Archive for March 19, 2009
FDIC Extends the Debt Guarantee Component of Its Temporary Liquidity Guarantee Program With Surcharges to Bolster the Deposit Insurance Fund
On Tuesday, the Federal Deposit Insurance Corporation (FDIC) voted to extend the debt guarantee portion of its Temporary Liquidity Guarantee Program (TLGP) from June 30, 2009 through October 31, 2009. Depository institutions and holding companies that participated in the guaranteed debt portion of the TLGP may continue to issue guaranteed debt through October 31, 2009 without application. Other participating entities must apply to the FDIC by June 30, 2009, to issue guaranteed debt during this extended period and also must apply to issue any non-guaranteed debt after June 30, 2009. The guarantee on debt issued before April 1, 2009 will expire by June 30, 2012 and, for debt issued on or after April 1, 2009, will expire by December 31, 2012.
Along with this extension, the FDIC will impose a surcharge on debt issued on or after April 1, 2009 with a maturity of one year or more. The surcharge will range from ten to 50 basis points depending on whether the issuer is a bank or bank holding company and when the debt matures. The surcharges are in addition to current fees for guaranteed debt and will be deposited into the Deposit Insurance Fund (DIF). The addition of these funds to the DIF “should enable the FDIC to meaningfully reduce the 20 basis-point special assessment proposed by the board on Feb. 27,” said FDIC Chairman Sheila Bair.
