Ownership Submission
FORM 4
Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
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(Print or Type Responses)
1. Name and Address of Reporting Person *
HURD TIMOTHY M
   2. Issuer Name and Ticker or Trading Symbol
CAPITALSOURCE INC [CSE] 		5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
__X__ Director _____ 10% Owner
_____ Officer (give title below) _____ Other (specify below)
(Last)
(First)
(Middle)
THREE FIRST NATIONAL PLAZA, SUITE 4600		 3. Date of Earliest Transaction (Month/Day/Year)
12/18/2008
(Street)

CHICAGO, IL 60602		 4. If Amendment, Date Original Filed(Month/Day/Year)
 6. Individual or Joint/Group Filing(Check Applicable Line)
_X_ Form filed by One Reporting Person
___ Form filed by More than One Reporting Person
(City)
(State)
(Zip)
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3)		 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code
(Instr. 8)		 4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5)		 5. Amount of Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 3 and 4)		 6. Ownership Form: Direct (D) or Indirect (I)
(Instr. 4)		 7. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code V Amount (A) or (D) Price
Common Stock 12/18/2008   J/K(1)   2,729,913 A $ 17.92 (1) 23,604,921.89 (2) I By Madison Dearborn Capital Partners III, L.P. (3)
Common Stock 12/18/2008   J/K(1)   60,616 A $ 17.92 (1) 524,129.47 (4) I By Madison Dearborn Special Equity III, L.P. (3)
Common Stock               9,508.302 (5) I By Special Advisors Fund I, LLC (3)

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Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 3)		 2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (Month/Day/Year) 3A. Deemed Execution Date, if any (Month/Day/Year) 4. Transaction Code
(Instr. 8)		 5. Number of Derivative Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4, and 5)		 6. Date Exercisable and Expiration Date
(Month/Day/Year)		 7. Title and Amount of Underlying Securities
(Instr. 3 and 4)		 8. Price of Derivative Security
(Instr. 5)		 9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 4)		 10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)		 11. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code V (A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares
Total Return Equity Swap (1) 12/18/2008   J/K(1)     1 09/12/2007 09/17/2010 Common Stock 2,729,913 $ 0 0 I By Madison Dearborn Capital Partners III, L.P. (3)
Total Return Equity Swap (1) 12/18/2008   J/K(1)     1 09/12/2007 09/17/2010 Common Stock 60,616 $ 0 0 I By Madison Dearborn Special Equity III, L.P. (3)

Reporting Owners

Reporting Owner Name / Address Relationships
 Director  10% Owner  Officer  Other
HURD TIMOTHY M
THREE FIRST NATIONAL PLAZA
SUITE 4600
CHICAGO, IL 60602		   X      

Signatures

 /s/ Mark B. Tresnowski, by power of attorney   12/22/2008
**Signature of Reporting Person Date

Explanation of Responses:

* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1) On December 18, 2008, Madison Dearborn Capital Partners III, L.P. ("MDCP III") and Madison Dearborn Special Equity III, L.P. ("MDSE") acquired 2,729,913 shares and 60,616 shares of Common Stock of CapitalSource, Inc. ("Common Stock"), respectively, pursuant to the settlement of a Partially Collateralized Equity Total Return Swap with Full Recourse to MDCP III and MDSE, each dated September 12, 2007 (the "Equity Swap"). MDCP III and MDSE acquired these shares of Common Stock, which were the "underlying securities" in the Equity Swap, for the price set forth in the Equity Swap. Immediately following this transaction, MDCP III beneficially owns 23,604,921.89 shares and MDSE beneficially owns 524,129.47 shares. The settlement of the Equity Swap in Table II and the reported acquisition of Common Stock in connection therewith in Table I are deemed exempt from Section 16(b) of the Securities Exchange Act of 1934 pursuant to Rule 16b-6(b) thereunder.
(2) Includes 92,178.13 shares acquired by MDCP III since January 1, 2008 under the CapitalSource Inc. Dividend Reinvestment and Stock Purchase Plan.
(3) Madison Dearborn Partners III, L.P. ("MDP III") is the general partner of MDCP III and MDSE, and the manager of Special Advisors Fund I, LLC ("SAF"). MDP III may be deemed to beneficially own the reported shares. Mr. Hurd is a managing director of the ultimate general partner of (a) MDCP III and MDSE and (b) the manager of SAF, and therefore may be deemed to share beneficial ownership of the shares held by MDCP III, MDSE and SAF. Mr. Hurd expressly disclaims beneficial ownership of the shares owned by MDCP III, MDSE and SAF except to the extent of his pecuniary interest therein.
(4) Includes 2,046.75 shares acquired by MDSE since January 1, 2008 under the CapitalSource Inc. Dividend Reinvestment and Stock Purchase Plan.
(5) Includes 37.41 shares acquired by Special Advisors Fund I, LLC since January 1, 2008 under the CapitalSource Inc. Dividend Reinvestment and Stock Purchase Plan.

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