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US Treasury Secretary Henry Paulson said in a statement released October 20 that banks had until November 14 to apply for some of the $250 billion set aside for capital injections by the government.

“Sufficient capital has been allocated so that all qualifying banks can participate,” Paulson said. “Let me be clear that this program is not being implemented on a first-come, first serve basis.”

Nine banks are the focus of the program, namely Citigroup, J.P. Morgan, Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley, Merrill Lynch, Bank of New York Mellon, and State Street.

To apply, bank must send a single application form to their primary regulator, the Federal Reserve, the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency or the Office of Thrift Supervision.

“Once Treasury receives the application with the regulator’s recommendation, we will review it and decide whether or not to make the capital purchase,” Paulson said.

Paulson continued: “Institutions that sell shares to the government will accept restrictions on executive compensation, including a clawback provision and a ban on golden parachutes during the period that Treasury holds equity issued through this program.” The Secretary also emphasized: “This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything.”

All transactions will be publicly announced within 48 hours of execution. Treasury will not, however, announce any applications that are withdrawn or denied.

The Treasury Department also announced that Bank of New York Mellon will serve as its custodian for the implementation of the Troubled Asset Relief Program authorized under the Emergency Economic Stabilization Act. Bank of New York Mellon was hired to provide the accounting record for the portfolio, hold all cash and assets in the portfolio, provide for pricing and asset valuation services and assist with other related services.

For further information, please see:

1. The Emergency Economic Stabilization Act Of 2008 (October 10, 2008 Arent Fox legal update)

2. Application Guidelines for Capital Purchase Program (http://www.treas.gov/press/releases/reports/applicationguidelines.pdf)

3. FAQs for Capital Purchase Program (http://www.treas.gov/press/releases/reports/faqcpp.pdf)

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Tags: 2008 emergency economic stability act, bailout bill, bank of america, Bank of New York Mellon, Citigroup, federal reserve, goldman sachs, henry paulson, J.P. Morgan, Merrill Lynch, Morgan Stanley, State Street, tarp, treasury secretary, Wells Fargo