On Wednesday, December 10, Interim Assistant Secretary Neel Kashkari testified before the House Financial Services Committee about oversight of the TARP program. During his testimony, Mr. Kashkari was asked by Congressman Spencer Bachus (R-AL) if the Treasury Department had developed a plan that would enable Subchapter S banks to participate in the TARP Capital Purchase Program. In explaining why Treasury has not yet released such a plan, Mr. Kashkari explained that “there are some real legal complexities on how to make equity investments in Subchapter S banks . . . and if you can make the investments, how do you get it out in the end so that the taxpayers can get their money back in the future.”
 
Despite these complexities, Mr. Kashkari emphasized that it is Treasury’s intention that every healthy U.S. financial institution should have the opportunity to participate in the TARP Capital Purchase Program. On one hand, it is encouraging that Treasury appears to still be working on a term sheet for Subchapter S banks, but on the other, it does not appear that such a term sheet will be released in the immediate future.