Treasury injects $386bn into local banks

28 January 2009

The Treasury Department is to inject $386 billion into 23 banks across the United States under the latest round of federal funding to be distributed through the Capital Purchase Program (CPP).

In the first CPP investment to take place since president Barack Obama took office, the department will provide funds to institutions in 16 states from Delaware and Pennsylvania in the east to Washington and California in the west.

Under the CPP, the Treasury has $250 billion to distribute to viable banks in order to kick-start business and consumer lending. In return for the funding, the department receives senior preferred shares that it can sell once the market stabilizes.

Banks taking part in the program must agree to limits on executive compensation, as well as restrictions on share repurchases and dividends.

So far, the Treasury has distributed a total of $194.2 billion through the CPP to 317 banks in a total of 43 states plus Puerto Rico. The largest single investment has been $25 billion.



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