/Vol. 73, No. 229/Wednesday, November 26, 2008/Rules and Regulations
73 FR 64179 (Oct. 29, 2008).
FEDERAL DEPOSIT INSURANCECORPORATION12 CFR Part 370
Temporary Liquidity GuaranteeProgram
Federal Deposit InsuranceCorporation (FDIC).
The FDIC is adopting a FinalRule to implement its TemporaryLiquidity Guarantee Program. TheTemporary Liquidity GuaranteeProgram, designed to avoid or mitigateadverse effects on economic conditionsor financial stability, has two primarycomponents: The Debt GuaranteeProgram, by which the FDIC willguarantee the payment of certain newly-issued senior unsecured debt, and theTransaction Account GuaranteeProgram, by which the FDIC willguarantee certain noninterest-bearingtransaction accounts.
The Final Rule becomes effective on November 21,2008, except that §370.5(h)(2), (h)(3),and (h)(4) are effective December 19,2008.
FOR FURTHER INFORMATION CONTACT
Munsell W. St. Clair, Section Chief,Division of Insurance and Research,(202) 898–8967 or
; Lisa Ryu, Section Chief, Division of Insurance and Research, (202) 898–3538or
;Richard Bogue,Counsel, Legal Division, (202) 898–3726or
;Robert Fick,Counsel, Legal Division, (202) 898–8962or
;A. Ann Johnson,Counsel, Legal Division, (202) 898–3573or
;Gail Patelunas,Deputy Director, Division of Resolutionsand Receiverships, (202) 898–6779 or
;John Corston,Associate Director, Large BankSupervision, Division of Supervisionand Consumer Protection, (202) 898–6548 or
;Serena L.Owens, Associate Director, Supervisionand Applications Branch, Division of Supervision and Consumer Protection,(202) 898–8996 or
; Donna Saulnier, Manager, AssessmentPolicy Section, Division of Finance,(703) 562–6167 or
; Michael L. Hetzner, Senior AssessmentSpecialist, Division of Finance, (703)562–6405 or
On November 21, 2008, the Board of Directors (Board) of the Federal DepositInsurance Corporation (FDIC) adopted aFinal Rule relating to the TemporaryLiquidity Guarantee Program (TLGProgram). The TLG Program wasannounced by the FDIC on October 14,2008, as an initiative to counter thecurrent system-wide crisis in thenation’s financial sector. It provided twolimited guarantee programs: One thatguaranteed newly-issued seniorunsecured debt of insured depositoryinstitutions and most U.S. holdingcompanies (the Debt GuaranteeProgram), and another that guaranteedcertain noninterest-bearing transactionaccounts at insured depositoryinstitutions (the Transaction AccountGuarantee Program).The FDIC’s establishment of the TLGProgram was preceded by adetermination of systemic risk by theSecretary of the Treasury (afterconsultation with the President),following receipt of the writtenrecommendation of the Board onOctober 13, 2008, along with a similarwritten recommendation of the Board of Governors of the Federal ReserveSystem (FRB).The recommendations and eventualdetermination of systemic risk weremade in accordance with section13(c)(4)(G) to the Federal DepositInsurance Act (FDI Act), 12 U.S.C.1823(c)(4)(G). The determination of systemic risk allowed the FDIC to takecertain actions to avoid or mitigateserious adverse effects on economicconditions and financial stability. TheFDIC believes that the TLG Programpromotes financial stability bypreserving confidence in the bankingsystem and encouraging liquidity inorder to ease lending to creditworthy businesses and consumers. The FDICanticipates that the TLG Program willfavorably impact both the availabilityand the cost of credit. As a result, onOctober 23, 2008, the FDIC’s Boardauthorized publication in the
and requested commentregarding an Interim Rule designed toimplement the TLG Program. TheInterim Rule with request for commentswas published on October 29, 2008, andprovided for a 15 day comment period.
Later, the FDIC amended its InterimRule. The Amended Interim Rule became effective on November 4, 2008,and was published in the
on November 7, 2008. It madethree limited modifications to theInterim Rule. In the Amended InterimRule, the FDIC extended the opt-outdeadline for participation in the TLGProgram from November 12, 2008 untilDecember 5, 2008; extended thedeadline for complying with specificdisclosure requirements related to theTLG Program from December 1, 2008until December 19, 2008; andestablished assessment procedures toaccommodate the extended opt-outperiod. Additionally, in issuing theAmended Interim Rule, the FDICrequested comment on three additionalquestions relating to the TLG Program.The FDIC received over 700comments on the Interim Rule and theAmended Interim Rule and, afterconsideration of those comments, issuesthe Final Rule that follows.
II. The Interim Rule
The Interim Rule permitted thefollowing eligible entities to participatein the TLG Program: FDIC-insureddepository institutions, any U.S. bankholding company or financial holdingcompany, and any U.S. savings and loanholding company that either engagedonly in activities permissible forfinancial holding companies to conductunder section (4)(k) of the Bank HoldingCompany Act of 1956 (BHCA) or had atleast one insured depository institutionsubsidiary that was the subject of anapplication that was pending onOctober 13, 2008, pursuant to section4(c)(8) of the BHCA. To be consideredan ‘‘eligible entity’’ under the InterimRule, both bank holding companies andsavings and loan holding companieswere required to have at least onechartered and operating insureddepository institution within theirholding company structure The InterimRule permitted other affiliates of insured depository institutions toparticipate in the program, with thepermission of the FDIC, granted in itssole discretion and on a case-by-case basis, after written request and positiverecommendation by the appropriateFederal banking agency. In making thisdetermination, the FDIC would considersuch factors as (1) the extent of thefinancial activity of the entities withinthe holding company structure; (2) thestrength, from a ratings perspective, of the issuer of the obligations that will beguaranteed; and (3) the size and extentof the activities of the organization.The TLG Program became effective onOctober 14, 2008. The Interim Ruleprovided that from October 14, 2008, alleligible entities would be covered under both components of the TLG Programfor the first 30 days of the programunless they opted out of eithercomponent of the Program before then.Under the Interim Rule, the guaranteesprovided by the TLG Program undereither the Debt Guarantee Program orthe Transaction Account GuaranteeProgram would be offered at no cost to
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