The Capital Assistance Program is a U.S. Treasury program that provides capital injections in exchange for mandatory convertible preferred stock and warrants to bank holding companies.
The Troubled Asset Relief Program (TARP) was to be implemented in two $350 billion authorizations.
[1] The new Barack Obama appointee, U.S. Treasury Secretary Timothy Geithner, announced the Capital Assistance Program on February 10, 2009.
[2] Money is given in exchange for preferred stock that pays a 9 percent dividend.
[3] Because preferred stock is similar to debt in that it gets paid before common stock, some economists have questioned whether the buying of preferred stock by both the Capital Assistance Program and the Capital Purchase Program will be effective in getting banks to lend efficiently.