On January 6, 2008, the Treasury released its Second Report to Congress as required under Section 105(a) of the Emergency Economic Stabilization Act.  While the Second Report does not contain any new information, it does contain two nuggets of information that may be of interest to community bankers: (a) how Treasury believes the effectiveness of the TARP Capital program should be measured; and (b) confirmation that terms applicable to S corporations and mutuals are still in the works.

The Second Report begins with a note that Treasury has continued to make significant investments in financial institutions through the Capital Purchase program.  “These investments have improved the capitalization of these institutions, which is essential to improving the flow of credit to businesses and consumers and boosting the confidence of depositors, investors, and counterparties alike. With higher capital levels and restored confidence, banks can continue to play their vital role as lenders in our communities, a necessary requisite for economic recovery and a return to prosperity.”

In discussing the details of the Capital Purchase program, the Second Report notes that “terms applicable to S corporations and mutual organizations are still under consideration.”