On October 14, 2008,  Treasury allocated $250 billion of the original $700 billion, later reduced to  $475 billion, in overall TARP funds for CPP. On December 31,  2009, the program was closed to new investments. CPP Proceeds Surpass Original Investments and Almost All Institutions Have Exited Program

Treasury continues to make progress winding down CPP. For the life of the program, repayments and sales totaled  almost $200 billion (see fig.1). In 2016, institutions’ repayments totaled  about $25 million. Moreover, as of December 31, 2016, Treasury had  received about $227 billion in returns, including repayments and income,  from its CPP investments, which exceeds the amount originally disbursed  by almost $22 billion. Investments outstanding  represent about 0.1 percent of the amount Treasury disbursed for CPP. As of December 31, 2016, 696 of the 707 institutions that originally  participated in CPP had exited the program (see fig. 2). A total of 6  institutions exited CPP in 2016. Restructurings allow troubled financial institutions to  negotiate new terms or discounted redemptions for their CPP  investment. Treasury requires institutions to raise new capital from  outside investors (or merge with another institution) as a prerequisite  for a restructuring. With this option, Treasury receives cash or other  securities that generally can be sold more easily than preferred stock,  but the restructured investments sometimes result in recoveries at  less than par value. Treasury officials said that they expect the majority of the remaining  institutions will require a restructuring to exit the program in the future  because the overall weaker financial condition of the remaining  institutions makes full repayment unlikely. Overall Financial Condition of Remaining CPP Institutions Has Improved but Some Show Signs of Financial Weakness

Overall, the financial condition of institutions remaining in CPP as of  December 31, 2016, appears to have improved since the end of 2011. For  example, 5 of the 11 institutions had negative return on average assets  for the third quarter of 2016. Treasury officials told us that Treasury regularly monitors all institutions  remaining in the program. For example, Treasury’s financial agent has  provided quarterly valuations and credit reports for all of the institutions  remaining in the CPP portfolio. Agency Comments

We provided Treasury with a draft of this report for review and comment. Treasury provided technical comments that we have incorporated as  appropriate. We are sending copies of this report to the appropriate congressional  committees, the Secretary of the Treasury, and other interested parties.
Why GAO Did This Study

CPP was established as the primary means of restoring stability to the financial system under the Troubled Asset Relief Program (TARP). Under CPP, Treasury invested almost $205 billion in 707 eligible financial institutions between October 2008 and December 2009. CPP recipients have made dividend and interest payments to Treasury on the investments. The Emergency Economic Stabilization Act of 2008, as amended, includes a provision that GAO report at least annually on TARP activities and performance. This report examines (1) the status of CPP, including repayments, investments outstanding, and number of remaining institutions; and (2) the financial condition of institutions remaining in CPP.
To assess the program's status, GAO reviewed Treasury reports on the status of CPP. In addition, GAO reviewed information from Treasury officials to identify the agency's current efforts to wind down the program. Finally, GAO used financial and regulatory data to assess the financial condition of institutions remaining in CPP.
GAO provided a draft of this report to Treasury for its review and comment. Treasury provided technical comments that GAO incorporated as appropriate.

What GAO Found

The Department of the Treasury (Treasury) continues to make progress winding down the Capital Purchase Program (CPP). As of December 31, 2016, investments outstanding stood at almost $0.2 billion (see figure), which represents about 0.1 percent of the original amount disbursed. Treasury had received almost $200 billion in repayments, including about $25 million in 2016. Further, Treasury's returns for the program, including repayments and income, totaled about $227 billion, exceeding the amount originally disbursed by almost $22 billion. Of the 707 institutions that originally participated in CPP, 696 had exited the program, including 6 institutions in 2016.
Treasury officials expect that the majority of the remaining institutions will require a restructuring to exit the program. Restructurings allow institutions to negotiate terms for their CPP investments. With this option, Treasury requires institutions to raise new capital or merge with another institution and Treasury agrees to receive cash or other securities, typically at less than par value. Treasury officials expect to rely primarily on restructurings because the overall weaker financial condition of the remaining institutions makes full repayment unlikely.
The financial condition of the institutions remaining in CPP as of December 31, 2016, appears to have improved since the end of 2011, but some institutions show signs of financial weakness. For example, 5 institutions had negative returns on average assets (a common measure of profitability) for the third quarter of 2016.