UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 20, 2008

CAPITALSOURCE INC.

(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization) 1-31753
(Commission
File Number) 35-2206895
(I.R.S. Employer
Identification No.)

4445 Willard Avenue, 12th Floor
Chevy Chase, MD 20815
(Address of principal executive offices, zip code)

Registrant’s telephone number, including area code (301) 841-2700

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 3.02. Unregistered Sales of Equity Securities.

     On October 20, 2008, CapitalSource Inc. entered into an agreement with one of its existing securityholders to issue shares of the company’s common stock in exchange for approximately $45 million in aggregate principal amount of the company’s outstanding 1.25% and 1.625% senior and senior subordinated convertible debentures due 2034 held by the securityholder. The number of shares to be issued will be determined based on the volume weighted average price of the company’s common stock as reported on each of ten consecutive trading days, and the debentures acquired by the company in the exchange made pursuant to Section 3(a)(9) of the Securities Act will be retired by the company.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: October 24, 2008	/s/ Steven A. Museles
	Steven A. Museles
	Executive Vice President, Chief Legal Officer and Secretary