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Protects preferred stockholders of HOLDING COMPANIES. e.g. Wells Fargo & Co/MN dba WFC HOLDING CO; JPMorgan Chase & Co, a Holding Co, etc...Federal Deposit Insurance Corp - Debt Guaranty Program aka Tempoary Liquidity Guaranty Program "TLGP" 12 Cfr Part 370 Debt Default Guaranty - Federal Reserve Board 'Claims' paid for debt 'How TLGP NOT inovlve FDIC insurance & tax Payer Money ? ' The Debt Guarantee ???

Protects preferred stockholders of HOLDING COMPANIES. e.g. Wells Fargo & Co/MN dba WFC HOLDING CO; JPMorgan Chase & Co, a Holding Co, etc...Federal Deposit Insurance Corp - Debt Guaranty Program aka Tempoary Liquidity Guaranty Program "TLGP" 12 Cfr Part 370 Debt Default Guaranty - Federal Reserve Board 'Claims' paid for debt 'How TLGP NOT inovlve FDIC insurance & tax Payer Money ? ' The Debt Guarantee ???

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Published by Mary Cochrane



guaranteed newly-issued senior
unsecured debt of insured depository
institutions and most U.S. holding
companies (the Debt Guarantee
Program)
and
guaranteed
certain noninterest-bearing transaction
accounts at insured depository
institutions (the Transaction Account
Guarantee Program).

http://www.scribd.com/doc/109656465/Fdic-Tlgp-Demand-and-Proof-of-Claim-Letter-debt-guarantee-will-be-triggered-by-payment-default-Chief-among-the-changes-is-that-the-debt-guarantee-will



guaranteed newly-issued senior
unsecured debt of insured depository
institutions and most U.S. holding
companies (the Debt Guarantee
Program)
and
guaranteed
certain noninterest-bearing transaction
accounts at insured depository
institutions (the Transaction Account
Guarantee Program).

http://www.scribd.com/doc/109656465/Fdic-Tlgp-Demand-and-Proof-of-Claim-Letter-debt-guarantee-will-be-triggered-by-payment-default-Chief-among-the-changes-is-that-the-debt-guarantee-will

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Published by: Mary Cochrane on Oct 12, 2012
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10/12/2012

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 Wednesday,November 26, 2008
Part VII
Federal Deposit InsuranceCorporation 
12 CFR Part 370 Temporary Liquidity Guarantee Program;Final Rule
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72244
Federal Register
/Vol. 73, No. 229/Wednesday, November 26, 2008/Rules and Regulations
1
73 FR 64179 (Oct. 29, 2008).
FEDERAL DEPOSIT INSURANCECORPORATION12 CFR Part 370
RIN 3064–AD37
Temporary Liquidity GuaranteeProgram
AGENCY
:
Federal Deposit InsuranceCorporation (FDIC).
ACTION
:
Final rule.
SUMMARY
:
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.
DATES
:
Effective Date: 
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
SUPPLEMENTARY INFORMATION
:
I. Background
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
FederalRegister
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.
1
 Later, the FDIC amended its InterimRule. The Amended Interim Rule became effective on November 4, 2008,and was published in the
FederalRegister
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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72245
Federal Register
/Vol. 73, No. 229/Wednesday, November 26, 2008/Rules and Regulations
eligible entities until November 13,2008. The Interim Rule provided that by11:59 p.m., Eastern Standard Time(EST) on November 12, 2008, eligibleentities were required to inform theFDIC whether they intended to opt-outof one or both components of the TLGProgram. (The Interim Rule alsopermitted eligible entities to notify theFDIC before that date of their intent toparticipate in the program.) An eligibleentity that did not opt-out of either or both programs became a participatingentity in the program, according to theInterim Rule. Eligible entities that didnot opt-out of the Debt GuaranteeProgram by the opt-out date of November 12, 2008, were not permittedto select which of their newly-issuedsenior unsecured debt would beguaranteed; the Interim Rule providedthat all senior unsecured debt issued bya participating entity up to a limit of 125percent of all senior unsecured debtoutstanding on September 30, 2008, andmaturing by June 30, 2009, would beconsidered guaranteed debt whenissued. The Interim Rule allowed aparticipating entity to make a separateelection and pay a nonrefundable fee toissue non-guaranteed senior unsecureddebt with a maturity date after June 30,2012, prior to reaching the 125 percentdebt guarantee limit.The Interim Rule permitted an eligibleentity to opt-out of either the DebtGuarantee Program or the TransactionAccount Guarantee Program or of bothcomponents of the TLG Program, butrequired all eligible entities within aU.S. Banking Holding Company or aU.S. Savings and Loan HoldingCompany structure to make the samedecision regarding continuedparticipation in each component of theTLG Program or none of the members of the holding company structure wereconsidered eligible for participation inthat component of the TLG Program.The Interim Rule required an eligibleentity’s opt-out decision(s) to be madepublicly available. In the Interim Rule,the FDIC committed to maintain andpost on its website a list of entities thatopted out of either or both componentsof the TLG Program. The Interim Rulerequired each eligible entity to makeclear to relevant parties whether or notit chose to participate in either or bothcomponents of the TLG Program.According to the Interim Rule, if aneligible entity remained in the DebtGuarantee Program of the TLG Program,it was required to clearly disclose tointerested lenders and creditors, inwriting and in a commerciallyreasonable manner, what debt it wasoffering and whether the debt wasguaranteed under this program.Similarly, the Interim Rule providedthat an eligible entity had toprominently post a notice in the lobbyof its main office and at all of its branches disclosing its decision onwhether to participate in, or opt-out of,the Transaction Account GuaranteeProgram. These disclosures wererequired to be provided in simple,readily understandable text, and, if theeligible entity decided to participate inthe Transaction Account GuaranteeProgram, the Interim Rule required thenotice to state that noninterest-bearingtransaction accounts were fullyguaranteed by the FDIC. The InterimRule provided that if the institutionused sweep arrangements or took otheractions that resulted in funds in anoninterest-bearing transaction account being transferred to or reclassified as aninterest-bearing account or a non-transaction account, the institution alsomust disclose those actions to theaffected customers and clearly advisethem in writing that such actions wouldvoid the transaction account guarantee.The Interim Rule required the describeddisclosures to be made by December 1,2008.
A. The Debt Guarantee Program
The Debt Guarantee Program, asdescribed in the Interim Rule,temporarily would guarantee all newly-issued senior unsecured debt up toprescribed limits issued by participatingentities on or after October 14, 2008,through and including June 30, 2009.The guarantee would not extend beyond June 30, 2012. The Interim Ruleexplained that, as a result of thisguarantee, the unpaid principal andcontract interest of an entity’s newly-issued senior unsecured debt would bepaid by the FDIC if the issuing insureddepository institution failed or if a bankruptcy petition were filed by therespective issuing holding company.In the Interim Rule, senior unsecureddebt included, without limitation,federal funds purchased, promissorynotes, commercial paper,unsubordinated unsecured notes,certificates of deposit standing to thecredit of a bank, bank deposits in aninternational banking facility (IBF) of aninsured depository institution, andEurodollar deposits standing to thecredit of a bank. Senior unsecured debtwas permitted to be denominated inforeign currency. For purposes of theInterim Rule, the term ‘‘bank’’ in thephrase ‘‘standing to the credit of a bank’’meant an insured depository institutionor a depository institution regulated bya foreign bank supervisory agency. To be eligible for the Debt GuaranteeProgram, senior unsecured debt wasrequired to be noncontingent. Finally,the Interim Rule required seniorunsecured debt to be evidenced by awritten agreement, contain a specifiedand fixed principal amount to be paidon a date certain, and not besubordinated to another liability.The preamble to the Interim Ruleexplained that the purpose of the DebtGuarantee Program was to provideliquidity to the inter-bank lendingmarket and promote stability in theunsecured funding market and not toencourage innovative, exotic or complexfunding structures or to protect lenderswho make risky loans. Thus, asexplained in the Interim Rule, forpurposes of the Debt GuaranteeProgram, some instruments wereexcluded from the definition of seniorunsecured debt. Some of theseexclusions from that definition were, forexample, obligations from guarantees orother contingent liabilities, derivatives,derivative-linked products, debt pairedwith any other security, convertibledebt, capital notes, the unsecuredportion of otherwise secured debt,negotiable certificates of deposit, anddeposits in foreign currency andEurodollar deposits that represent fundsswept from individual, partnership orcorporate accounts held at insureddepository institutions. Also excludedfrom the definition of ‘‘senior unsecureddebt’’ were loans from affiliates,including parents and subsidiaries, andinstitution-affiliated parties.The Interim Rule explained that debteligible for coverage under the DebtGuarantee Program had to be issued byparticipating entities on or before June30, 2009. The FDIC agreed to guaranteesuch debt until the earlier of thematurity date of the debt or until June30, 2012. The Interim Rule provided anabsolute limit for coverage: coveragewould expire at 11:59 p.m. EST on June30, 2012, whether or not the liabilityhad matured at that time. In order forthe newly-issued senior unsecured debtto be guaranteed by the FDIC, theInterim Rule required the debtinstrument to be clearly identified as‘‘guaranteed by the FDIC.’’As explained in the Interim Rule,absent additional action by the FDIC,the maximum amount of seniorunsecured debt that could be issuedpursuant to the Debt Guarantee Programwas equal to 125 percent of the par orface value of senior unsecured debtoutstanding as of September 30, 2008,that was scheduled to mature on or before June 30, 2009. The Interim Ruleprovided that the maximum guaranteedamount would be calculated for eachindividual participating entity within aholding company structure. In the
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