12078 Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Rules and Regulations
11 69 FR 28856 (May 19, 2004).
12 70 FR 11834 (March 10, 2005).
the other Federal banking agencies and
Treasury, to respond to the current
financial situation.
Regulatory Flexibility Act
Under section 604 of the Regulatory
Flexibility Act (RFA) (5 U.S.C. 604), a
final regulatory flexibility analysis is
required only for notice-and-comment
rulemakings conducted under section
553 of the APA. Since the Board finds
that there is ‘‘good cause’’ under the
APA for not proceeding with notice-
and-comment rulemaking for this
amendment to the implementation date
for the final rule, the RFA does not
require that a final regulatory flexibility
analysis be provided for this
amendment.
The Board provided regulatory
flexibility analysis in the preamble to
the final rule published on March 10,
2005 (70 FR 11827–11838). In that
regulatory flexibility analysis, the Board
considered the likely impact of the final
rule on small entities and determined
that the final rule will not have a
significant impact on a substantial
number of small entities.
Paperwork Reduction Act
In accordance with the requirements
of the Paperwork Reduction Act of 1995
(44 U.S.C. 3506), the Board has
reviewed this rule to assess any
information collections. There are no
collections of information as defined by
the Paperwork Reduction Act in this
rule.
Solicitation of Comments on Use of
Plain Language
Section 722 of the Gramm-Leach-
Bliley Act, Public Law 106–102,
requires the Federal banking agencies to
use plain language in all proposed and
final rules published after January 1,
2000. The Board invited comment on
how to make the final rule easier to
understand.11 No commenter indicated
that the proposed rule should be revised
to make it easier to understand. In the
preamble to the final rule the Board
indicated that it believes the final rule
is written plainly and clearly.12
List of Subjects in 12 CFR Part 225
Administrative Practice and
Procedure, Banks, Banking, Federal
Reserve System, Holding companies,
Reporting and recordkeeping
requirements, Securities.
Board of Governors of the Federal
Reserve System
12 CFR Chapter II
Authority and Issuance
■ For the reasons stated in the preamble,
the Board of Governors of the Federal
Reserve System amends part 225 of
chapter II of title 12 of the Code of
Federal Regulations as follows:
PART 225—BANK HOLDING
COMPANIES AND CHANGE IN BANK
CONTROL (REGULATION Y)
■ 1. The authority citation for part 225
continues to read as follows:
Authority: 12 U.S.C. 1817(j)(13), 1818,
1828(o), 1831i, 1831p–1, 1843(c)(8), 1844(b),
1972(1), 3106, 3108, 3310, 3331–3351, 3907,
and 3909; 15 U.S.C. 6801 and 6805.
Appendix A to Part 225 [Amended]
■ 2. In Appendix A to part 225,
paragraphs II.A.1.b.ii. and II.A.2.d.iv.
are amended by removing ‘‘2009’’ and
adding ‘‘2011’’ in its place wherever it
appears.
By order of the Board of Governors of the
Federal Reserve System, March 16, 2009.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E9–6096 Filed 3–20–09; 8:45 am]
BILLING CODE 6210–02–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 370
RIN 3064–AD37
Amendment of the Temporary Liquidity
Guarantee Program To Extend the
Debt Guarantee Program and To
Impose Surcharges on Assessments
for Certain Debt Issued on or After
April 1, 2009
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Interim Rule with request for
comments.
SUMMARY: The FDIC is issuing this
Interim Rule to amend the Temporary
Liquidity Guarantee Program (TLGP) by
providing a limited extension of the
Debt Guarantee Program (DGP) for
insured depository institutions (IDIs)
participating in the DGP. The extended
DGP also would apply to other
participating entities; however, other
participating entities that have not
issued FDIC-guaranteed debt before
April 1, 2009 are required to submit an
application to and obtain approval from
the FDIC to participate in the extended
DGP. The Interim Rule imposes
surcharges on certain debt issued on or
after April 1, 2009. Any surcharge
collected will be deposited into the
Deposit Insurance Fund (DIF or Fund).
The Interim Rule also establishes an
application process whereby entities
participating in the extended DGP may
apply to issue non-FDIC-guaranteed
debt during the extension period.
DATES: The Interim Rule becomes
effective on March 23, 2009. Comments
on the Interim Rule must be received by
April 7, 2009.
ADDRESSES: You may submit comments
on the Interim Rule by any of the
following methods:
• Agency Web Site: http://
www.FDIC.gov/regulations/laws/
federal/notices.html. Follow
instructions for submitting comments
on the Agency Web Site.
• E-mail: Comments@FDIC.gov.
Include RIN # 3064–AD37 on the
subject line of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
• Hand Delivery: Comments may be
hand delivered to the guard station at
the rear of the 550 17th Street Building
(located on F Street) on business days
between 7 a.m. and 5 p.m.
Instructions: All comments received
will be posted generally without change
to http://www.fdic.gov/regulations/laws/
federal/propose.html, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT:
Mark L. Handzlik, Senior Attorney,
Legal Division, (202) 898–3990 or
mhandzlik@fdic.gov; Robert C. Fick,
Counsel, Legal Division, (202) 898–8962
or rfick@fdic.gov; A. Ann Johnson,
Counsel, Legal Division, (202) 898–3573
or aajohnson@fdic.gov; (for questions or
comments related to applications) Lisa
D Arquette, Associate Director, Division
of Supervision and Consumer
Protection, (202) 898–8633 or
larquette@fdic.gov; Serena L. Owens,
Associate Director, Supervision and
Applications Branch, Division of
Supervision and Consumer Protection,
(202) 898–8996 or sowens@fdic.gov; Gail
Patelunas, Deputy Director, Division of
Resolutions and Receiverships, (202)
898–6779 or gpatelunas@fdic.gov;
Donna Saulnier, Manager, Assessment
Policy Section, Division of Finance,
(703) 562–6167 or dsaulnier@fdic.gov;
or Munsell St. Clair, Chief, Bank and
Regulatory Policy Section, Division of
Insurance and Research, (202) 898–8967
or mstclair@fdic.gov.
SUPPLEMENTARY INFORMATION:
VerDate Nov<24>2008 15:22 Mar 20, 2009 Jkt 217001 PO 00000 Frm 00028 Fmt 4700 Sfmt 4700 E:\FR\FM\23MRR1.SGM 23MRR1
dwashington3 on PROD1PC60 with RULES
11 69 FR 28856 (May 19, 2004).
12 70 FR 11834 (March 10, 2005).
the other Federal banking agencies and
Treasury, to respond to the current
financial situation.
Regulatory Flexibility Act
Under section 604 of the Regulatory
Flexibility Act (RFA) (5 U.S.C. 604), a
final regulatory flexibility analysis is
required only for notice-and-comment
rulemakings conducted under section
553 of the APA. Since the Board finds
that there is ‘‘good cause’’ under the
APA for not proceeding with notice-
and-comment rulemaking for this
amendment to the implementation date
for the final rule, the RFA does not
require that a final regulatory flexibility
analysis be provided for this
amendment.
The Board provided regulatory
flexibility analysis in the preamble to
the final rule published on March 10,
2005 (70 FR 11827–11838). In that
regulatory flexibility analysis, the Board
considered the likely impact of the final
rule on small entities and determined
that the final rule will not have a
significant impact on a substantial
number of small entities.
Paperwork Reduction Act
In accordance with the requirements
of the Paperwork Reduction Act of 1995
(44 U.S.C. 3506), the Board has
reviewed this rule to assess any
information collections. There are no
collections of information as defined by
the Paperwork Reduction Act in this
rule.
Solicitation of Comments on Use of
Plain Language
Section 722 of the Gramm-Leach-
Bliley Act, Public Law 106–102,
requires the Federal banking agencies to
use plain language in all proposed and
final rules published after January 1,
2000. The Board invited comment on
how to make the final rule easier to
understand.11 No commenter indicated
that the proposed rule should be revised
to make it easier to understand. In the
preamble to the final rule the Board
indicated that it believes the final rule
is written plainly and clearly.12
List of Subjects in 12 CFR Part 225
Administrative Practice and
Procedure, Banks, Banking, Federal
Reserve System, Holding companies,
Reporting and recordkeeping
requirements, Securities.
Board of Governors of the Federal
Reserve System
12 CFR Chapter II
Authority and Issuance
■ For the reasons stated in the preamble,
the Board of Governors of the Federal
Reserve System amends part 225 of
chapter II of title 12 of the Code of
Federal Regulations as follows:
PART 225—BANK HOLDING
COMPANIES AND CHANGE IN BANK
CONTROL (REGULATION Y)
■ 1. The authority citation for part 225
continues to read as follows:
Authority: 12 U.S.C. 1817(j)(13), 1818,
1828(o), 1831i, 1831p–1, 1843(c)(8), 1844(b),
1972(1), 3106, 3108, 3310, 3331–3351, 3907,
and 3909; 15 U.S.C. 6801 and 6805.
Appendix A to Part 225 [Amended]
■ 2. In Appendix A to part 225,
paragraphs II.A.1.b.ii. and II.A.2.d.iv.
are amended by removing ‘‘2009’’ and
adding ‘‘2011’’ in its place wherever it
appears.
By order of the Board of Governors of the
Federal Reserve System, March 16, 2009.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. E9–6096 Filed 3–20–09; 8:45 am]
BILLING CODE 6210–02–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 370
RIN 3064–AD37
Amendment of the Temporary Liquidity
Guarantee Program To Extend the
Debt Guarantee Program and To
Impose Surcharges on Assessments
for Certain Debt Issued on or After
April 1, 2009
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Interim Rule with request for
comments.
SUMMARY: The FDIC is issuing this
Interim Rule to amend the Temporary
Liquidity Guarantee Program (TLGP) by
providing a limited extension of the
Debt Guarantee Program (DGP) for
insured depository institutions (IDIs)
participating in the DGP. The extended
DGP also would apply to other
participating entities; however, other
participating entities that have not
issued FDIC-guaranteed debt before
April 1, 2009 are required to submit an
application to and obtain approval from
the FDIC to participate in the extended
DGP. The Interim Rule imposes
surcharges on certain debt issued on or
after April 1, 2009. Any surcharge
collected will be deposited into the
Deposit Insurance Fund (DIF or Fund).
The Interim Rule also establishes an
application process whereby entities
participating in the extended DGP may
apply to issue non-FDIC-guaranteed
debt during the extension period.
DATES: The Interim Rule becomes
effective on March 23, 2009. Comments
on the Interim Rule must be received by
April 7, 2009.
ADDRESSES: You may submit comments
on the Interim Rule by any of the
following methods:
• Agency Web Site: http://
www.FDIC.gov/regulations/laws/
federal/notices.html. Follow
instructions for submitting comments
on the Agency Web Site.
• E-mail: Comments@FDIC.gov.
Include RIN # 3064–AD37 on the
subject line of the message.
• Mail: Robert E. Feldman, Executive
Secretary, Attention: Comments, Federal
Deposit Insurance Corporation, 550 17th
Street, NW., Washington, DC 20429.
• Hand Delivery: Comments may be
hand delivered to the guard station at
the rear of the 550 17th Street Building
(located on F Street) on business days
between 7 a.m. and 5 p.m.
Instructions: All comments received
will be posted generally without change
to http://www.fdic.gov/regulations/laws/
federal/propose.html, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT:
Mark L. Handzlik, Senior Attorney,
Legal Division, (202) 898–3990 or
mhandzlik@fdic.gov; Robert C. Fick,
Counsel, Legal Division, (202) 898–8962
or rfick@fdic.gov; A. Ann Johnson,
Counsel, Legal Division, (202) 898–3573
or aajohnson@fdic.gov; (for questions or
comments related to applications) Lisa
D Arquette, Associate Director, Division
of Supervision and Consumer
Protection, (202) 898–8633 or
larquette@fdic.gov; Serena L. Owens,
Associate Director, Supervision and
Applications Branch, Division of
Supervision and Consumer Protection,
(202) 898–8996 or sowens@fdic.gov; Gail
Patelunas, Deputy Director, Division of
Resolutions and Receiverships, (202)
898–6779 or gpatelunas@fdic.gov;
Donna Saulnier, Manager, Assessment
Policy Section, Division of Finance,
(703) 562–6167 or dsaulnier@fdic.gov;
or Munsell St. Clair, Chief, Bank and
Regulatory Policy Section, Division of
Insurance and Research, (202) 898–8967
or mstclair@fdic.gov.
SUPPLEMENTARY INFORMATION:
VerDate Nov<24>2008 15:22 Mar 20, 2009 Jkt 217001 PO 00000 Frm 00028 Fmt 4700 Sfmt 4700 E:\FR\FM\23MRR1.SGM 23MRR1
dwashington3 on PROD1PC60 with RULES
12079Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Rules and Regulations
1 Public Law 110–343 (October 3, 2008).
2 Public Law 111–5 (February 17, 2009).
3 Memorandum dated November 19, 2008, to
FDIC Chairman Sheila C. Bair from Federal Reserve
Board Staff at page 1.
4 Secretary Geithner Introduces Financial
Stability Plan, http://www.treas.gov/press/releases/
tg18.htm (last visited Feb. 19, 2009).
5 12 U.S.C. 1823(c)(4)(G).
6 12 U.S.C. 1819(a)Tenth.
7 2009 Monetary Press Release, Release Date:
February 3, 2009, http://www.federalreserve.gov/
newsevents/press/monetary/20090203a.htm (last
visited February 20, 2009) (announcing four month
extensions until October 2009 of six liquidity
programs originally scheduled to expire in April
2009).
8 Unless those other participating entities that
have not issued debt before April 1, 2009, apply
and receive the approval of the FDIC to participate
in the extended DGP, the FDIC’s guarantee will
expire for such entities no later than June 30, 2012.
(See Section III.B.)
I. Background
The FDIC adopted the TLGP in
October 2008 following a determination
of systemic risk by the Secretary of the
Treasury (after consultation with the
President) that was supported by
recommendations from the FDIC and
the Board of Governors of the Federal
Reserve System (Federal Reserve). The
TLGP is part of a coordinated effort by
the FDIC, the U.S. Department of the
Treasury (Treasury), and the Federal
Reserve to address unprecedented
disruptions in credit markets and the
resultant inability of financial
institutions to fund themselves and
make loans to creditworthy borrowers.
More broadly, Congress, the Treasury,
and the federal banking agencies, have
taken coordinated steps to preserve
confidence in the American economy.
Congress enacted sweeping laws to deal
with the economic crisis, including the
Emergency Economic Stabilization Act 1
(which temporarily raised deposit
insurance limits) and the American
Recovery and Reinvestment Act of
2009; 2 the Federal Reserve made
commercial paper facilities available;
and the Treasury provided banks with
capital injections.
The disruption in credit markets that
emerged in the second half of 2008
impaired the ability of financial
institutions to obtain funding, make
loans to creditworthy borrowers, and
intermediate credit transactions.
Although the financial system and
credit markets remain stressed, credit
market conditions have improved in
response to government stabilization
efforts such as the TLGP. Interbank
short-term funding rates have fallen
notably since mid-October 2008. The
three-month Libor rate has fallen about
350 basis points from the 4.75 percent
peak in mid-October 2008. The three-
month Libor spread over Treasuries has
also declined to under one percent,
down from 4.57 percent in mid-October
2008, but remains above a historical
spread of approximately 40 basis points.
While liquidity in the financial
markets has not returned to pre-crisis
levels, the TLGP debt guarantee program
has been effective to date in improving
short-term and intermediate-term
funding for banking organizations. More
than two-thirds of new public debt
issuances by banking organizations
between October 14, 2008, and March 4,
2009, that matures on or before June 30,
2012, are FDIC-guaranteed. Thus far,
non-FDIC-guaranteed debt issued by
banking organizations has mostly been
for relatively small amounts with some
exceptions. During the first two months
of the year, one banking organization
issued $2 billion in 10-year senior notes,
and another banking organization issued
$4 billion in 30-year bonds, both
without government guarantees.
At its inception, the Federal Reserve
and the Treasury recommended
extending the DGP to bank holding
companies, given the difficulties that
these institutions were having with
gaining access to funding. Concerns
were raised that under the
circumstances at that time, there would
be risk to IDIs and to the banking system
as a whole if the FDIC did not guarantee
debt issued by bank holding companies
under the TLGP.3 The FDIC believes
that certain aspects of the credit markets
have improved, and with this Interim
Rule, the FDIC is acting to ensure the
orderly phase-out of the TLGP, a
program that has provided benefit to
IDIs, bank and certain savings and loan
holding companies, and certain of their
affiliates.
The FDIC expects the Interim Rule to
provide an orderly transition period for
participating entities returning to non-
FDIC-guaranteed funding, and reduce
the potential for market disruption
when the DGP ends. Also, the extension
should enhance bank liquidity while the
elements of the Treasury’s proposed
Financial Stability Plan are fully
implemented.4
II. Authority To Provide Limited
Extension of the TLGP
The amendment to the DGP provided
under the Interim Rule is consistent
with the rationale for establishing the
existing TLGP and the determination of
systemic risk made on October 14, 2008,
pursuant to section 13(c)(4)(G),5 by the
Secretary of the Treasury (after
consultation with the President)
following receipt of the written
recommendation dated October 13,
2008, by the Board of Directors of the
FDIC (Board) and the similar written
recommendation of the Federal Reserve.
The determination of systemic risk
authorized the FDIC to take actions to
avoid or mitigate serious adverse effects
on economic conditions or financial
stability by providing a guarantee of
senior unsecured debt, and the FDIC
initiated the TLGP in response. The
limited extension of the TLGP provided
for in the Interim Rule represents
continued action by the FDIC to avoid
or mitigate further deterioration in the
economic condition and stability of the
U.S. financial system and is consistent
with the systemic risk determination
made by the Secretary of the Treasury
based on recommendations of the FDIC
and the FRB in October 2008.
In addition to the authority granted to
the FDIC by the systemic risk
determination made under Section
13(c)(4) of the FDI Act, as described
above, the FDIC is authorized under
Section 9(a) Tenth of the FDI Act,6 to
prescribe, by its Board, such rules and
regulations as it may deem necessary to
carry out the provisions of the FDI Act.
The FDIC has determined that this
Interim Rule is necessary to further
enhance the TLGP.
III. The Interim Rule
A. Extension of the Debt Guarantee
Program for IDIs Participating in the
TLGP
Under the existing DGP, participating
entities are permitted to issue senior
unsecured debt until June 30, 2009. The
FDIC will guarantee this debt until the
earlier of the maturity of the debt or
June 30, 2012.
The Interim Rule provides a limited
four-month extension for the issuance of
debt under the DGP and is consistent
with extensions to other liquidity
programs recently announced by the
Federal Reserve.7 The Interim Rule
permits all IDIs participating in the DGP
to issue FDIC-guaranteed senior
unsecured debt until October 31, 2009.
For debt issued on or after April 1, 2009,
the Interim Rule extends the FDIC’s
guarantee (previously set to expire
under the existing program on the
earliest of the opt-out date, if any, the
maturity of the debt, the mandatory
conversion date for mandatory
convertible debt, or June 30, 2012) until
the earliest of the opt-out date, the
maturity of the debt, the mandatory
conversion date for mandatory
convertible debt, or December 31, 2012.8
VerDate Nov<24>2008 15:22 Mar 20, 2009 Jkt 217001 PO 00000 Frm 00029 Fmt 4700 Sfmt 4700 E:\FR\FM\23MRR1.SGM 23MRR1
dwashington3 on PROD1PC60 with RULES
1 Public Law 110–343 (October 3, 2008).
2 Public Law 111–5 (February 17, 2009).
3 Memorandum dated November 19, 2008, to
FDIC Chairman Sheila C. Bair from Federal Reserve
Board Staff at page 1.
4 Secretary Geithner Introduces Financial
Stability Plan, http://www.treas.gov/press/releases/
tg18.htm (last visited Feb. 19, 2009).
5 12 U.S.C. 1823(c)(4)(G).
6 12 U.S.C. 1819(a)Tenth.
7 2009 Monetary Press Release, Release Date:
February 3, 2009, http://www.federalreserve.gov/
newsevents/press/monetary/20090203a.htm (last
visited February 20, 2009) (announcing four month
extensions until October 2009 of six liquidity
programs originally scheduled to expire in April
2009).
8 Unless those other participating entities that
have not issued debt before April 1, 2009, apply
and receive the approval of the FDIC to participate
in the extended DGP, the FDIC’s guarantee will
expire for such entities no later than June 30, 2012.
(See Section III.B.)
I. Background
The FDIC adopted the TLGP in
October 2008 following a determination
of systemic risk by the Secretary of the
Treasury (after consultation with the
President) that was supported by
recommendations from the FDIC and
the Board of Governors of the Federal
Reserve System (Federal Reserve). The
TLGP is part of a coordinated effort by
the FDIC, the U.S. Department of the
Treasury (Treasury), and the Federal
Reserve to address unprecedented
disruptions in credit markets and the
resultant inability of financial
institutions to fund themselves and
make loans to creditworthy borrowers.
More broadly, Congress, the Treasury,
and the federal banking agencies, have
taken coordinated steps to preserve
confidence in the American economy.
Congress enacted sweeping laws to deal
with the economic crisis, including the
Emergency Economic Stabilization Act 1
(which temporarily raised deposit
insurance limits) and the American
Recovery and Reinvestment Act of
2009; 2 the Federal Reserve made
commercial paper facilities available;
and the Treasury provided banks with
capital injections.
The disruption in credit markets that
emerged in the second half of 2008
impaired the ability of financial
institutions to obtain funding, make
loans to creditworthy borrowers, and
intermediate credit transactions.
Although the financial system and
credit markets remain stressed, credit
market conditions have improved in
response to government stabilization
efforts such as the TLGP. Interbank
short-term funding rates have fallen
notably since mid-October 2008. The
three-month Libor rate has fallen about
350 basis points from the 4.75 percent
peak in mid-October 2008. The three-
month Libor spread over Treasuries has
also declined to under one percent,
down from 4.57 percent in mid-October
2008, but remains above a historical
spread of approximately 40 basis points.
While liquidity in the financial
markets has not returned to pre-crisis
levels, the TLGP debt guarantee program
has been effective to date in improving
short-term and intermediate-term
funding for banking organizations. More
than two-thirds of new public debt
issuances by banking organizations
between October 14, 2008, and March 4,
2009, that matures on or before June 30,
2012, are FDIC-guaranteed. Thus far,
non-FDIC-guaranteed debt issued by
banking organizations has mostly been
for relatively small amounts with some
exceptions. During the first two months
of the year, one banking organization
issued $2 billion in 10-year senior notes,
and another banking organization issued
$4 billion in 30-year bonds, both
without government guarantees.
At its inception, the Federal Reserve
and the Treasury recommended
extending the DGP to bank holding
companies, given the difficulties that
these institutions were having with
gaining access to funding. Concerns
were raised that under the
circumstances at that time, there would
be risk to IDIs and to the banking system
as a whole if the FDIC did not guarantee
debt issued by bank holding companies
under the TLGP.3 The FDIC believes
that certain aspects of the credit markets
have improved, and with this Interim
Rule, the FDIC is acting to ensure the
orderly phase-out of the TLGP, a
program that has provided benefit to
IDIs, bank and certain savings and loan
holding companies, and certain of their
affiliates.
The FDIC expects the Interim Rule to
provide an orderly transition period for
participating entities returning to non-
FDIC-guaranteed funding, and reduce
the potential for market disruption
when the DGP ends. Also, the extension
should enhance bank liquidity while the
elements of the Treasury’s proposed
Financial Stability Plan are fully
implemented.4
II. Authority To Provide Limited
Extension of the TLGP
The amendment to the DGP provided
under the Interim Rule is consistent
with the rationale for establishing the
existing TLGP and the determination of
systemic risk made on October 14, 2008,
pursuant to section 13(c)(4)(G),5 by the
Secretary of the Treasury (after
consultation with the President)
following receipt of the written
recommendation dated October 13,
2008, by the Board of Directors of the
FDIC (Board) and the similar written
recommendation of the Federal Reserve.
The determination of systemic risk
authorized the FDIC to take actions to
avoid or mitigate serious adverse effects
on economic conditions or financial
stability by providing a guarantee of
senior unsecured debt, and the FDIC
initiated the TLGP in response. The
limited extension of the TLGP provided
for in the Interim Rule represents
continued action by the FDIC to avoid
or mitigate further deterioration in the
economic condition and stability of the
U.S. financial system and is consistent
with the systemic risk determination
made by the Secretary of the Treasury
based on recommendations of the FDIC
and the FRB in October 2008.
In addition to the authority granted to
the FDIC by the systemic risk
determination made under Section
13(c)(4) of the FDI Act, as described
above, the FDIC is authorized under
Section 9(a) Tenth of the FDI Act,6 to
prescribe, by its Board, such rules and
regulations as it may deem necessary to
carry out the provisions of the FDI Act.
The FDIC has determined that this
Interim Rule is necessary to further
enhance the TLGP.
III. The Interim Rule
A. Extension of the Debt Guarantee
Program for IDIs Participating in the
TLGP
Under the existing DGP, participating
entities are permitted to issue senior
unsecured debt until June 30, 2009. The
FDIC will guarantee this debt until the
earlier of the maturity of the debt or
June 30, 2012.
The Interim Rule provides a limited
four-month extension for the issuance of
debt under the DGP and is consistent
with extensions to other liquidity
programs recently announced by the
Federal Reserve.7 The Interim Rule
permits all IDIs participating in the DGP
to issue FDIC-guaranteed senior
unsecured debt until October 31, 2009.
For debt issued on or after April 1, 2009,
the Interim Rule extends the FDIC’s
guarantee (previously set to expire
under the existing program on the
earliest of the opt-out date, if any, the
maturity of the debt, the mandatory
conversion date for mandatory
convertible debt, or June 30, 2012) until
the earliest of the opt-out date, the
maturity of the debt, the mandatory
conversion date for mandatory
convertible debt, or December 31, 2012.8
VerDate Nov<24>2008 15:22 Mar 20, 2009 Jkt 217001 PO 00000 Frm 00029 Fmt 4700 Sfmt 4700 E:\FR\FM\23MRR1.SGM 23MRR1
dwashington3 on PROD1PC60 with RULES