36506 Federal Register / Vol. 75, No. 123 / Monday, June 28, 2010 / Rules and Regulations
1 See Section 13(c)(4)(G) of the Federal Deposit
Insurance Act (FDI Act), 12 U.S.C. 1823(c)(4)(G).
The determination of systemic risk authorized the
FDIC to take actions to avoid or mitigate serious
adverse effects on economic conditions or financial
stability, and the FDIC implemented the TLGP in
response.
2 73 FR 64179 (Oct. 29, 2008). This Interim Rule
was followed by a Final Rule, published in the
Federal Register on November 26, 2008. 73 FR
72244 (Nov. 26, 2008).
3 73 FR 64182–64183.
4 73 FR 72244, 72262 (Nov. 26, 2008).
5 73 FR 64179, 64182 (Oct. 29, 2008).
6 74 FR 31217 (June 30, 2009).
7 74 FR 45093 (Sept. 1, 2009).
8 Id.
9 74 FR 45098.
Dated at Rockville, Maryland, this 18th day
of June 2010.
For the Nuclear Regulatory Commission.
Michael C. Layton,
Deputy Director, Division of Security Policy,
Office of Nuclear Security and Incident
Response.
[FR Doc. 2010–15627 Filed 6–25–10; 8:45 am]
BILLING CODE 7590–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 370
RIN 3064–AD37
Final Rule Regarding Amendment of
the Temporary Liquidity Guarantee
Program To Extend the Transaction
Account Guarantee Program
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: The FDIC is issuing a Final
Rule extending the Transaction Account
Guarantee (TAG) component of the
Temporary Liquidity Guarantee Program
(TLGP) through December 31, 2010, for
insured depository institutions (IDIs)
currently participating in the TAG
program, with the possibility of an
additional extension of up to 12 months
without additional rulemaking, upon a
determination by the FDIC’s Board of
Directors (Board) that continuing
economic difficulties warrant further
extension.
The Final Rule differs only slightly
from the interim rule that preceded it.
The interim rule provided for the
possibility of a further extension of the
TAG program until December 31, 2011,
without additional rulemaking, should
the FDIC’s Board determine that
economic conditions warrant a further
extension of the program. The Final
Rule provides that, under appropriate
economic conditions, the Board may
further extend the TAG program for a
period of time not to exceed December
31, 2011. Like the interim rule, the Final
Rule modifies the assessment basis for
calculating the assessment rate for an
IDI’s continued participation in the TAG
to the average daily balances in the
TAG-related accounts, but makes no
changes to the assessment rate itself.
Further, as in the interim rule the Final
Rule requires IDIs that are participating
in the TAG program and that offer NOW
accounts covered by the program to
reduce the interest rate on such
accounts to a rate no higher than 0.25
percent and to commit to maintain that
rate for the duration of the TAG
extension in order for those NOW
accounts to remain eligible for the
FDIC’s continued guarantee.
DATES: Effective June 28, 2010.
FOR FURTHER INFORMATION CONTACT: A.
Ann Johnson, Counsel, Legal Division,
(202) 898–3573 or aajohnson@fdic.gov;
Robert C. Fick, Supervisory Counsel,
Legal Division, (202) 898–8962 or
rfick@fdic.gov; Julia E. Paris, Senior
Attorney, Legal Division, (202) 898–
3821 or jparis@fdic.gov; Lisa D.
Arquette, Associate Director, Division of
Supervision and Consumer Protection,
(202) 898–8633 or larquette@fdic.gov;
Donna Saulnier, Manager, Assessment
Policy Section, Division of Finance,
(703) 562–6167 or dsaulnier@fdic.gov;
or Rose Kushmeider, Acting Chief,
Banking and Regulatory Policy Section,
Division of Insurance and Research,
(202) 898–3861 or
rkushmeider@fdic.gov.
SUPPLEMENTARY INFORMATION:
I. Background
In October 2008, the FDIC adopted the
TLGP 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).1 The
TLGP is part of an ongoing and
coordinated effort by the FDIC, the U.S.
Department of the Treasury, and the
Federal Reserve to address
unprecedented disruptions in the
financial markets and preserve
confidence in the American economy.
The FDIC’s October 2008 interim rule
provided the blueprint for the TLGP.2
The TLGP comprises two distinct
components: The Debt Guarantee
Program, pursuant to which the FDIC
guarantees certain senior unsecured
debt issued by entities participating in
the TLGP; and the TAG program,
pursuant to which the FDIC guarantees
all funds held at participating IDIs
(beyond the standard maximum deposit
insurance limit) in qualifying
noninterest-bearing transaction
accounts.
The TAG component of the TLGP was
developed, in part, to address concerns
that a large number of account holders
might withdraw their uninsured
account balances from IDIs due to then-
prevailing economic uncertainties. Such
withdrawals could have further
destabilized financial markets and
impaired the funding structure of
smaller banks that rely on deposits as a
primary source of funding while also
negatively affecting other institutions
that had relationships with these
banks.3 In designing the TAG program,
the FDIC sought to improve public
confidence and to encourage depositors
to maintain their transaction account
balances at IDIs participating in the
TAG program.
As part of its rulemaking process, the
FDIC in November 2008 expanded the
TAG program to cover, among other
accounts, ‘‘negotiable order of
withdrawal,’’ or NOW accounts, with
interest rates no higher than 0.50
percent if the IDI offering the account
committed to maintain the interest rate
at a level no higher than 0.50 percent
through December 31, 2009.4
The TAG program was originally set
to expire on December 31, 2009.5 The
FDIC recognized that the TAG program
was contributing significantly to
improvements in the financial sector,
but also noted that many parts of the
country were still suffering from the
effects of economic turmoil. As a result,
on August 26, 2009, following a public
notice and comment period,6 the FDIC
issued a final rule that extended the
TAG program through June 30, 2010.7
The initial TAG extension included
an increased assessment rate designed
to offset the potential losses associated
with the FDIC’s guarantee. Beginning on
January 1, 2010, the fee for continued
participation in the TAG was raised and
the basis changed to reflect an IDI’s risk
profile, ranging from 15 basis points to
up to 25 basis points. The rule provided
participating IDIs with a second
opportunity to opt out of the TAG
program.8 The initial TAG extension
also required participating IDIs to
extend their commitment to maintain
interest rates on NOW account at no
higher than 0.50 percent during the
extended TAG program.9
Since its inception, the TAG program
has been an important source of stability
for many banks with large transaction
account balances. Currently, over 6,300
insured depository institutions,
representing approximately 80 percent
of all IDIs, continue to participate in the
VerDate Mar<15>2010 14:52 Jun 25, 2010 Jkt 220001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\28JNR1.SGM 28JNR1
erowe on DSK5CLS3C1PROD with RULES
1 See Section 13(c)(4)(G) of the Federal Deposit
Insurance Act (FDI Act), 12 U.S.C. 1823(c)(4)(G).
The determination of systemic risk authorized the
FDIC to take actions to avoid or mitigate serious
adverse effects on economic conditions or financial
stability, and the FDIC implemented the TLGP in
response.
2 73 FR 64179 (Oct. 29, 2008). This Interim Rule
was followed by a Final Rule, published in the
Federal Register on November 26, 2008. 73 FR
72244 (Nov. 26, 2008).
3 73 FR 64182–64183.
4 73 FR 72244, 72262 (Nov. 26, 2008).
5 73 FR 64179, 64182 (Oct. 29, 2008).
6 74 FR 31217 (June 30, 2009).
7 74 FR 45093 (Sept. 1, 2009).
8 Id.
9 74 FR 45098.
Dated at Rockville, Maryland, this 18th day
of June 2010.
For the Nuclear Regulatory Commission.
Michael C. Layton,
Deputy Director, Division of Security Policy,
Office of Nuclear Security and Incident
Response.
[FR Doc. 2010–15627 Filed 6–25–10; 8:45 am]
BILLING CODE 7590–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 370
RIN 3064–AD37
Final Rule Regarding Amendment of
the Temporary Liquidity Guarantee
Program To Extend the Transaction
Account Guarantee Program
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: The FDIC is issuing a Final
Rule extending the Transaction Account
Guarantee (TAG) component of the
Temporary Liquidity Guarantee Program
(TLGP) through December 31, 2010, for
insured depository institutions (IDIs)
currently participating in the TAG
program, with the possibility of an
additional extension of up to 12 months
without additional rulemaking, upon a
determination by the FDIC’s Board of
Directors (Board) that continuing
economic difficulties warrant further
extension.
The Final Rule differs only slightly
from the interim rule that preceded it.
The interim rule provided for the
possibility of a further extension of the
TAG program until December 31, 2011,
without additional rulemaking, should
the FDIC’s Board determine that
economic conditions warrant a further
extension of the program. The Final
Rule provides that, under appropriate
economic conditions, the Board may
further extend the TAG program for a
period of time not to exceed December
31, 2011. Like the interim rule, the Final
Rule modifies the assessment basis for
calculating the assessment rate for an
IDI’s continued participation in the TAG
to the average daily balances in the
TAG-related accounts, but makes no
changes to the assessment rate itself.
Further, as in the interim rule the Final
Rule requires IDIs that are participating
in the TAG program and that offer NOW
accounts covered by the program to
reduce the interest rate on such
accounts to a rate no higher than 0.25
percent and to commit to maintain that
rate for the duration of the TAG
extension in order for those NOW
accounts to remain eligible for the
FDIC’s continued guarantee.
DATES: Effective June 28, 2010.
FOR FURTHER INFORMATION CONTACT: A.
Ann Johnson, Counsel, Legal Division,
(202) 898–3573 or aajohnson@fdic.gov;
Robert C. Fick, Supervisory Counsel,
Legal Division, (202) 898–8962 or
rfick@fdic.gov; Julia E. Paris, Senior
Attorney, Legal Division, (202) 898–
3821 or jparis@fdic.gov; Lisa D.
Arquette, Associate Director, Division of
Supervision and Consumer Protection,
(202) 898–8633 or larquette@fdic.gov;
Donna Saulnier, Manager, Assessment
Policy Section, Division of Finance,
(703) 562–6167 or dsaulnier@fdic.gov;
or Rose Kushmeider, Acting Chief,
Banking and Regulatory Policy Section,
Division of Insurance and Research,
(202) 898–3861 or
rkushmeider@fdic.gov.
SUPPLEMENTARY INFORMATION:
I. Background
In October 2008, the FDIC adopted the
TLGP 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).1 The
TLGP is part of an ongoing and
coordinated effort by the FDIC, the U.S.
Department of the Treasury, and the
Federal Reserve to address
unprecedented disruptions in the
financial markets and preserve
confidence in the American economy.
The FDIC’s October 2008 interim rule
provided the blueprint for the TLGP.2
The TLGP comprises two distinct
components: The Debt Guarantee
Program, pursuant to which the FDIC
guarantees certain senior unsecured
debt issued by entities participating in
the TLGP; and the TAG program,
pursuant to which the FDIC guarantees
all funds held at participating IDIs
(beyond the standard maximum deposit
insurance limit) in qualifying
noninterest-bearing transaction
accounts.
The TAG component of the TLGP was
developed, in part, to address concerns
that a large number of account holders
might withdraw their uninsured
account balances from IDIs due to then-
prevailing economic uncertainties. Such
withdrawals could have further
destabilized financial markets and
impaired the funding structure of
smaller banks that rely on deposits as a
primary source of funding while also
negatively affecting other institutions
that had relationships with these
banks.3 In designing the TAG program,
the FDIC sought to improve public
confidence and to encourage depositors
to maintain their transaction account
balances at IDIs participating in the
TAG program.
As part of its rulemaking process, the
FDIC in November 2008 expanded the
TAG program to cover, among other
accounts, ‘‘negotiable order of
withdrawal,’’ or NOW accounts, with
interest rates no higher than 0.50
percent if the IDI offering the account
committed to maintain the interest rate
at a level no higher than 0.50 percent
through December 31, 2009.4
The TAG program was originally set
to expire on December 31, 2009.5 The
FDIC recognized that the TAG program
was contributing significantly to
improvements in the financial sector,
but also noted that many parts of the
country were still suffering from the
effects of economic turmoil. As a result,
on August 26, 2009, following a public
notice and comment period,6 the FDIC
issued a final rule that extended the
TAG program through June 30, 2010.7
The initial TAG extension included
an increased assessment rate designed
to offset the potential losses associated
with the FDIC’s guarantee. Beginning on
January 1, 2010, the fee for continued
participation in the TAG was raised and
the basis changed to reflect an IDI’s risk
profile, ranging from 15 basis points to
up to 25 basis points. The rule provided
participating IDIs with a second
opportunity to opt out of the TAG
program.8 The initial TAG extension
also required participating IDIs to
extend their commitment to maintain
interest rates on NOW account at no
higher than 0.50 percent during the
extended TAG program.9
Since its inception, the TAG program
has been an important source of stability
for many banks with large transaction
account balances. Currently, over 6,300
insured depository institutions,
representing approximately 80 percent
of all IDIs, continue to participate in the
VerDate Mar<15>2010 14:52 Jun 25, 2010 Jkt 220001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\28JNR1.SGM 28JNR1
erowe on DSK5CLS3C1PROD with RULES
36507Federal Register / Vol. 75, No. 123 / Monday, June 28, 2010 / Rules and Regulations
10 75 FR 20257, 20260–261 (April 19, 2010).
11 Id. at 20258.
12 Id. at 20259.
13 Id. at 20260–261.
14 75 FR 20257, 20260 (April 19, 2010).
15 Id.
16 Id. at 20261.
17 Id.
18 Id.
19 Id.
TAG program and to benefit from the
guarantee provided by the FDIC. These
institutions held an estimated $356
billion of deposits in accounts currently
subject to the FDIC’s guarantee as of
March 31, 2010. Of these, $280 billion
represented amounts above the insured
deposit limit and guaranteed by the
FDIC through its TAG program. Among
the current participants in the program,
the average TAG account size was about
$1.04 million. About 509 institutions
rely on TAG accounts to fund 10
percent or more of their assets.
II. Interim Rule
While the immediate financial crisis
that led to the creation of the TLGP in
October 2008 has abated, several
economic factors led the FDIC’s Board
to authorize publication in the Federal
Register of an interim rule to amend the
TLGP to provide for a six month
extension, until December 31, 2010, of
the TAG Program, with the possibility of
an additional 12-month extension
without further rulemaking.10 Namely,
the recession that began in late 2007
continues to pressure local communities
across the country. The financial
distress has spread from large,
systemically important banks to banks
of all sizes, particularly in regions
suffering from ongoing economic
turmoil.11 Weaknesses facing
community banks have intensified as
the lingering consequences of the 2008
financial crisis and the resulting
recession place continued pressure on
earnings and asset quality. The effects of
the financial crisis and recession are
expected to persist for some time,
especially as the magnitude of economic
distress facing local markets places
continued pressure on asset quality and
earnings, with the potential for
undermining the stability of the banking
organizations that serve these markets.12
With these factors in mind, as well as
the FDIC’s general concern that allowing
the TAG program to expire in the
current environment could cause a
number of community banks to
experience deposit withdrawals from
their large transaction accounts and risk
needless liquidity failures or negatively
affect IDI’s deposit franchise values, the
interim rule reflected several features
designed to continue to promote
confidence and stability in the banking
system and to monitor and minimize
risk of loss.13
In order to allow the majority of
participating IDIs to remain in the
program, the FDIC’s interim rule did not
increase fees for continued participation
in the extended TAG program.14 Rather,
the tiered-pricing assessment structure,
ranging from 15 to 25 basis points based
on an IDI’s deposit insurance
assessment risk category remains in
effect. However, the interim rule did
modify the basis for calculating the risk-
based assessments from end-of-
calendar-quarter to average-daily-
account-balance reporting.15
With respect to the treatment of NOW
accounts, the interim rule reduced the
permissible interest rate, from no higher
than 0.50 percent to no higher than 0.25
percent, for the NOW accounts covered
by the FDIC’s TAG guarantee in order to
better align the program with prevailing
market rates. It also required
participating IDIs to commit to maintain
the interest rate at or below 0.25 percent
after June 30, 2010, and through
December 31, 2010, or the duration of
the program, if the Board further
extends the TAG program.16
In light of the regulatory
modifications to the existing TAG
program and in recognition that some
IDIs wished to discontinue participation
in the program, the interim rule
provided IDIs currently participating in
the TAG program with a one-time,
irrevocable opportunity to opt out of
this TAG extension by April 30, 2010.17
An additional 441 institutions took
advantage of this opt-out opportunity
and indicated their intent to exit the
program as of July 1, 2010. Under the
interim rule, a participating IDI’s
decision to remain in the extended TAG
program obligates it to remain in the
program through December 31, 2010, or
for the duration of the program, if the
Board further extends the TAG program.
As to the disclosures required
regarding the extended TAG program,
the interim rule required IDIs that did
not opt out of the extension to update
their disclosures on or before May 20,
2010, to reflect the new termination date
for the extension.18 Under the interim
rule, those IDIs that chose to opt out of
the program similarly had to update
disclosures to reflect that they would no
longer be participating in the TAG
program and that deposits in
noninterest-bearing transaction accounts
would no longer be guaranteed in full
by the FDIC.19
The FDIC requested comment on the
interim rule, and the comment period
ended on May 19, 2010. A total of 10
comments were submitted by bankers,
trade groups, and Members of the U.S.
House of Representatives. The
comments are summarized below and
may be viewed in their entirety on the
FDIC’s Web site at http://www.fdic.gov/
regulations/laws/federal/.
IV. Comment Summary and Discussion
With one exception, commenters
generally supported the FDIC’s interim
rule extending the TAG program. They
cited the continued confidence and
stability that the TAG program instills
in customers as well as the ability for
banks to use the deposit base provided
by the TAG program to lend and
promote growth in their communities.
One commenter opposed to the
interim rule suggests, without providing
any supporting data, that, because
evidence shows the economy is
recovering, a further extension of the
TAG program is unwarranted and
would further cause participating IDIs to
postpone addressing their liquidity
positions. Although the FDIC agrees
there are many signs that the economy
is recovering, the recovery remains
fragile and is still threatened by weak
labor markets, household and business
uncertainty, and tight credit conditions.
The Final Rule extends the TAG
program in order to reduce the risk of
needless liquidity failures and increased
costs that might result if the TAG
program were not extended during this
still fragile economic period. In
addition, the Final Rule would maintain
an important source of liquidity for
participating IDIs to fund small business
lending, which will further contribute to
economic recovery. An orderly phase-
out of the TAG program will be
appropriate once evidence points to a
more solid and sustained economic
recovery.
Further comments are detailed below
by subject.
Clarification of Possible Additional
Extension Period
As an initial matter, the FDIC notes
that some commenters viewed the
interim rule’s possible additional
extension beyond December 31, 2010, as
a term of ‘‘up to 12 months.’’ To provide
maximum flexibility in the event of a
more rapid resurgence of positive
economic conditions, the Final Rule
defines the ‘‘TAG expiration date’’ to
mean December 31, 2010, unless the
Board, for good cause, extends the
program for an additional period of time
not to exceed one year, in which case
the term ‘‘TAG expiration date’’ means
the last day of such additional period of
time. As with the interim rule, the Final
VerDate Mar<15>2010 14:52 Jun 25, 2010 Jkt 220001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 E:\FR\FM\28JNR1.SGM 28JNR1
erowe on DSK5CLS3C1PROD with RULES
10 75 FR 20257, 20260–261 (April 19, 2010).
11 Id. at 20258.
12 Id. at 20259.
13 Id. at 20260–261.
14 75 FR 20257, 20260 (April 19, 2010).
15 Id.
16 Id. at 20261.
17 Id.
18 Id.
19 Id.
TAG program and to benefit from the
guarantee provided by the FDIC. These
institutions held an estimated $356
billion of deposits in accounts currently
subject to the FDIC’s guarantee as of
March 31, 2010. Of these, $280 billion
represented amounts above the insured
deposit limit and guaranteed by the
FDIC through its TAG program. Among
the current participants in the program,
the average TAG account size was about
$1.04 million. About 509 institutions
rely on TAG accounts to fund 10
percent or more of their assets.
II. Interim Rule
While the immediate financial crisis
that led to the creation of the TLGP in
October 2008 has abated, several
economic factors led the FDIC’s Board
to authorize publication in the Federal
Register of an interim rule to amend the
TLGP to provide for a six month
extension, until December 31, 2010, of
the TAG Program, with the possibility of
an additional 12-month extension
without further rulemaking.10 Namely,
the recession that began in late 2007
continues to pressure local communities
across the country. The financial
distress has spread from large,
systemically important banks to banks
of all sizes, particularly in regions
suffering from ongoing economic
turmoil.11 Weaknesses facing
community banks have intensified as
the lingering consequences of the 2008
financial crisis and the resulting
recession place continued pressure on
earnings and asset quality. The effects of
the financial crisis and recession are
expected to persist for some time,
especially as the magnitude of economic
distress facing local markets places
continued pressure on asset quality and
earnings, with the potential for
undermining the stability of the banking
organizations that serve these markets.12
With these factors in mind, as well as
the FDIC’s general concern that allowing
the TAG program to expire in the
current environment could cause a
number of community banks to
experience deposit withdrawals from
their large transaction accounts and risk
needless liquidity failures or negatively
affect IDI’s deposit franchise values, the
interim rule reflected several features
designed to continue to promote
confidence and stability in the banking
system and to monitor and minimize
risk of loss.13
In order to allow the majority of
participating IDIs to remain in the
program, the FDIC’s interim rule did not
increase fees for continued participation
in the extended TAG program.14 Rather,
the tiered-pricing assessment structure,
ranging from 15 to 25 basis points based
on an IDI’s deposit insurance
assessment risk category remains in
effect. However, the interim rule did
modify the basis for calculating the risk-
based assessments from end-of-
calendar-quarter to average-daily-
account-balance reporting.15
With respect to the treatment of NOW
accounts, the interim rule reduced the
permissible interest rate, from no higher
than 0.50 percent to no higher than 0.25
percent, for the NOW accounts covered
by the FDIC’s TAG guarantee in order to
better align the program with prevailing
market rates. It also required
participating IDIs to commit to maintain
the interest rate at or below 0.25 percent
after June 30, 2010, and through
December 31, 2010, or the duration of
the program, if the Board further
extends the TAG program.16
In light of the regulatory
modifications to the existing TAG
program and in recognition that some
IDIs wished to discontinue participation
in the program, the interim rule
provided IDIs currently participating in
the TAG program with a one-time,
irrevocable opportunity to opt out of
this TAG extension by April 30, 2010.17
An additional 441 institutions took
advantage of this opt-out opportunity
and indicated their intent to exit the
program as of July 1, 2010. Under the
interim rule, a participating IDI’s
decision to remain in the extended TAG
program obligates it to remain in the
program through December 31, 2010, or
for the duration of the program, if the
Board further extends the TAG program.
As to the disclosures required
regarding the extended TAG program,
the interim rule required IDIs that did
not opt out of the extension to update
their disclosures on or before May 20,
2010, to reflect the new termination date
for the extension.18 Under the interim
rule, those IDIs that chose to opt out of
the program similarly had to update
disclosures to reflect that they would no
longer be participating in the TAG
program and that deposits in
noninterest-bearing transaction accounts
would no longer be guaranteed in full
by the FDIC.19
The FDIC requested comment on the
interim rule, and the comment period
ended on May 19, 2010. A total of 10
comments were submitted by bankers,
trade groups, and Members of the U.S.
House of Representatives. The
comments are summarized below and
may be viewed in their entirety on the
FDIC’s Web site at http://www.fdic.gov/
regulations/laws/federal/.
IV. Comment Summary and Discussion
With one exception, commenters
generally supported the FDIC’s interim
rule extending the TAG program. They
cited the continued confidence and
stability that the TAG program instills
in customers as well as the ability for
banks to use the deposit base provided
by the TAG program to lend and
promote growth in their communities.
One commenter opposed to the
interim rule suggests, without providing
any supporting data, that, because
evidence shows the economy is
recovering, a further extension of the
TAG program is unwarranted and
would further cause participating IDIs to
postpone addressing their liquidity
positions. Although the FDIC agrees
there are many signs that the economy
is recovering, the recovery remains
fragile and is still threatened by weak
labor markets, household and business
uncertainty, and tight credit conditions.
The Final Rule extends the TAG
program in order to reduce the risk of
needless liquidity failures and increased
costs that might result if the TAG
program were not extended during this
still fragile economic period. In
addition, the Final Rule would maintain
an important source of liquidity for
participating IDIs to fund small business
lending, which will further contribute to
economic recovery. An orderly phase-
out of the TAG program will be
appropriate once evidence points to a
more solid and sustained economic
recovery.
Further comments are detailed below
by subject.
Clarification of Possible Additional
Extension Period
As an initial matter, the FDIC notes
that some commenters viewed the
interim rule’s possible additional
extension beyond December 31, 2010, as
a term of ‘‘up to 12 months.’’ To provide
maximum flexibility in the event of a
more rapid resurgence of positive
economic conditions, the Final Rule
defines the ‘‘TAG expiration date’’ to
mean December 31, 2010, unless the
Board, for good cause, extends the
program for an additional period of time
not to exceed one year, in which case
the term ‘‘TAG expiration date’’ means
the last day of such additional period of
time. As with the interim rule, the Final
VerDate Mar<15>2010 14:52 Jun 25, 2010 Jkt 220001 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 E:\FR\FM\28JNR1.SGM 28JNR1
erowe on DSK5CLS3C1PROD with RULES