3/19/2010 3/19/2010 Investment Description Trade Date Coastal Securities Coastal Securities Coastal Securities Coastal Securities Shay Financial Shay Financial Coastal Securities Shay Financial Shay Financial Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Coastal Securities Institution Name 1 83165AFT6 83164K5M1 83164K5L3 83164K5F6 83165AFK5 83165AFC3 83164K5H2 83165AFA7 83165AEW0 83165AE91 83165AFB5 83165AEZ3 83164K4M2 83164K4E0 83165AE42 83164K4J9 83164K3Y7 83165AEP5 83165AEQ3 83165AEK6 83164K3B7 83165AED2 83164K2Q5 83165AEE0 83164KZH9 83165AD84 83165ADE1 83165ADC5 83164KYN7 CUSIP Purchase Details UCSB TRANSACTION DETAIL, AS OF 3/31/2011 Table D.10 $11,482,421.00 $3,450,000.00 $5,741,753.00 $5,750,000.00 $8,050,000.00 $8,902,230.00 $6,900,000.00 $10,350,000.00 $9,272,482.00 $10,000,000.00 $5,000,000.00 $8,279,048.00 $9,719,455.00 $2,598,386.00 $13,183,361.00 $6,860,835.00 $6,004,156.00 $28,209,085.00 $34,441,059.00 $17,119,972.00 $8,417,817.00 $8,744,333.00 $12,898,996.00 $10,751,382.00 $8,900,014.00 $23,500,000.00 $8,030,000.00 $7,617,617.00 $4,070,000.00 Purchase Face Amount3 113.838 110.875 110.5 106.5 110.759 111.584 105.875 112.476 110.515 110.821 110.088 110.198 106.75 108.438 111.86 108.505 106.625 112.028 110.785 109.553 110.125 110.798 109.42 106.806 107.5 110.502 108.875 109 107.75 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Pricing Mechanism TBA or PMF3 12/30/2010 11/30/2010 11/30/2010 11/30/2010 11/30/2010 10/29/2010 11/30/2010 10/29/2010 9/29/2010 10/29/2010 10/29/2010 9/30/2010 10/29/2010 9/30/2010 9/30/2010 9/30/2010 9/30/2010 8/30/2010 8/30/2010 7/30/2010 7/30/2010 6/30/2010 6/30/2010 6/30/2010 4/30/2010 5/28/2010 3/24/2010 3/24/2010 3/24/2010 Settlement Date $13,109,070 $3,834,428 $6,361,173 $6,134,172 $8,940,780 $9,962,039 $7,319,688 $11,672,766 $10,277,319 $11,115,031 $5,520,652 $9,150,989 $10,394,984 $2,826,678 $14,789,302 $7,462,726 $6,416,804 $31,693,810 $38,273,995 $18,801,712 $9,294,363 $9,717,173 $14,151,229 $11,511,052 $9,598,523 $26,041,643 $8,716,265 $8,279,156 $4,377,249 Investment Amount 2, 3 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — TBA or PMF3 $6,535 $1,912 $3,172 $3,061 $4,458 $4,966 $3,652 $5,820 $5,123 $5,541 $2,752 $4,561 $5,187 $1,408 $7,373 $3,722 $3,200 $15,801 $19,077 $9,377 $4,635 $4,844 $7,057 $5,741 $4,783 $12,983 $4,348 $4,130 $2,184 Senior Security Proceeds 4 Settlement Details Trade Date Current Face Amount Final Disposition Life-to-date Principal Received 1 Continued on next page. $78,043 $28,616 $51,138 $32,234 $76,149 $121,650 $44,134 $134,390 $157,138 $140,100 $69,077 $138,891 $83,124 $45,878 $218,158 $94,337 $75,945 $559,765 $726,125 $328,608 $174,158 $234,958 $305,166 $224,869 $297,302 $726,075 $273,918 $262,680 $124,276 Dividend/ Disposition Interest Paid to Amount 5 Treasury Transaction detail I Appendix D I april 28, 2011 267 Floating Rate SBA 7a security due 2034 Floating Rate SBA 7a security due 2035 9/28/2010 9/28/2010 Shay Financial Shay Financial Institution Name $14,950,000.00 $332,596,893 Total Purchase Face Amount $13,402,491.00 Purchase Face Amount3 83165AFQ2 83165AFM1 CUSIP 1 114.006 113.9 $17,092,069 $368,145,452 Total Investment Amount* $15,308,612 Investment Amount 2, 3 12/30/2010 11/30/2010 Settlement Date Total Senior Security Proceeds — — TBA or PMF3 $183,555 $8,521 $7,632 Senior Security Proceeds 4 Settlement Details Trade Date Total Disposition Proceeds Current Face Amount Final Disposition Life-to-date Principal Received 1 $— $— $99,258 $133,797 Dividend/ Disposition Interest Paid to Amount 5 Treasury Date 10/30/2009 10/30/2009 10/2/2009 10/2/2009 10/2/2009 10/2/2009 9/30/2009 9/30/2009 Note 2,6 1,6 2,6 1,6 2,6 1,6 1,6 2,6 DE DE DE DE DE AllianceBernstein Legacy Securities Master Fund, L.P. Wilmington AllianceBernstein Legacy Securities Master Fund, L.P. Wilmington Wilmington Wilmington Blackrock PPIF, L.P. Blackrock PPIF, L.P. Invesco Legacy Securities Master Fund, L.P. Wilmington DE DE Invesco Legacy Securities Master Wilmington Fund, L.P. DE Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Transaction State Type AG GECC PPIF Master Fund, L.P. Wilmington City AG GECC PPIF Master Fund, L.P. Wilmington Institution Seller Debt Obligation w/ Contingent Proceeds Membership Interest $2,222,222,222 $1,111,111,111 $1,111,111,111 $2,222,222,222 Membership Interest $1,111,111,111 Debt Obligation w/ Contingent Proceeds $2,222,222,222 Membership Interest $1,111,111,111 Debt Obligation w/ Contingent Proceeds $2,222,222,222 Investment Amount (Continued) Membership Interest Debt Obligation w/ Contingent Proceeds Investment Description PPIP Transaction Detail, as of 3/31/2011 Table D.11 Par Par Par Par Par Par Par Par Pricing Mechanism 3 3/22/2010 $2,488,875,000 03/22/2010 $1,244,437,500 3/22/2010 $1,244,437,500 3/22/2010 $2,488,875,000 3/22/2010 $1,244,437,500 3/22/2010 $2,488,875,000 3/22/2010 $1,271,337,500 3/22/2010 $2,542,675,000 DateAmount Adjusted Investment Source: Treasury, Transactions Report, 3/31/2011, Treasury, Dividends and Interest Report, 3/31/2011, Response to SIGTARP data call, 4/6/2011. 2 1 7/16/2010 7/16/2010 7/16/2010 7/16/2010 7/16/2010 7/16/2010 7/16/2010 7/16/2010 Date $1,712,000,000 $856,000,000 $694,980,000 $1,389,960,000 $1,150,423,500 $2,300,847,000 $1,243,275,000 $2,486,550,000 Amount Final Investment Amount7 $31,689,230 $27,355,590 $92,300,138 $128,027,536 12/14/2010 1/14/2010 2/14/2011 3/14/2011 $60,022,674 9/15/2010 $132,928,628 $7,066,434 4/15/2010 11/15/2010 $4,888,718 Repayment Amount 2/18/2010 Repayment Date Capital Repayment Details Debt Obligation w/ Contingent $1,227,721,052 Proceeds Debt Obligation w/ Contingent $1,355,748,588 Proceeds Debt Obligation w/ Contingent $1,448,048,726 Proceeds Debt Obligation w/ Contingent $1,475,404,316 Proceeds Debt Obligation w/ Contingent $1,507,093,546 Proceeds Debt Obligation w/ Contingent $1,640,022,174 Proceeds Debt Obligation w/ Contingent $1,700,044,848 Proceeds Debt Obligation w/ Contingent $1,707,111,282 Proceeds Amount Description Investment after Capital Repayment Date Description $310,633,053 $15,389,626 $113,106,621 $82,787,534 Interest/ Distributions Paid to Treasury Continued on next page. Proceeds Distribution or Disposition * Subject to adjustment The amortizing principal and interest payments are reported on the monthly Dividends and Interest Report available at http://www.treasury.gov/initiatives/financial—stability/Pages/default.aspx. Investment Amount is stated after giving effect to factor and, if applicable, the purchase of accrued principal and interest. 3 If a purchase is listed as TBA, or To—Be—Announced, the underlying loans in the SBA Pool have yet to come to market, and the TBA pricing mechanism, purchase face amount, investment amount and senior security proceeds will be adjusted within the variance permitted under the program terms. If a purchase is listed as PMF, or Prior—Month—Factor, the trade was made prior to the applicable month’s factor being published and the SBA 7a security and senior security are priced according to the prior—month’s factor. The PMF investment amount and senior security proceeds will be adjusted after publication of the applicable month’s factor (on or about the 11th business day of each month). 4 In order to satisfy the requirements under Section 113 of the Emergency Economic Stabilization Act of 2008, Treasury will acquire a senior indebtedness instrument (a Senior Security) from the seller of each respective SBA 7a Security. Each Senior Security will (i) have an aggregate principal amount equal to the product of (A) 0.05% and (B) the Investment Amount (excluding accrued interest) paid by Treasury for the respective SBA 7a Security, and (ii) at the option of the respective seller, may be redeemed at par value immediately upon issuance, or remain outstanding with the terms and conditions as set forth in the Master Purchase Agreement. 5 Disposition Amount is stated after giving effect, if applicable, to sale of accrued principal and interest. — — Pricing Mechanism TBA or PMF3 Notes: Numbers affected by rounding. Data as of 3/31/2011. Numbered notes were taken verbatim from Treasury’s 4/4/2011 Transactions Report. Investment Description Trade Date Purchase Details UCSB TRANSACTION DETAIL, AS OF 3/31/2011 268 Appendix D I Transaction Detail I april 28, 2011 11/25/2009 11/25/2009 12/18/2009 12/18/2009 11/4/2009 11/4/2009 9/30/2009 9/30/2009 10/1/2009 10/1/2009 2,6 1,6 2,6 1,6 2,6 1,6 2,4,5 1,4,5 2,6 1,6 DE DE RLJ Western Asset Public/Private Master Fund, L.P. Wilmington DE DE Wellington Management Legacy Securities PPIF Master Fund, LP Wilmington Wellington Management Legacy Securities PPIF Master Fund, LP Wilmington DE DE Wilmington RLJ Western Asset Public/Private Master Fund, L.P. Wilmington UST/TCW Senior Mortgage Securi- Wilmington ties Fund, L.P. DE Wilmington Oaktree PPIP Fund, L.P. Oaktree PPIP Fund, L.P. DE DE UST/TCW Senior Mortgage Securi- Wilmington ties Fund, L.P. DE Marathon Legacy Securities PublicPrivate Investment Partnership, L.P. Wilmington City Marathon Legacy Securities PublicPrivate Investment Partnership, L.P. Wilmington Institution Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Transaction State Type Initial Investment Amount Membership Interest Debt Obligation w/ Contingent Proceeds Membership Interest Debt Obligation w/ Contingent Proceeds $30,000,000,000 $1,111,111,111 $2,222,222,222 $1,111,111,111 $2,222,222,222 $1,111,111,111 $2,222,222,222 Membership Interest $1,111,111,111 Debt Obligation w/ Contingent Proceeds $2,222,222,222 Membership Interest $1,111,111,111 Debt Obligation w/ Contingent Proceeds $2,222,222,222 Investment Amount Membership Interest Debt Obligation w/ Contingent Proceeds Investment Description (Continued) Par Par Par Par Par Par Par Par Par Par Pricing Mechanism 3 $156,250,000 $200,000,000 7/16/2010 Total Final Investment Amount 3/22/2010 $1,262,037,500 7/16/2010 7/16/2010 7/16/2010 7/16/2010 7/16/2010 7/16/2010 7/16/2010 $22,406,483,574 $1,149,487,000 $2,298,974,000 $156,250,000 $200,000,000 $620,578,258 $1,241,156,516 $1,160,784,100 $2,321,568,200 $474,550,000 $949,100,000 Amount Final Investment Amount7 Date 3/22/2010 $2,524,075,000 1/4/2010 1/4/2010 3/22/2010 $1,244,437,500 3/22/2010 $2,488,875,000 3/22/2010 $1,244,437,500 3/22/2010 $2,488,875,000 3/22/2010 $1,244,437,500 3/22/2010 $2,488,875,000 DateAmount Adjusted Investment Total Capital Repayment 1/15/2010 1/12/2010 1/11/2010 Repayment Date $840,528,948 $156,250,000 $166,000,000 $34,000,000 Repayment Amount Capital Repayment Details — Membership Interest Contingent — Proceeds Debt Obligation w/ Contingent $166,000,000 Proceeds Amount Description Investment after Capital Repayment $20,644,319 $48,922 Total Proceeds $20,091,872 Final 2/24/2010 Distribution $1,223 1/29/2010 Distribution $502,302 Proceeds Final 2/24/2010 Distribution N/A Description 1/29/2010 Distribution Date Distribution or Disposition $47,006,054 $342,176 $68,604,131 $2,410,838 $13,809,654 Interest/ Distributions Paid to Treasury Sources: Treasury, Transactions Report, 3/31/2011; Treasury, Dividends and Interest Report, 3/31/2011; Treasury, response to SIGTARP data call, 4/6/2011. 2 1 Notes: Numbers may not total due to rounding. Data as of 3/31/2011. Numbered notes were taken verbatim from Treasury’s 4/4/2011 Transactions Report. The equity amount may be incrementally funded. Investment amount represents Treasury’s maximum obligation if the limited partners other than Treasury fund their maximum equity capital obligations. The loan may be incrementally funded. Investment amount represents Treasury’s maximum obligation if Treasury and the limited partners other than Treasury fund 100% of their maximum equity obligations. 3 Adjusted to show Treasury’s maximum obligations to a fund. 4 On 1/4/2010, Treasury and the fund manager entered into a Winding-Up and Liquidation Agreement. 5 Profit after capital repayments will be paid pro rata (subject to prior distribution of Contingent Proceeds to Treasury) to the fund’s partners, including Treasury, in respect of their membership interests. 6 Following termination of the TCW fund, the $3.33 billion of obligations have been reallocated to the remaining eight funds pursuant to consent letters from Treasury dated as of 3/22/2010. $133 million of maximum equity capital obligation and $267 million of maximum debt obligation were reallocated per fund, after adjustment for the $17.6 million and $26.9 million equity capital reallocations from private investors in the TCW fund to the Wellington fund and the AG GECC fund, respectively. The $356 million of final investment in the TCW fund will remain a part of Treasury’s total maximum S-PPIP investment amount. 7 Amount adjusted to show Treasury’s final capital commitment (membership interest) and the maximum amount of Treasury’s debt obligation that may be drawn down in accordance with the Loan Agreement. Date Note Seller PPIP Transaction Detail, as of 3/31/2011 Transaction detail I Appendix D I april 28, 2011 269 4/13/2009 Date Transaction Type Purchase Name of Institution Select Portfolio Servicing, Salt Lake City, UT Servicer Modifying Borrowers’ Loans Financial Instrument for Home Loan Modifications Investment Description ($2,300,000) $100,000 $3,600,000 ($735) 2/16/2011 3/16/2011 3/30/2011 ($639) 1/13/2011 1/6/2011 $64,400,000 $4,000,000 9/30/2010 12/15/2010 $128,690,000 7/14/2010 ($700,000) ($355,530,000) 3/26/2010 11/16/2010 $131,340,000 12/30/2009 $376,000,000 N/A $121,910,000 9/30/2009 $59,807,784 $284,590,000 6/12/2009 9/30/2010 Cap Adjustment Amount (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 table d.12 $815,906,410 $815,907,145 $812,307,145 $812,207,145 $814,507,145 $814,507,784 $750,107,784 $750,807,784 $691,000,000 $687,000,000 $558,310,000 $913,840,000 $782,500,000 $660,590,000 Adjusted Cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Initial FHA-HAMP cap and initial FHA-2LP cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Reason for Adjustment Adjustment Details Market Capitalization (in Millions) $12,576,586 Borrowers Incentive $32,265,642 Lenders/ Investors Incentives $77,914,197 Total Non-GSE Incentive Payments Continued on next page. $33,071,969 Servicers Incentives Non-GSE Incentive Payments 270 Appendix D I Transaction Detail I april 28, 2011 4/13/2009 Date Transaction Type Purchase Name of Institution CitiMortgage, Inc., O’Fallon, MO Servicer Modifying Borrowers’ Loans Financial Instrument for Home Loan Modifications Investment Description ($230,000) ($3,000,000) ($12,280,000) ($757,680,000) ($7,110,000) 4/19/2010 5/14/2010 6/16/2010 7/14/2010 7/16/2010 ($3,200,000) 10/15/2010 11/16/2010 ($10,500,000) ($4,600,000) ($30,500,000) ($1,031) 1/13/2011 2/16/2011 3/16/2011 3/30/2011 ($981) ($1,400,000) 9/30/2010 1/6/2011 $32,400,000 $101,287,484 9/30/2010 ($8,300,000) ($199,300,000) 3/26/2010 9/15/2010 ($105,410,000) 12/30/2009 ($6,300,000) $1,010,180,000 9/30/2009 8/13/2010 ($991,580,000) 6/12/2009 $2,071,000,000 N/A Cap Adjustment Amount (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $1,073,475,472 $1,073,476,503 $1,103,976,503 $1,108,576,503 $1,119,076,503 $1,119,077,484 $1,122,277,484 $1,123,677,484 $1,022,390,000 $989,990,000 $998,290,000 $1,004,590,000 $1,011,700,000 $1,769,380,000 $1,781,660,000 $1,784,660,000 $1,784,890,000 $1,984,190,000 $2,089,600,000 $1,079,420,000 Adjusted Cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Initial FHA-HAMP cap and initial FHA-2LP cap Transfer of cap to multiple servicers due to servicing transfer Transfer of cap to multiple servicers due to servicing transfer Transfer of cap to multiple servicers due to servicing transfer Updated portfolio data from servicer Transfer of cap to multiple servicers due to servicing transfer Transfer of cap to Specialized Loan Servicing, LLC due to servicing transfer Transfer of cap to Service One, Inc. due to servicing transfer Updated portfolio data from servicer & 2MP initial cap Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Reason for Adjustment Adjustment Details Market Capitalization (in Millions) $14,356,611 Borrowers Incentive $37,965,429 Lenders/ Investors Incentives $90,543,847 Total Non-GSE Incentive Payments Continued on next page. $38,221,808 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 271 Purchase Purchase Wells Fargo Bank, NA, Des Moines, IA GMAC Mortgage, Inc., Ft. Washington, PA 4/13/2009 4/13/2009 Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $2,873,000,000 N/A $633,000,000 N/A Financial Instrument for Home Loan Modifications $8,413,225 $22,200,000 12/3/2010 12/15/2010 $216,998,139 9/30/2010 ($100,000) ($2,024) 3/30/2011 ($1,734) 3/16/2011 1/6/2011 ($500,000) $119,200,000 9/30/2010 12/15/2010 ($3,700,000) 8/13/2010 ($881,530,000) ($1,679,520,000) 12/30/2009 7/14/2010 $2,537,240,000 9/30/2009 $1,880,000 $384,650,000 6/12/2009 5/14/2010 ($7,171) 3/30/2011 $190,180,000 ($100,000) 3/16/2011 3/26/2010 ($100,000) 1/13/2011 ($6,312) $344,000,000 9/30/2010 1/6/2011 ($287,348,828) $683,130,000 3/26/2010 ($2,038,220,000) $668,108,890 3/19/2010 9/30/2010 $54,767 3/12/2010 7/14/2010 $2,050,236,344 2/17/2010 $65,070,000 9/30/2009 $1,213,310,000 ($462,990,000) 6/17/2009 12/30/2009 Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $1,517,794,381 $1,517,796,405 $1,517,896,405 $1,517,898,139 $1,518,398,139 $1,301,400,000 $1,182,200,000 $1,185,900,000 $2,067,430,000 $2,065,550,000 $1,875,370,000 $3,554,890,000 $1,017,650,000 $5,138,750,914 $5,138,758,085 $5,138,858,085 $5,138,958,085 $5,138,964,397 $5,116,764,397 $5,108,351,172 $4,764,351,172 $5,051,700,000 $7,089,920,000 $6,406,790,000 $5,738,681,110 $5,738,626,344 $3,688,390,000 $2,475,080,000 $2,410,010,000 Adjusted Cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-HAMP cap, initial FHA-2LP cap, and initial 2MP cap Transfer of cap due to servicing transfer Updated portfolio data from servicer Transfer of cap from Wilshire Credit Corporation due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap (from Wachovia) due to merger Initial FHA-HAMP cap, initial FHA-2LP cap, and initial RD-HAMP Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Initial 2MP cap Transfer of cap (from Wachovia) due to merger Transfer of cap (from Wachovia) due to merger Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Reason for Adjustment Adjustment Details $168,471 Market Capitalization (in Millions) $7,747,806 $14,314,746 Borrowers Incentive $32,160,958 $57,004,340 Lenders/ Investors Incentives $66,140,416 $124,519,121 Total Non-GSE Incentive Payments Continued on next page. $26,231,652 $53,200,035 Servicers Incentives Non-GSE Incentive Payments 272 Appendix D I Transaction Detail I april 28, 2011 $659,000,000 N/A Financial Instrument for Home Loan Modifications Ocwen Financial Corporation, Inc., West Palm Beach, FL 4/16/2009 Purchase $3,552,000,000 N/A Financial Instrument for Home Loan Modifications Chase Home Finance, LLC, Purchase Iselin, NJ 4/13/2009 2 ($22,980,000) 7/16/2010 ($1,020) $900,000 ($1,114) 2/16/2011 3/30/2011 $170,800,000 1/6/2011 10/15/2010 $100,000 ($191,610,000) 7/14/2010 $3,742,740 $156,050,000 6/16/2010 9/30/2010 $46,860,000 3/26/2010 9/15/2010 $277,640,000 12/30/2009 $23,710,000 $102,580,000 9/30/2009 7/16/2010 ($105,620,000) 6/12/2009 ($654) 3/30/2011 ($3,552,000,000) $700,000 3/16/2011 7/31/2009 $2,300,000 1/13/2011 ($556) $8,900,000 12/15/2010 1/6/2011 $100,000 10/15/2010 $116,222,668 ($513,660,000) 7/14/2010 9/30/2010 ($156,050,000) 6/16/2010 $9,800,000 ($57,720,000) 3/26/2010 $1,800,000 $355,710,000 12/30/2009 9/30/2010 $254,380,000 9/30/2009 9/15/2010 $225,040,000 6/17/2009 $407,000,000 N/A Cap Adjustment Amount Saxon Mortgage Services, Purchase Inc., Irving, TX Investment Description 4/13/2009 Transaction Type Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date (CONTINUED) Financial Instrument for Home Loan Modifications Date Name of Institution Servicer Modifying Borrowers’ Loans HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $1,144,150,606 $1,144,151,720 $1,143,251,720 $1,143,252,740 $972,452,740 $968,710,000 $968,610,000 $944,900,000 $1,136,510,000 $980,460,000 $933,600,000 $655,960,000 $553,380,000 — $631,541,458 $631,542,112 $630,842,112 $628,542,112 $628,542,668 $619,642,668 $619,542,668 $503,320,000 $493,520,000 $491,720,000 $514,700,000 $1,028,360,000 $1,184,410,000 $1,242,130,000 $886,420,000 $632,040,000 Adjusted Cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Initial FHA-HAMP cap Transfer of cap from Saxon Mortgage Services, Inc. due to servicing transfer Updated portfolio data from servicer Transfer of cap from Saxon Mortgage Services, Inc. due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Termination of SPA Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Initial FHA-HAMP cap and initial FHA-2LP cap Transfer of cap due to servicing transfer Transfer of cap due to multiple servicing transfers Updated portfolio data from servicer Transfer of cap to Ocwen Financial Corporation, Inc. due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Reason for Adjustment Adjustment Details $1,106.00 Market Capitalization (in Millions) $11,825,475 $9,416,403 Borrowers Incentive $34,276,406 $19,564,235 Lenders/ Investors Incentives $76,920,146 $54,615,091 Total Non-GSE Incentive Payments Continued on next page. $30,818,265 $25,634,453 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 273 Purchase Purchase 4/17/2009 Countrywide Home as amended Loans Servicing LP, on Simi Valley, CA 1/26/2010 Transaction Type 4/17/2009 as amended Bank of America, N.A., on Simi Valley, CA 1/26/2010 Date Name of Institution Servicer Modifying Borrowers’ Loans Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Investment Description $1,864,000,000 N/A $1,800,000 $100,000 ($9,190) 3/16/2011 3/30/2011 ($8,012) 2/16/2011 1/6/2011 $236,000,000 $286,510,000 6/16/2010 12/15/2010 $10,280,000 4/19/2010 ($614,527,362) $905,010,000 3/26/2010 9/30/2010 $450,100,000 1/26/2010 $105,500,000 $2,290,780,000 12/30/2009 9/30/2010 ($717,420,000) 9/30/2009 ($1,787,300,000) $3,318,840,000 6/12/2009 7/14/2010 ($2,548) 3/30/2011 $222,941,084 9/30/2010 ($2,199) $95,300,000 9/30/2010 1/6/2011 ($366,750,000) $800,390,000 1/26/2010 7/14/2010 $665,510,000 12/30/2009 $798,900,000 N/A $162,680,000 9/30/2009 ($829,370,000) $5,540,000 6/12/2009 3/26/2010 Cap Adjustment Amount (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $6,349,655,436 $6,349,664,626 $6,349,564,626 $6,347,764,626 $6,347,772,638 $6,111,772,638 $6,726,300,000 $6,620,800,000 $8,408,100,000 $8,121,590,000 $8,111,310,000 $7,206,300,000 $6,756,200,000 $4,465,420,000 $5,182,840,000 $1,555,136,337 $1,555,138,885 $1,555,141,084 $1,332,200,000 $1,236,900,000 $1,603,650,000 $2,433,020,000 $1,632,630,000 $967,120,000 $804,440,000 Adjusted Cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-HAMP cap, initial FHA-2LP cap, and initial RD-HAMP Updated portfolio data from servicer Transfer of cap from Wilshire Credit Corporation due to servicing transfer Transfer of cap from Wilshire Credit Corporation due to servicing transfer Updated portfolio data from servicer Initial 2MP cap Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-HAMP cap, initial FHA-2LP cap, and initial RD-HAMP Updated portfolio data from servicer Updated portfolio data from servicer Initial 2MP cap Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Reason for Adjustment Adjustment Details $136,129.00 Market Capitalization (in Millions) $20,250,620 $2,385,888 Borrowers Incentive $56,852,231 $9,359,162 Lenders/ Investors Incentives $131,765,994 $19,524,144 Total Non-GSE Incentive Payments Continued on next page. $54,663,143 $7,779,094 Servicers Incentives Non-GSE Incentive Payments 274 Appendix D I Transaction Detail I april 28, 2011 Purchase Purchase Home Loan Services, Inc., Pittsburgh, PA Wilshire Credit Corporation, Beaverton, OR 4/20/2009 4/20/2009 Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $366,000,000 N/A Financial Instrument for Home Loan Modifications 9/30/2010 ($294) ($100,000) $68,565,782 8/13/2010 3/30/2011 ($210,000) 7/16/2010 ($247) $19,540,000 7/14/2010 1/6/2011 ($286,510,000) 6/16/2010 ($1,880,000) $119,700,000 12/30/2009 5/14/2010 ($249,670,000) 9/30/2009 $52,270,000 $87,130,000 6/12/2009 ($10,280,000) ($278) 3/30/2011 4/19/2010 ($400,000) 3/16/2011 3/26/2010 ($1,900,000) 2/16/2011 ($233) ($314,900,000) 1/6/2011 12/15/2010 ($73,010,000) 7/14/2010 ($77,126,410) ($17,440,000) 3/26/2010 9/30/2010 $145,820,000 12/30/2009 $319,000,000 N/A $46,730,000 9/30/2009 $6,700,000 $128,300,000 6/12/2009 9/30/2010 Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $164,555,241 $164,555,535 $164,555,782 $95,990,000 $96,090,000 $96,300,000 $76,760,000 $363,270,000 $365,150,000 $375,430,000 $323,160,000 $203,460,000 $453,130,000 $161,773,079 $161,773,357 $162,173,357 $164,073,357 $164,073,590 $478,973,590 $556,100,000 $549,400,000 $622,410,000 $639,850,000 $494,030,000 $447,300,000 Adjusted Cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap due to servicing transfer Transfer of cap to Green Tree Servicing LLC due to servicing transfer Updated portfolio data from servicer Transfer of cap to Countrywide Home Loans due to servicing transfer Transfer of cap to GMAC Mortgage, Inc. due to servicing transfer Transfer of cap to Countrywide Home Loans due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-2LP cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Reason for Adjustment Adjustment Details Market Capitalization (in Millions) — $169,858 Borrowers Incentive $490,394 $2,440,768 Lenders/ Investors Incentives $1,657,394 $6,309,233 Total Non-GSE Incentive Payments Continued on next page. $1,167,000 $3,698,607 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 275 $798,000,000 N/A Financial Instrument for Home Loan Modifications Aurora Loan Services, LLC, Purchase Littleton, CO 5/1/2009 $195,000,000 N/A Financial Instrument for Home Loan Modifications Purchase Carrington Mortgage Services, LLC, Santa Ana, CA 4/27/2009 $5,600,000 $10,185,090 9/30/2010 9/30/2010 7/14/2010 ($338,450,000) ($11,860,000) $21,330,000 $9,150,000 6/17/2009 9/30/2009 12/30/2009 3/26/2010 $400,000 ($342) ($374) 3/30/2011 ($8,454,269) 1/6/2011 9/30/2010 9/1/2010 ($76,870,000) ($384) 3/30/2011 7/14/2010 $2,400,000 ($325) 1/13/2011 1/6/2011 $300,000 $74,520,000 ($75,610,000) 3/26/2010 $3,763,685 $57,980,000 12/30/2009 12/15/2010 $90,990,000 9/30/2009 9/30/2010 ($63,980,000) 6/17/2009 $1,100,000 ($250) 3/30/2011 8/13/2010 ($213) 1/6/2011 $400,000 $34,600,000 9/10/2010 10/15/2010 $2,200,000 $210,000 7/16/2010 8/13/2010 $13,080,000 ($116,750,000) 12/30/2009 ($24,220,000) $130,780,000 9/30/2009 7/14/2010 ($64,990,000) 6/17/2009 3/26/2010 Cap Adjustment Amount $156,000,000 N/A Purchase 4/24/2009 Investment Description Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date (CONTINUED) Financial Instrument for Home Loan Modifications Green Tree Servicing LLC, Saint Paul, MN Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $469,715,015 $469,715,389 $469,715,731 $401,700,000 $401,300,000 $478,170,000 $469,020,000 $447,690,000 $459,550,000 $286,462,976 $286,463,360 $284,063,360 $284,063,685 $283,763,685 $280,000,000 $278,900,000 $354,510,000 $279,990,000 $222,010,000 $131,020,000 $147,094,627 $147,094,877 $147,095,090 $146,695,090 $136,510,000 $130,910,000 $96,310,000 $94,110,000 $93,900,000 $118,120,000 $105,040,000 $221,790,000 $91,010,000 Adjusted Cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-HAMP cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Initial FHA-2LP cap and FHA-HAMP Initial 2MP cap Transfer of cap due to servicing transfer Transfer of cap from Wilshire Credit Corporation due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Reason for Adjustment Adjustment Details Market Capitalization (in Millions) $4,755,316 $1,650,247 $101,039 Borrowers Incentive $13,610,110 $6,296,247 $237,228 Lenders/ Investors Incentives $30,684,357 $13,194,813 $743,029 Total Non-GSE Incentive Payments Continued on next page. $12,318,931 $5,248,319 $404,762 Servicers Incentives Non-GSE Incentive Payments 276 Appendix D I Transaction Detail I april 28, 2011 Purchase Purchase Purchase Nationstar Mortgage LLC, Lewisville, TX Residential Credit Solutions, Fort Worth, TX CCO Mortgage, Glen Allen, VA 5/28/2009 6/12/2009 6/17/2009 Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $101,000,000 N/A $19,400,000 N/A $16,520,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications ($428) ($1,860,000) $27,920,000 ($1,390,000) 3/30/2011 9/30/2009 12/30/2009 3/26/2010 ($116,950,000) 3/26/2010 ($46) ($55) 1/6/2011 3/30/2011 $7,846,346 $145,510,000 12/30/2009 9/30/2010 $13,070,000 9/30/2009 ($23,350,000) ($37) 3/30/2011 7/14/2010 ($34) $586,954 9/30/2010 1/6/2011 $400,000 9/30/2010 ($13,870,000) $29,800,000 3/16/2011 7/14/2010 $900,000 ($363) 2/16/2011 1/6/2011 $700,000 $1,700,000 12/15/2010 $33,801,486 9/30/2010 11/16/2010 $2,900,000 $100,000 8/13/2010 9/30/2010 $67,250,000 ($85,900,000) 12/30/2009 7/14/2010 $80,250,000 9/30/2009 3/26/2010 $16,140,000 $134,560,000 6/12/2009 Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $42,646,245 $42,646,300 $42,646,346 $34,800,000 $58,150,000 $175,100,000 $29,590,000 $31,186,883 $31,186,920 $31,186,954 $30,600,000 $30,200,000 $44,070,000 $45,460,000 $17,540,000 $383,200,695 $383,201,123 $353,401,123 $352,501,123 $352,501,486 $350,801,486 $350,101,486 $316,300,000 $313,400,000 $313,300,000 $399,200,000 $331,950,000 $251,700,000 $117,140,000 Adjusted Cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-HAMP cap, initial FHA-2LP cap, and initial 2MP cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Initial FHA-HAMP cap, initial FHA-2LP cap, initial RD-HAMP, and initial 2MP cap Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Reason for Adjustment Adjustment Details Market Capitalization (in Millions) $241,484 $162,289 $2,639,561 Borrowers Incentive $746,078 $551,448 $7,880,079 Lenders/ Investors Incentives $1,581,178 $1,308,085 $18,823,362 Total Non-GSE Incentive Payments Continued on next page. $593,617 $594,348 $8,303,721 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 277 $770,000 N/A $540,000 N/A $30,000 N/A $70,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Purchase Purchase Purchase Purchase First Federal Savings and Loan, Port Angeles, WA Wescom Central Credit Union, Anaheim, CA Citizens First Wholesale Mortgage Company, The Villages, FL Technology Credit Union, San Jose, CA 6/19/2009 6/19/2009 6/26/2009 6/26/2009 ($1) ($1) 1/6/2011 3/30/2011 $60,445 9/30/2010 ($720,000) 3/26/2010 ($430,000) $2,180,000 12/30/2009 7/14/2010 $45,056 ($145,056) 2/17/2011 $70,000 9/30/2010 ($580,000) $590,000 12/30/2009 7/14/2010 ($10,000) 9/30/2009 3/26/2010 ($2) 3/30/2011 $1,551,668 9/30/2010 ($2) $1,500,000 7/30/2010 1/6/2011 ($1,800,000) 7/14/2010 ($14,260,000) 3/26/2010 9/30/2009 $16,490,000 $330,000 5/26/2010 12/30/2009 $11,370,000 ($14,160,000) 3/26/2010 $2,020,000 ($65) 3/30/2011 12/30/2009 ($51) ($4,300,000) 1/6/2011 ($4,459,154) 12/15/2010 4/9/2010 9/30/2010 $65,640,000 ($14,470,000) 3/26/2010 ($8,860,000) ($42,210,000) 12/30/2009 7/14/2010 ($11,300,000) 9/30/2009 $57,000,000 N/A Cap Adjustment Amount RG Mortgage Corporation, Purchase San Juan, PR Investment Description 6/17/2009 Transaction Type Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date (CONTINUED) Financial Instrument for Home Loan Modifications Date Name of Institution Servicer Modifying Borrowers’ Loans HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Termination of SPA Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Reason for Adjustment $1,160,443 $1,160,444 $1,160,445 $1,100,000 $1,530,000 $2,250,000 — $145,056 Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Termination of SPA Updated portfolio data from servicer $100,000 Updated portfolio data from servicer $30,000 $610,000 $20,000 $4,351,664 $4,351,666 $4,351,668 $2,800,000 $1,300,000 $3,100,000 $17,360,000 $870,000 — $14,160,000 $2,790,000 $37,040,730 $37,040,795 $37,040,846 $41,340,846 $45,800,000 $54,660,000 $69,130,000 $3,490,000 $45,700,000 Adjusted Cap Adjustment Details Market Capitalization (in Millions) $7,500 $88,546 $164,853 Borrowers Incentive $34,626 $353,607 $227,582 Lenders/ Investors Incentives $63,043 $647,765 $793,769 Total Non-GSE Incentive Payments Continued on next page. $20,917 $205,613 $401,334 Servicers Incentives Non-GSE Incentive Payments 278 Appendix D I Transaction Detail I april 28, 2011 Purchase Purchase Purchase National City Bank, Miamisburg, OH Wachovia Mortgage, FSB, Des Moines, IA Bayview Loan Servicing, LLC, Coral Gables, FL 6/26/2009 7/1/2009 7/1/2009 Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $634,010,000 N/A $44,260,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications 3 $723,880,000 9/30/2009 ($70) ($86) 1/6/2011 3/30/2011 ($15,252,303) $1,010,000 5/7/2010 9/30/2010 $34,540,000 3/26/2010 $600,000 $43,590,000 12/30/2009 9/30/2010 $23,850,000 9/30/2009 ($34,250,000) ($54,767) 3/12/2010 7/14/2010 ($2,050,236,344) 2/17/2010 $692,640,000 ($981) 3/30/2011 12/30/2009 ($100,000) 3/16/2011 ($828) $200,000 2/16/2011 1/6/2011 $71,230,004 7/14/2010 9/30/2010 ($18,690,000) ($272,640,000) 3/26/2010 $80,600,000 $90,280,000 12/30/2009 9/30/2010 $315,170,000 9/30/2009 $294,980,000 N/A Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $98,347,541 $98,347,627 $98,347,697 $113,600,000 $113,000,000 $147,250,000 $146,240,000 $111,700,000 $68,110,000 $238,890 $293,656 $2,050,530,000 $1,357,890,000 $561,029,023 $561,030,004 $561,130,004 $560,930,004 $560,930,004 $489,700,000 $409,100,000 $681,740,000 $700,430,000 $610,150,000 Adjusted Cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-2LP cap Updated portfolio data from servicer Initial 2MP cap Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Transfer of cap (to Wells Fargo Bank) due to merger Transfer of cap (to Wells Fargo Bank) due to merger Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-HAMP cap, Initial FHA-2LP cap, and initial 2MP cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Reason for Adjustment Adjustment Details Market Capitalization (in Millions) $1,489,995 — $412,043 Borrowers Incentive $3,949,210 $76,890 $1,380,475 Lenders/ Investors Incentives $9,455,272 $238,890 $2,949,988 Total Non-GSE Incentive Payments Continued on next page. $4,016,067 $162,000 $1,157,469 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 279 $100,000 N/A $870,000 N/A $23,480,000 N/A $54,470,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications IBM Southeast Employees’ Federal Credit Union, Purchase Delray Beach, FL Purchase Purchase MorEquity, Inc., Evansville, IN PNC Bank, National Association, Pittsburgh, PA 7/10/2009 7/17/2009 7/17/2009 $18,360,000 3/26/2010 ($123) ($147) 3/30/2011 $23,076,191 9/30/2010 1/6/2011 $35,500,000 $2,470,000 3/26/2010 9/30/2010 $19,280,000 12/30/2009 ($17,180,000) ($36,240,000) 9/30/2009 7/14/2010 ($34) 3/30/2011 ($37) ($29,400,000) 3/16/2011 1/6/2011 ($8,194,261) $24,510,000 12/30/2009 9/30/2010 $18,530,000 9/30/2009 ($22,580,000) ($1) 3/30/2011 7/14/2010 ($1) 1/6/2011 $170,334 ($10,000) 3/26/2010 9/30/2010 $250,000 12/30/2009 ($400,000) ($10,000) 9/30/2009 7/14/2010 ($1) 3/30/2011 $35,167 9/30/2010 ($1) ($30,000) 7/14/2010 1/6/2011 $50,000 3/26/2010 $130,000 12/30/2009 Financial Instrument for Home Loan Modifications $150,000 9/30/2009 Purchase Date Lake National Bank, Mentor, OH Cap Adjustment Amount 7/10/2009 Investment Description Transaction Type Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date (CONTINUED) Name of Institution Servicer Modifying Borrowers’ Loans HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Reason for Adjustment $81,375,921 $81,376,068 $81,376,191 $58,300,000 $22,800,000 $39,980,000 $37,510,000 $18,230,000 $24,705,668 $24,705,702 $54,105,702 $54,105,739 $62,300,000 $84,880,000 $66,520,000 $42,010,000 $870,332 Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-2LP cap and initial 2MP cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation $870,333 Updated portfolio data from servicer $870,334 $700,000 $1,100,000 $1,110,000 $860,000 $435,165 $435,166 $435,167 $400,000 $430,000 $380,000 $250,000 Adjusted Cap Adjustment Details $33,070.00 Market Capitalization (in Millions) $11,583 $342,841 $1,000 $1,000 Borrowers Incentive $25,947 $2,305,003 $6,939 $1,992 Lenders/ Investors Incentives $70,530 $4,623,665 $15,939 $4,992 Total Non-GSE Incentive Payments Continued on next page. $33,000 $1,975,821 $8,000 $2,000 Servicers Incentives Non-GSE Incentive Payments 280 Appendix D I Transaction Detail I april 28, 2011 Purchase Purchase Purchase Purchase Farmers State Bank, West Salem, OH ShoreBank, Chicago, IL American Home Mortgage Servicing, Inc, Coppell, TX Mortgage Center, LLC, Southfield, MI 7/17/2009 7/17/2009 7/22/2009 7/22/2009 Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $1,410,000 N/A $1,272,490,000 N/A $4,210,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications $2,800,000 3/26/2010 ($12) ($14) 1/6/2011 3/30/2011 $2,658,280 $2,840,000 12/30/2009 9/30/2010 $1,780,000 9/30/2009 ($5,730,000) ($1,400) 3/30/2011 7/14/2010 ($500,000) ($1,173) 2/16/2011 1/6/2011 ($100,000) 7/14/2010 11/16/2010 $124,820,000 ($289,990,000) 3/26/2010 $300,000 $250,450,000 12/30/2009 10/15/2010 ($53,670,000) 9/30/2009 $1,690,508 ($4) 3/30/2011 9/30/2010 ($3) $471,446 9/30/2010 1/6/2011 ($240,000) $1,260,000 12/30/2009 7/14/2010 $890,000 9/30/2009 ($20,000) $45,056 9/30/2010 3/26/2010 $100,000 ($130,000) 7/14/2010 $50,000 12/30/2009 3/26/2010 ($90,000) 9/30/2009 $170,000 N/A Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $8,558,254 $8,558,268 $8,558,280 $5,900,000 $11,630,000 $8,830,000 $5,990,000 $1,305,487,935 $1,305,489,335 $1,305,989,335 $1,305,990,508 $1,306,090,508 $1,305,790,508 $1,304,100,000 $1,594,090,000 $1,469,270,000 $1,218,820,000 $4,031,439 $4,031,443 $4,031,446 $3,300,000 $3,540,000 $3,560,000 $2,300,000 $145,056 $100,000 $230,000 $130,000 $80,000 Adjusted Cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Reason for Adjustment Adjustment Details Market Capitalization (in Millions) $19,039 $8,579,747 $49,915 Borrowers Incentive $53,562 $39,336,123 $153,906 Lenders/ Investors Incentives $146,966 $79,900,376 $346,986 Total Non-GSE Incentive Payments Continued on next page. $74,365 $31,984,506 $143,165 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 281 Purchase Mission Federal Credit Union, San Diego, CA First Bank, St. Louis, MO 7/22/2009 7/29/2009 $1,090,000 N/A $85,020,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Purdue Employees Federal Credit Union, Purchase West Lafayette, IN Wachovia Bank, N.A., Charlotte, NC 7/29/2009 7/29/2009 Purchase $6,460,000 N/A Financial Instrument for Home Loan Modifications Purchase ($1,530,000) 9/30/2009 $2,070,000 3/26/2010 $9,820,000 ($28,686,775) ($8,413,225) 9/30/2010 12/3/2010 $26,160,000 12/30/2009 ($46,200,000) ($37,700,000) 9/30/2009 7/14/2010 ($1) 3/30/2011 3/26/2010 ($1) 1/6/2011 $180,222 $1,260,000 12/30/2009 9/30/2010 ($60,000) 9/30/2009 ($3,960,000) ($2) 3/30/2011 7/14/2010 ($2) $2,523,114 9/30/2010 1/6/2011 ($2,470,000) 7/14/2010 $2,460,000 ($1) 3/30/2011 3/26/2010 $125,278 9/30/2010 $680,000 ($180,000) 12/30/2009 ($6,340,000) $6,750,000 12/30/2009 7/14/2010 ($490,000) 9/30/2009 3/26/2010 Cap Adjustment Amount $860,000 N/A Investment Description Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date (CONTINUED) Financial Instrument for Home Loan Modifications Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Reason for Adjustment Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer — $8,413,225 $37,100,000 $83,300,000 $73,480,000 $47,320,000 $580,220 $580,221 $580,222 Termination of SPA Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer $400,000 Updated portfolio data from servicer $4,360,000 $2,290,000 $1,030,000 $8,123,110 $8,123,112 $8,123,114 $5,600,000 $8,070,000 $5,610,000 $4,930,000 $725,277 $725,278 $600,000 Updated portfolio data from servicer $780,000 $7,120,000 $370,000 Adjusted Cap Adjustment Details Market Capitalization (in Millions) $78,775 $7,667 Borrowers Incentive $400,385 $28,711 Lenders/ Investors Incentives $912,986 $62,378 Total Non-GSE Incentive Payments Continued on next page. $433,826 $26,000 Servicers Incentives Non-GSE Incentive Payments 282 Appendix D I Transaction Detail I april 28, 2011 $420,000 N/A Financial Instrument for Home Loan Modifications Lake City Bank, Warsaw, IN 8/5/2009 Purchase $707,380,000 N/A Financial Instrument for Home Loan Modifications EMC Mortgage Purchase Corporation, Lewisville, TX 7/31/2009 ($4,400,000) 12/15/2010 ($70,000) $90,111 ($350,000) 12/30/2009 9/30/2010 $180,000 9/30/2009 7/14/2010 ($925) 3/30/2011 $20,000 ($4,000,000) 3/16/2011 3/26/2010 ($900,000) 2/16/2011 ($802) ($100,000) 10/15/2010 1/6/2011 ($8,006,457) 9/30/2010 ($630,000) 7/16/2010 $13,100,000 ($392,140,000) 7/14/2010 9/30/2010 ($134,560,000) 3/26/2010 ($10,000) 9/30/2009 $502,430,000 ($3,999) 3/30/2011 12/30/2009 ($100,000) 3/16/2011 ($3,636) $215,625,536 9/30/2010 1/6/2011 $72,400,000 ($1,934,230,000) 9/30/2010 7/14/2010 $1,006,580,000 3/26/2010 $2,699,720,000 N/A $1,178,180,000 12/30/2009 Financial Instrument for Home Loan Modifications ($14,850,000) 9/30/2009 Purchase Date J.P.Morgan Chase Bank, NA, Lewisville, TX Cap Adjustment Amount 7/31/2009 Investment Description Transaction Type Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date (CONTINUED) Name of Institution Servicer Modifying Borrowers’ Loans HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $290,111 $200,000 $270,000 $250,000 $600,000 $678,161,816 $678,162,741 $682,162,741 $683,062,741 $683,063,543 $687,463,543 $687,563,543 $695,570,000 $682,470,000 $683,100,000 $1,075,240,000 $1,209,800,000 $707,370,000 $3,223,317,901 $3,223,321,900 $3,223,421,900 $3,223,425,536 $3,007,800,000 $2,935,400,000 $4,869,630,000 $3,863,050,000 $2,684,870,000 Adjusted Cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Initial FHA-HAMP cap and initial FHA-2LP cap Transfer of cap to Saxon Mortgage Services, Inc. Updated portfolio data from servicer Updated portfolio data from servicer & 2MP initial cap Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-HAMP cap, Initial FHA-2LP cap, and initial RD-HAMP Updated portfolio data from servicer Updated portfolio data from servicer & 2MP initial cap Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Reason for Adjustment Adjustment Details $185,034.00 Market Capitalization (in Millions) — $7,328,912 $30,096,090 Borrowers Incentive $502 $10,917,929 $48,693,378 Lenders/ Investors Incentives $3,502 $34,243,922 $151,022,869 Total Non-GSE Incentive Payments Continued on next page. $3,000 $15,997,081 $72,233,401 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 283 Purchase Purchase Purchase Oakland Municipal Credit Union, Oakland, CA HomEq Servicing, North Highlands, CA Litton Loan Servicing LP, Houston, TX 8/5/2009 8/5/2009 8/12/2009 Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $674,000,000 N/A $774,900,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications ($121,190,000) ($36,290,000) $199,320,000 ($189,040,000) 9/30/2009 12/30/2009 3/26/2010 7/14/2010 $278,910,000 ($474,730,000) ($700,000) 3/26/2010 7/14/2010 8/13/2010 $8,800,000 ($1,470) 3/16/2011 3/30/2011 ($1,286) $800,000 12/15/2010 1/6/2011 ($800,000) 10/15/2010 ($115,017,236) $275,370,000 12/30/2009 9/30/2010 $313,050,000 9/30/2009 ($1,000,000) ($653) 3/30/2011 9/15/2010 ($900,000) 2/16/2011 ($549) ($22,200,000) 12/15/2010 1/6/2011 ($170,800,000) 10/15/2010 $38,626,728 ($1) 3/30/2011 9/30/2010 ($1) ($74,722) 1/6/2011 9/30/2010 $170,000 3/26/2010 ($10,000) $210,000 12/30/2009 7/14/2010 $290,000 9/30/2009 $140,000 N/A Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $1,059,580,008 $1,059,581,478 $1,050,781,478 $1,050,782,764 $1,049,982,764 $1,050,782,764 $1,165,800,000 $1,166,800,000 $1,167,500,000 $1,642,230,000 $1,363,320,000 $1,087,950,000 $371,525,526 $371,526,179 $372,426,179 $372,426,728 $394,626,728 $565,426,728 $526,800,000 $715,840,000 $516,520,000 $552,810,000 $725,276 $725,277 $725,278 $800,000 $810,000 $640,000 $430,000 Adjusted Cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Transfer of cap to due to servicing transfer Transfer of cap to due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Reason for Adjustment Adjustment Details Market Capitalization (in Millions) $6,625,051 — — Borrowers Incentive $19,184,782 $3,036,319 $3,568 Lenders/ Investors Incentives $43,010,405 $8,308,819 $10,068 Total Non-GSE Incentive Payments Continued on next page. $17,200,572 $5,272,500 $6,500 Servicers Incentives Non-GSE Incentive Payments 284 Appendix D I Transaction Detail I april 28, 2011 Purchase Purchase PennyMac Loan Services, LLC, Calasbasa, CA Servis One, Inc., Titusville, PA 8/12/2009 8/12/2009 Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $29,730,000 N/A Financial Instrument for Home Loan Modifications ($100,000) 12/15/2010 $300,000 $100,000 $2,200,000 ($52) 1/13/2011 2/16/2011 3/16/2011 3/30/2011 ($40) $100,000 12/15/2010 1/6/2011 $100,000 10/15/2010 $16,755,064 9/30/2010 9/15/2010 $100,000 $100,000 7/14/2010 9/30/2010 $850,000 ($850,000) 5/19/2010 $230,000 4/19/2010 ($25,510,000) 9/30/2009 $4,330,000 ($94) 3/30/2011 3/26/2010 $4,000,000 3/16/2011 $520,000 ($100,000) 2/16/2011 12/30/2009 $4,100,000 1/13/2011 ($72) $1,400,000 1/6/2011 ($1,423,197) $2,600,000 8/13/2010 11/16/2010 $6,680,000 7/16/2010 9/30/2010 ($18,020,000) 7/14/2010 $200,000 $2,710,000 6/16/2010 9/30/2010 $23,200,000 3/26/2010 $6,210,000 N/A $30,800,000 12/30/2009 ($100,000) ($1,200,000) 9/30/2009 9/15/2010 Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $29,054,972 $29,055,024 $26,855,024 $26,755,024 $26,455,024 $26,455,064 $26,355,064 $26,255,064 $9,500,000 $9,400,000 $9,300,000 $10,150,000 $9,300,000 $9,070,000 $4,740,000 $4,220,000 $60,956,637 $60,956,731 $56,956,731 $57,056,731 $52,956,731 $52,956,803 $53,056,803 $51,656,803 $53,080,000 $52,880,000 $52,980,000 $50,380,000 $43,700,000 $61,720,000 $59,010,000 $35,810,000 $5,010,000 Adjusted Cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Initial FHA-HAMP cap Transfer of cap to due to servicing transfer Updated portfolio data from servicer Initial 2MP cap Transfer of cap from CitiMortgage, Inc. due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Initial FHA-HAMP cap and 2MP initial cap Transfer of cap to due to servicing transfer Transfer of cap to due to servicing transfer Transfer of cap from CitiMortgage, Inc. due to servicing transfer Updated portfolio data from servicer Transfer of cap from CitiMortgage, Inc. due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer & HPDP initial cap Reason for Adjustment Adjustment Details Market Capitalization (in Millions) $917 $195,401 Borrowers Incentive $2,709 $555,952 Lenders/ Investors Incentives $5,626 $1,330,554 Total Non-GSE Incentive Payments Continued on next page. $2,000 $579,201 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 285 Purchase Purchase Stanford Federal Credit Union, Palo Alto, CA RoundPoint Mortgage Servicing Corporation, Charlotte, NC Horicon Bank, Horicon, WI 8/28/2009 8/28/2009 9/2/2009 Purchase Purchase OneWest Bank, Pasadena, CA 8/28/2009 Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $300,000 N/A $570,000 N/A $560,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications $70,000 10/2/2009 ($310,000) $2,110,000 10/2/2009 12/30/2009 3/26/2010 ($1,110,000) $100,000 ($9,889) 9/30/2010 9/30/2010 ($1,680,000) 3/26/2010 7/14/2010 $1,040,000 12/30/2009 $1,260,000 $130,000 10/2/2009 5/12/2010 ($25) 3/30/2011 ($22) ($400,000) 3/16/2011 1/6/2011 $5,301,172 $130,000 3/23/2011 9/30/2010 ($290,111) 9/30/2010 $8,300,000 ($1,209,889) 7/14/2010 7/14/2010 $350,000 ($1,900,000) 3/26/2010 $2,680,000 ($2,674) 12/30/2009 ($2,282) 3/30/2011 ($51,741,163) 9/30/2010 1/6/2011 $5,500,000 9/30/2010 $121,180,000 3/26/2010 ($408,850,000) $1,355,930,000 12/30/2009 7/14/2010 $145,800,000 10/2/2009 $668,440,000 N/A Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $290,111 $300,000 $200,000 $1,310,000 $50,000 $1,730,000 $690,000 $15,701,125 $15,701,150 $16,101,150 $16,101,172 $10,800,000 $2,500,000 $390,000 $700,000 — $290,111 $1,500,000 $3,400,000 $3,050,000 $370,000 $1,836,253,881 $1,836,256,555 $1,836,258,837 $1,888,000,000 $1,882,500,000 $2,291,350,000 $2,170,170,000 $814,240,000 Adjusted Cap Updated portfolio data from servicer Initial RD-HAMP Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Termination of SPA Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer 2MP initial cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Reason for Adjustment Adjustment Details Market Capitalization (in Millions) $917 — $7,730,462 Borrowers Incentive $3,030 $47,617 $26,968,402 Lenders/ Investors Incentives $7,863 $111,617 $55,322,540 Total Non-GSE Incentive Payments Continued on next page. $3,917 $64,000 $20,623,676 Servicers Incentives Non-GSE Incentive Payments 286 Appendix D I Transaction Detail I april 28, 2011 Purchase Purchase Purchase Central Florida Educators Federal Credit Union, Lake Mary, FL U.S. Bank National Association, Owensboro, KY CUC Mortgage Corporation, Albany, NY 9/9/2009 9/9/2009 Purchase Transaction Type 9/9/2009 9/2/2009 as Vantium Capital, Inc.dba amended on Acqura Loan Services, 8/27/2010 Plano, TX Date Name of Institution Servicer Modifying Borrowers’ Loans $6,000,000 N/A $1,250,000 N/A $114,220,000 N/A $4,350,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications 10 $2,700,000 12/15/2010 $120,000 12/30/2009 3/26/2010 $41,830,000 3/26/2010 $740,000 3/26/2010 ($5) ($6) 1/6/2011 3/30/2011 ($6,673,610) $5,700,000 12/30/2009 9/30/2010 $950,000 10/2/2009 ($1,440,000) ($172) 3/30/2011 7/14/2010 ($160) 1/6/2011 $36,574,444 $49,410,000 12/30/2009 9/30/2010 $24,920,000 10/2/2009 ($85,780,000) ($1) 3/30/2011 7/14/2010 ($1) 1/6/2011 $270,334 ($750,000) 10/2/2009 9/30/2010 $280,000 3/30/2011 ($300,000) ($19) 2/16/2011 7/14/2010 $700,000 $1,800,000 1/13/2011 ($17) $800,000 11/16/2010 1/6/2011 $117,764 9/15/2010 9/30/2010 ($730,000) $4,700,000 7/14/2010 ($3,390,000) 12/30/2009 $410,000 $1,310,000 10/2/2009 3/26/2010 Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Reason for Adjustment $3,626,379 $3,626,385 $3,626,390 $10,300,000 $11,740,000 $11,000,000 $5,300,000 $181,174,112 $181,174,284 $181,174,444 $144,600,000 $230,380,000 $188,550,000 $139,140,000 $870,332 Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated due to quarterly assessment and reallocation $870,333 Updated portfolio data from servicer $870,334 $600,000 $900,000 $780,000 $1,530,000 $14,417,728 $14,417,747 $12,617,747 $11,917,747 $11,917,764 $9,217,764 $8,417,764 $8,300,000 $3,600,000 $4,330,000 $3,920,000 $7,310,000 Adjusted Cap Adjustment Details Market Capitalization (in Millions) $7,083 $1,537,911 $4,750 $1,000 Borrowers Incentive $24,900 $6,901,715 $28,032 $2,568 Lenders/ Investors Incentives $60,400 $14,429,153 $66,782 $4,568 Total Non-GSE Incentive Payments Continued on next page. $28,417 $5,989,527 $34,000 $1,000 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 287 $250,000 N/A $280,000 N/A $27,510,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Allstate Mortgage Loans & Investments, Inc., Purchase Ocala, FL Purchase Purchase Metropolitan National Bank, Little Rock, AR Franklin Credit Management Corporation, Jersey City, NJ 9/11/2009 9/11/2009 9/11/2009 ($1,800,000) ($6) 2/16/2011 3/30/2011 ($3) $2,973,670 9/30/2010 1/6/2011 ($2,390,000) ($4,780,000) 3/26/2010 7/14/2010 ($19,750,000) $6,010,000 10/2/2009 12/30/2009 ($435,166) 1/26/2011 ($1) $35,167 1/6/2011 9/30/2010 $100,000 ($670,000) 3/26/2010 7/14/2010 $70,000 $620,000 12/30/2009 $45,056 9/30/2010 10/2/2009 ($410,000) ($80,000) 12/30/2009 7/14/2010 $60,000 10/2/2009 $280,000 ($12) 3/30/2011 3/26/2010 ($10) $1,817,613 9/30/2010 1/6/2011 ($13,540,000) 7/14/2010 $13,280,000 3/26/2010 $2,070,000 N/A $2,730,000 12/30/2009 Financial Instrument for Home Loan Modifications $460,000 10/2/2009 Purchase Date ORNL Federal Credit Union, Oak Ridge, TN Cap Adjustment Amount 9/11/2009 Investment Description Transaction Type Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date (CONTINUED) Name of Institution Servicer Modifying Borrowers’ Loans HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Reason for Adjustment Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated portfolio data from servicer $7,773,661 $7,773,667 $9,573,667 $9,573,670 $6,600,000 $8,990,000 $13,770,000 $33,520,000 — $435,166 $435,167 Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Termination of SPA Updated portfolio data from servicer Updated portfolio data from servicer $400,000 Updated portfolio data from servicer $1,070,000 $970,000 $350,000 $145,056 $100,000 Updated portfolio data from servicer $510,000 $230,000 $310,000 $6,817,591 $6,817,603 $6,817,613 $5,000,000 $18,540,000 $5,260,000 $2,530,000 Adjusted Cap Adjustment Details Market Capitalization (in Millions) $31,073 $1,623 — Borrowers Incentive $188,581 $4,938 — Lenders/ Investors Incentives $525,309 $11,184 $2,000 Total Non-GSE Incentive Payments Continued on next page. $305,656 $4,623 $2,000 Servicers Incentives Non-GSE Incentive Payments 288 Appendix D I Transaction Detail I april 28, 2011 Purchase Purchase Purchase Purchase Purchase Bay Federal Credit Union, Capitola, CA AMS Servicing, LLC, Buffalo, NY Schools Financial Credit Union, Sacramento, CA Glass City Federal Credit Union, Maumee, OH Central Jersey Federal Credit Union, Woodbridge, NJ 9/16/2009 9/23/2009 9/23/2009 9/23/2009 9/23/2009 Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $410,000 N/A $4,390,000 N/A $390,000 N/A $230,000 N/A $30,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications $960,000 10/2/2009 ($980,000) 3/26/2010 ($145,056) $45,056 9/30/2010 10/29/2010 $10,000 $120,000 12/30/2009 ($70,000) $10,000 10/2/2009 7/14/2010 ($9,889) 3/26/2010 ($110,000) 9/30/2010 ($10,000) 12/30/2009 7/14/2010 $60,000 10/2/2009 $130,000 ($2) 3/30/2011 3/26/2010 ($2) 1/6/2011 $1,150,556 $940,000 12/30/2009 9/30/2010 $90,000 10/2/2009 ($140,000) ($16) 3/30/2011 7/14/2010 $600,000 3/16/2011 ($12) $323,114 1/6/2011 $5,310,000 9/30/2010 $230,000 7/14/2010 3/26/2010 ($3,090,000) ($1) 3/30/2011 12/30/2009 ($1) 1/6/2011 ($1,419,778) 9/30/2010 $160,000 ($120,000) 3/26/2010 7/14/2010 $1,460,000 $90,000 10/2/2009 12/30/2009 Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Reason for Adjustment Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated portfolio data from servicer — $145,056 $100,000 Termination of SPA Updated portfolio data from servicer Updated portfolio data from servicer $170,000 Updated portfolio data from servicer $160,000 $40,000 $290,111 $300,000 Updated portfolio data from servicer $410,000 $280,000 $290,000 $1,450,552 $1,450,554 $1,450,556 $300,000 $440,000 $1,420,000 $480,000 $8,723,086 $8,723,102 $8,123,102 $8,123,114 $7,800,000 $2,490,000 $2,260,000 $5,350,000 $580,220 $580,221 $580,222 $2,000,000 $2,120,000 $1,960,000 $500,000 Adjusted Cap Adjustment Details Market Capitalization (in Millions) $2,000 $2,000 Borrowers Incentive $1,594 $14,102 Lenders/ Investors Incentives $7,594 $24,102 Total Non-GSE Incentive Payments Continued on next page. $4,000 $8,000 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 289 Purchase Purchase Purchase Purchase Purchase Yadkin Valley Bank, Elkin, NC SEFCU, Albany, NY Great Lakes Credit Union, North Chicago, IL Mortgage Clearing Corporation, Tulsa, OK 9/23/2009 9/25/2009 10/14/2009 10/14/2009 United Bank Mortgage 10/21/2009 Corporation, Grand Rapids, MI Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $440,000 N/A $570,000 N/A $4,860,000 N/A $410,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications ($880,000) 3/26/2010 $400,000 ($1) ($1) 3/30/2011 $180,222 1/6/2011 9/30/2010 ($430,000) 3/26/2010 7/14/2010 $20,000 1/22/2010 ($145,056) $45,056 3/9/2011 ($260,000) 9/30/2010 ($1,600,000) 3/26/2010 7/14/2010 ($2,900,000) ($1) 3/30/2011 12/30/2009 ($1) 1/6/2011 $180,222 $1,030,000 12/30/2009 9/30/2010 ($54,944) 9/30/2010 ($320,000) ($70,000) 7/14/2010 ($290,000) 7/14/2010 $20,000 12/30/2009 3/26/2010 $100,000 10/2/2009 ($1) $235,167 9/30/2010 1/6/2011 $1,360,000 ($1,810,000) 7/14/2010 $350,000 12/30/2009 3/26/2010 $60,000 10/2/2009 $240,000 N/A Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap HPDP initial cap Reason for Adjustment Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated portfolio data from servicer Updated portfolio data from servicer & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Termination of SPA Updated portfolio data from servicer $580,220 $580,221 $580,222 Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer $400,000 Updated portfolio data from servicer $830,000 $430,000 — $145,056 $100,000 Updated portfolio data from servicer $360,000 $1,960,000 $580,220 $580,221 $580,222 $400,000 Updated portfolio data from servicer $720,000 $1,600,000 $145,056 Updated portfolio data from servicer $200,000 $270,000 $560,000 $540,000 $2,245,166 $2,245,167 $200,000 $2,010,000 $650,000 $300,000 Adjusted Cap Adjustment Details $37.00 Market Capitalization (in Millions) $9,592 — $2,000 Borrowers Incentive $22,100 $1,222 $696 Lenders/ Investors Incentives $59,833 $3,222 $11,696 Total Non-GSE Incentive Payments Continued on next page. $28,141 $2,000 $9,000 Servicers Incentives Non-GSE Incentive Payments 290 Appendix D I Transaction Detail I april 28, 2011 Purchase Purchase Harleysville National 10/28/2009 Bank & Trust Company, Harleysville, PA Members Mortgage 10/28/2009 Company, Inc, Woburn, MA Purchase Purchase DuPage Credit Union, Naperville, IL Los Alamos National Bank, Los Alamos, NM 10/30/2009 11/6/2009 10/23/2009 Purchase Purchase Transaction Type IC Federal Credit Union, Fitchburg, MA Bank United, Miami 10/23/2009 Lakes, FL Date Name of Institution Servicer Modifying Borrowers’ Loans $93,660,000 N/A $760,000 N/A $1,070,000 N/A $510,000 N/A $70,000 N/A $700,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications $40,000 $50,000 1/22/2010 3/26/2010 ($3) ($4) 3/30/2011 $75,834 1/6/2011 9/30/2010 $1,310,000 $45,056 9/30/2010 7/14/2010 $10,000 7/14/2010 $10,000 $10,000 1/22/2010 3/26/2010 ($510,000) 4/21/2010 ($1,070,000) ($4) 3/30/2011 4/21/2010 ($4) $565,945 9/30/2010 1/6/2011 ($770,000) $2,630,000 5/12/2010 7/14/2010 $40,000 ($760,000) 3/26/2010 ($88) 3/30/2011 1/22/2010 ($9,900,000) ($77) 3/16/2011 1/6/2011 $1,751,033 ($16,610,000) 7/14/2010 9/30/2010 $4,370,000 $23,880,000 1/22/2010 3/26/2010 Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Termination of SPA Termination of SPA Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Reason for Adjustment $2,175,827 $2,175,831 $2,175,834 $2,100,000 $790,000 Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer $740,000 Updated HPDP cap & HAFA initial cap $145,056 $100,000 $90,000 $80,000 — — $2,465,937 $2,465,941 $2,465,945 $1,900,000 $2,670,000 $40,000 $800,000 $97,150,868 $97,150,956 $107,050,956 $107,051,033 $105,300,000 $121,910,000 $98,030,000 Adjusted Cap Adjustment Details Market Capitalization (in Millions) $277 $1,000 $1,917 $1,026,017 Borrowers Incentive $1,858 $8,026 $5,603 $4,506,107 Lenders/ Investors Incentives $10,608 $11,526 $14,520 $9,193,468 Total Non-GSE Incentive Payments Continued on next page. $8,474 $2,500 $7,000 $3,661,344 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 291 Purchase Purchase Purchase Hillsdale County National Bank, Hillsdale, MI QLending, Inc., Coral Gables, FL Marix Servicing, LLC, Phoenix, AZ 11/18/2009 11/18/2009 11/25/2009 Home Financing 11/25/2009 Center, Inc, Coral Gables, FL Purchase Purchase Quantum Servicing Corporation, Tampa, FL 11/18/2009 Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $1,670,000 N/A $20,000 N/A $20,360,000 N/A $230,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications ($2,890,000) 7/14/2010 $18,960,000 N/A $3,840,000 3/26/2010 ($1,160,000) 7/14/2010 ($230,000) ($6) 3/30/2011 4/21/2010 $5,700,000 3/16/2011 ($1) $1,357,168 9/30/2010 1/6/2011 $200,000 9/30/2010 $800,000 $1,030,000 6/16/2010 8/13/2010 $950,000 ($17,880,000) 3/26/2010 $45,056 9/30/2010 1/22/2010 $90,000 7/14/2010 3/26/2010 ($10,000) ($2) 3/30/2011 1/22/2010 ($1) 1/6/2011 $160,445 ($1,080,000) 7/14/2010 9/30/2010 $80,000 $330,000 ($58) 3/30/2011 3/26/2010 $1,400,000 1/22/2010 $1,600,000 2/16/2011 ($46) 1/13/2011 1/6/2011 $9,661,676 $890,000 1/22/2010 9/30/2010 Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 — $11,357,161 $11,357,167 $5,657,167 $5,657,168 $4,300,000 $4,100,000 $3,300,000 $4,460,000 $3,430,000 $21,310,000 $145,056 $100,000 $10,000 $20,000 $1,160,442 $1,160,444 $1,160,445 $1,000,000 $2,080,000 $1,750,000 $33,461,572 $33,461,630 $32,061,630 $30,461,630 $30,461,676 $20,800,000 $23,690,000 $19,850,000 Adjusted Cap Termination of SPA Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-HAMP cap and initial RD-HAMP Transfer of cap due to servicing transfer Updated portfolio data from servicer Transfer of cap from CitiMortgage, Inc. due to servicing transfer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Transfer of cap due to servicing transfer Transfer of cap due to servicing transfer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Reason for Adjustment Adjustment Details Market Capitalization (in Millions) $12,875 $5,143 — Borrowers Incentive $123,470 $6,526 $1,046 Lenders/ Investors Incentives $330,322 $31,457 $2,046 Total Non-GSE Incentive Payments Continued on next page. $193,977 $19,788 $1,000 Servicers Incentives Non-GSE Incentive Payments 292 Appendix D I Transaction Detail I april 28, 2011 Purchase First Keystone Bank, Media, PA Community Bank & Trust Company, Clarks Summit, PA 11/25/2009 12/4/2009 $380,000 N/A $9,430,000 N/A $360,000 N/A $1,590,000 N/A $1,880,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Purchase Idaho Housing and Finance Purchase Association, Boise, ID Purchase Purchase Purchase Spirit of Alaska Federal Credit Union, Fairbanks, AK American Eagle Federal Credit Union, East Hartford, CT Silver State Schools Credit Union, Las Vegas, NV 12/4/2009 12/9/2009 12/9/2009 12/9/2009 3/26/2010 $10,000 1/22/2010 3/26/2010 $90,000 $1,110,000 1/22/2010 3/26/2010 ($2) ($3) 3/30/2011 $275,834 1/6/2011 9/30/2010 ($1,180,000) ($1) 3/30/2011 7/14/2010 ($1) $70,334 1/6/2011 9/30/2010 ($570,000) $70,000 ($290,000) 1/22/2010 7/14/2010 ($1,305,498) 2/17/2011 ($2) $105,500 9/30/2010 1/6/2011 $100,000 ($120,000) 7/14/2010 9/30/2010 $10,000 $850,000 3/26/2010 ($9,889) 9/30/2010 1/22/2010 $150,000 7/14/2010 3/26/2010 ($24,200,000) $14,480,000 1/22/2010 5/26/2010 $45,056 $440,000 9/30/2010 ($810,000) 7/14/2010 $520,000 ($2) 3/30/2011 3/26/2010 ($2) $50,556 1/6/2011 9/30/2010 ($950,000) $50,000 $1,020,000 1/22/2010 7/14/2010 Cap Adjustment Amount $1,280,000 N/A Investment Description Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date (CONTINUED) Financial Instrument for Home Loan Modifications Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans HAMP TRANSACTION DETAIL, AS OF 3/30/2011 $2,175,829 $2,175,832 $2,175,834 $1,900,000 $3,080,000 $1,970,000 $870,332 $870,333 $870,334 $800,000 $1,370,000 $1,660,000 — $1,305,498 $1,305,500 $1,200,000 $1,100,000 $1,220,000 $370,000 $290,111 $300,000 $150,000 $24,350,000 $9,870,000 $145,056 $100,000 $910,000 $390,000 $1,450,552 $1,450,554 $1,450,556 $1,400,000 $2,350,000 $1,330,000 Adjusted Cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Termination of SPA Updated portfolio data from servicer Updated portfolio data from servicer Initial FHA-HAMP cap Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Reason for Adjustment Adjustment Details Market Capitalization (in Millions) $11,595 $2,922 $2,776 Borrowers Incentive $69,292 $3,229 $3,423 Lenders/ Investors Incentives $119,731 $12,073 $14,917 Total Non-GSE Incentive Payments Continued on next page. $38,845 $5,922 $8,718 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 293 Purchase Fidelity Homestead Savings Bank, New Orleans, LA Bay Gulf Credit Union, Tampa, FL 12/9/2009 12/9/2009 $6,160,000 N/A $2,250,000 N/A $310,000 N/A $370,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Purchase The Golden 1 Credit Union, Purchase Sacramento, CA Sterling Savings Bank, Spokane, WA 12/9/2009 12/9/2009 Purchase Purchase HomeStar Bank & 12/11/2009 Financial Services, Manteno, IL Glenview State Bank, 12/11/2009 Glenview, IL Purchase $230,000 N/A Financial Instrument for Home Loan Modifications $6,300,000 3/26/2010 $290,000 $40,000 1/22/2010 3/26/2010 $100,000 ($740,000) 1/22/2010 3/26/2010 $20,000 $820,000 1/22/2010 3/26/2010 $1,250,000 ($1,640,000) $20,000 1/22/2010 5/26/2010 ($1) 3/30/2011 3/26/2010 ($1) $70,334 1/6/2011 9/30/2010 ($350,000) ($1) 3/30/2011 7/14/2010 ($1) $550,556 1/6/2011 9/30/2010 ($710,000) ($4) 3/30/2011 7/14/2010 ($4) $606,612 1/6/2011 9/30/2010 ($2,890,000) ($580,222) 10/15/2010 7/14/2010 ($19,778) 3/26/2010 9/30/2010 $10,000 $440,000 1/22/2010 ($80,000) ($2) 3/30/2011 7/14/2010 ($1) ($6,384,611) 1/6/2011 9/30/2010 ($1,980,000) $140,000 1/22/2010 7/14/2010 Cap Adjustment Amount $2,940,000 N/A Investment Description Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date (CONTINUED) Financial Instrument for Home Loan Modifications Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Reason for Adjustment Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Termination of SPA Updated portfolio data from servicer — $1,640,000 $390,000 $870,332 $870,333 $870,334 Termination of SPA Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer $800,000 Updated portfolio data from servicer $1,150,000 $330,000 $1,450,554 $1,450,555 $1,450,556 $900,000 $1,610,000 $2,350,000 $4,206,604 $4,206,608 $4,206,612 $3,600,000 $6,490,000 $6,450,000 — $580,222 $600,000 Updated portfolio data from servicer $680,000 $240,000 $1,015,386 $1,015,388 $1,015,389 $7,400,000 $9,380,000 $3,080,000 Adjusted Cap Adjustment Details Market Capitalization (in Millions) $583 $8,000 $2,275 Borrowers Incentive $1,571 $30,429 $105,466 Lenders/ Investors Incentives $6,071 $75,929 $193,016 Total Non-GSE Incentive Payments Continued on next page. $3,917 $37,500 $85,275 Servicers Incentives Non-GSE Incentive Payments 294 Appendix D I Transaction Detail I april 28, 2011 Purchase Purchase Verity Credit Union, Seattle, WA Hartford Savings Bank, Hartford, WI The Bryn Mawr Trust Co., Bryn Mawr, PA 12/11/2009 12/11/2009 12/11/2009 $620,000 N/A $170,000 N/A $3,460,000 N/A $440,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Citizens 1st National Bank, Purchase Spring Valley, IL Golden Plains Credit Union, Purchase Garden City, KS 12/16/2009 12/16/2009 12/16/2009 Sound Community Bank, Seattle, WA Purchase Purchase $150,000 N/A Financial Instrument for Home Loan Modifications Purchase First Federal Savings 12/16/2009 and Loan Association of Lakewood, Lakewood, OH $630,000 N/A Financial Instrument for Home Loan Modifications 3/26/2010 $800,000 3/26/2010 ($580,000) $1,430,000 3/26/2010 7/14/2010 ($390,000) ($1,500,000) 7/14/2010 9/8/2010 $1,430,000 $20,000 3/26/2010 1/22/2010 $160,000 1/22/2010 ($3,620,000) ($290,111) 2/17/2011 4/21/2010 $90,111 $30,000 3/26/2010 9/30/2010 $10,000 1/22/2010 ($10,000) ($3) 3/30/2011 7/14/2010 ($2) 1/6/2011 $95,612 $30,000 1/22/2010 9/30/2010 ($150,000) ($2) 3/30/2011 4/21/2010 ($2) $60,445 1/6/2011 9/30/2010 ($360,000) $30,000 1/22/2010 7/14/2010 ($725,277) ($1) $25,278 2/17/2011 1/6/2011 9/30/2010 ($330,000) $30,000 $400,000 1/22/2010 7/14/2010 Cap Adjustment Amount $600,000 N/A Investment Description Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date (CONTINUED) Financial Instrument for Home Loan Modifications Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Reason for Adjustment — $1,500,000 $1,890,000 $460,000 — $3,620,000 — $290,111 $200,000 $210,000 $180,000 $745,607 $745,610 $745,612 $1,500,000 $70,000 $650,000 — $1,160,441 $1,160,443 $1,160,445 $1,100,000 $1,460,000 $660,000 — Termination of SPA Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Termination of SPA Updated HPDP cap & HAFA initial cap Termination of SPA Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Termination of SPA Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Termination of SPA $725,277 Updated portfolio data from servicer $725,278 $700,000 $1,030,000 $630,000 Adjusted Cap Adjustment Details Market Capitalization (in Millions) $833 Borrowers Incentive $3,206 Lenders/ Investors Incentives $9,956 Total Non-GSE Incentive Payments Continued on next page. $5,917 Servicers Incentives Non-GSE Incentive Payments Transaction detail I Appendix D I april 28, 2011 295 Purchase Purchase Horizon Bank, NA, Michigan City, IN Park View Federal Savings Bank, Solon, OH 12/16/2009 12/16/2009 Purchase Grafton Suburban Credit Union, North Grafton, MA Purchase Tempe Schools Credit Union, Tempe, AZ 12/23/2009 Purchase Eaton National Bank & 12/23/2009 Trust Company, Eaton, OH 12/23/2009 Purchase 12/23/2009 Iberiabank, Sarasota, FL Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $760,000 N/A $4,230,000 N/A $340,000 N/A $60,000 N/A $110,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications $40,000 $140,000 1/22/2010 3/26/2010 $200,000 ($1,470,000) 1/22/2010 3/26/2010 $20,000 ($320,000) 1/22/2010 3/26/2010 — 1/22/2010 $45,056 ($145,056) 12/8/2010 3/26/2010 9/30/2010 — ($20,000) 1/22/2010 $10,000 ($54,944) 9/30/2010 7/14/2010 $50,000 7/14/2010 $90,000 ($1) 3/30/2011 3/26/2010 ($1) ($74,722) 1/6/2011 9/30/2010 $760,000 ($13) 7/14/2010 ($11) 3/30/2011 $5,852,780 1/6/2011 9/30/2010 ($1,560,000) ($1) 3/30/2011 7/14/2010 ($1) $70,334 1/6/2011 9/30/2010 ($140,000) ($2) 3/30/2011 7/14/2010 ($2) $850,556 1/6/2011 9/30/2010 ($1,870,000) $1,740,000 3/26/2010 7/14/2010 $30,000 1/22/2010 $700,000 N/A Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Reason for Adjustment — $145,056 $100,000 $90,000 $110,000 $145,056 $200,000 $150,000 $60,000 $725,276 $725,277 $725,278 $800,000 $40,000 $360,000 $7,252,756 $7,252,769 $7,252,780 $1,400,000 $2,960,000 $4,430,000 $870,332 $870,333 $870,334 Termination of SPA Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated portfolio data from servicer Updated HPDP cap & HAFA initial cap Updated due to quarterly assessment and reallocation Updated portfolio data from servicer Updated portfolio data from servicer $800,000 Updated portfolio data from servicer $940,000 $800,000 $1,450,552 $1,450,554 $1,450,556 $600,000 $2,470,000 $730,000 Adjusted Cap Adjustment Details Market Capitalization (in Millions) — $2,000 Borrowers Incentive $10,502 $11,087 Lenders/ Investors Incentives $25,502 $22,087 Total Non-GSE Incentive Payments Continued on next page. $15,000 $9,000 Servicers Incentives Non-GSE Incentive Payments 296 Appendix D I Transaction Detail I april 28, 2011 Purchase Purchase Purchase Purchase Fresno County Federal Credit Union, Fresno, CA Roebling Bank, Roebling, NJ First National Bank of Grant Park, Grant Park, IL Specialized Loan Servicing, LLC, Highlands Ranch, CO 1/13/2010 1/13/2010 1/13/2010 1/13/2010 Date Transaction Type Name of Institution Servicer Modifying Borrowers’ Loans $240,000 N/A $140,000 N/A $64,150,000 N/A Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications Financial Instrument for Home Loan Modifications $610,000 $50,000 3/26/2010 7/14/2010 $330,000 7/16/2010 $1,500,000 $7,100,000 ($36) 3/16/2011 3/30/2011 ($32) $200,000 1/13/2011 1/6/2011 11/16/2010 $200,000 $3,630,000 7/14/2010 ($1,695,826) $4,860,000 6/16/2010 9/30/2010 $3,000,000 5/14/2010 9/15/2010 ($51,240,000) 3/26/2010 $700,000 ($290,111) 1/26/2011 8/13/2010 ($9,889) $10,000 9/30/2010 7/14/2010 $150,000 3/26/2010 ($1) ($870,333) 3/23/2011 1/6/2011 ($29,666) ($1) 3/30/2011 9/30/2010 ($1) 1/6/2011 ($19,778) ($140,000) 7/14/2010 9/30/2010 $480,000 3/26/2010 $260,000 N/A Cap Adjustment Amount Financial Instrument for Home Loan Modifications Investment Description (CONTINUED) Cap of Incentive Payments on Behalf of Borrowers and to Servicers & Lenders/Investors Pricing Adjustment (Cap)1 Mechanism Note Date HAMP TRANSACTION DETAIL, AS OF 3/30/2011 Termination of SPA Updated portfolio d
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