Temporary Liquidity Guarantee Program Interim Rule
FIL-110-2008 October 23, 2008
Following a systemic risk determination pursuant to section 141 of the Federal Deposit Insurance Corporation Improvement Act of 1991, in an effort to avoid or mitigate serious adverse effects on economic conditions and financial stability, the FDIC has issued the attached interim rule establishing the Temporary Liquidity Guarantee Program (TLGP). The FDIC is soliciting comment on all aspects of this interim rule. Comments are due 15 days after the interim rule's publication in the Federal Register, which is expected soon. Coverage under the TLGP was established by the FDIC as of October 14, 2008.
The TLGP consists of two components:
a temporary guarantee of newly issued senior unsecured debt ("debt guarantee program"), and
a temporary and unlimited guarantee of the coverage of funds in non-interest bearing transaction accounts at FDIC-insured institutions ("transaction account guarantee program").
Generally, and as defined in the interim rule, the following entities are
eligible to participate in the TLGP:
any FDIC-insured depository institution;
any U.S. bank holding company, including financial holding companies; and
certain U.S. savings and loan holding companies.
The interim rule includes a provision for certain otherwise ineligible holding
companies or affiliates that issue debt for the benefit of an insured
institution or eligible holding company to apply for inclusion in the program
on a case-by-case basis.
All eligible entities will be covered under the TLGP without cost to the
entity for the first 30 days of the program. On or before November 12,
2008, eligible entities must inform the FDIC if they will opt out of the debt
guarantee program or the transaction account guarantee program, or both.
An eligible entity's decision to opt out of either component of the TLGP will
be made available to the public. The FDIC will maintain and post on its
Web site (www.fdic.gov) a list of those entities that have opted out of either
or both components of the TLGP.
Beginning on November 13, 2008, unless an eligible entity has chosen to
opt out of a component of the TLGP, it will be assessed fees for continued
coverage under that component.