Financial Institution Letter
FIL-103-2008
October 15, 2008
TEMPORARY LIQUIDITY GUARANTEE PROGRAM
FDIC Announces Temporary Program to Encourage Liquidity and
Confidence in the Banking System
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990
Summary: On October 14, 2008, the FDIC announced the Temporary Liquidity Guarantee Program to
strengthen confidence and encourage liquidity in the banking system. The new program will (1) guarantee
newly issued senior unsecured debt of eligible institutions, including FDIC-insured banks and thrifts, as well as
certain holding companies, and (2) provide full deposit insurance coverage for non-interest bearing deposit
transaction accounts in FDIC-insured institutions, regardless of the dollar amount.
Distribution:
All FDIC-Insured Institutions Highlights:
Suggested Routing:
Chief Executive Office
Chief Financial Officer
Compliance Officer
The FDIC will guarantee certain newly issued senior unsecured debt
issued by participating institutions on or after October 14, 2008, and
before June 30, 2009.
Attachment:
“The FDIC’s Temporary Liquidity
Guarantee Program”
Contact:
The FDIC will provide full FDIC deposit insurance coverage for non-
interest bearing transaction deposit accounts held at participating FDIC-
insured institutions. This provision expires December 31, 2009.
FDIC Call Center
Toll-free numbers:
• 877-ASKFDIC (877-275-3342)
• TDD: 800-925-4618
The Program is available to all FDIC-insured institutions and the debt
guarantee component of the program also is available to certain holding
companies that meet the following criteria:
• Eligibility: FDIC-insured institutions and bank holding companies,
financial holding companies, and savings and loan holding
companies that engage only in activities permissible for financial
holding companies to conduct under Section 4(k) of the Bank Holding
Company Act.
Note:
• Participation: All eligible entities will be covered under the program
for the first 30 days at no cost. Prior to the end of this period,
institutions may opt out of one or both parts of the program;
otherwise, fees will apply for future participation. If an entity opts out,
the Program’s guarantees or insurance shall remain valid only for the
first 30 days.
FDIC financial institution letters (FILs) may
be accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2008/in
dex.html.
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.
html.
• Supervision and Oversight: All entities that participate in the FDIC’s
Temporary Liquidity Guarantee Program will be subject to
supervisory oversight to prevent rapid growth or excessive risk-
taking. The FDIC, in consultation with an entity’s primary regulator,
will determine eligibility and use.
Paper copies of FDIC financial institution
letters may be obtained through the
FDIC's Public Information Center, 3501
Fairfax Drive, E-1002, Arlington, VA
22226.
The FDIC will provide institutions with additional information on the
recordkeeping, billing and reporting aspects of the program, including
how institutions may opt out. Please check the website for more
information and answers to common questions at
http://www.fdic.gov/tlgp/.
FIL-103-2008
October 15, 2008
TEMPORARY LIQUIDITY GUARANTEE PROGRAM
FDIC Announces Temporary Program to Encourage Liquidity and
Confidence in the Banking System
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990
Summary: On October 14, 2008, the FDIC announced the Temporary Liquidity Guarantee Program to
strengthen confidence and encourage liquidity in the banking system. The new program will (1) guarantee
newly issued senior unsecured debt of eligible institutions, including FDIC-insured banks and thrifts, as well as
certain holding companies, and (2) provide full deposit insurance coverage for non-interest bearing deposit
transaction accounts in FDIC-insured institutions, regardless of the dollar amount.
Distribution:
All FDIC-Insured Institutions Highlights:
Suggested Routing:
Chief Executive Office
Chief Financial Officer
Compliance Officer
The FDIC will guarantee certain newly issued senior unsecured debt
issued by participating institutions on or after October 14, 2008, and
before June 30, 2009.
Attachment:
“The FDIC’s Temporary Liquidity
Guarantee Program”
Contact:
The FDIC will provide full FDIC deposit insurance coverage for non-
interest bearing transaction deposit accounts held at participating FDIC-
insured institutions. This provision expires December 31, 2009.
FDIC Call Center
Toll-free numbers:
• 877-ASKFDIC (877-275-3342)
• TDD: 800-925-4618
The Program is available to all FDIC-insured institutions and the debt
guarantee component of the program also is available to certain holding
companies that meet the following criteria:
• Eligibility: FDIC-insured institutions and bank holding companies,
financial holding companies, and savings and loan holding
companies that engage only in activities permissible for financial
holding companies to conduct under Section 4(k) of the Bank Holding
Company Act.
Note:
• Participation: All eligible entities will be covered under the program
for the first 30 days at no cost. Prior to the end of this period,
institutions may opt out of one or both parts of the program;
otherwise, fees will apply for future participation. If an entity opts out,
the Program’s guarantees or insurance shall remain valid only for the
first 30 days.
FDIC financial institution letters (FILs) may
be accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2008/in
dex.html.
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.
html.
• Supervision and Oversight: All entities that participate in the FDIC’s
Temporary Liquidity Guarantee Program will be subject to
supervisory oversight to prevent rapid growth or excessive risk-
taking. The FDIC, in consultation with an entity’s primary regulator,
will determine eligibility and use.
Paper copies of FDIC financial institution
letters may be obtained through the
FDIC's Public Information Center, 3501
Fairfax Drive, E-1002, Arlington, VA
22226.
The FDIC will provide institutions with additional information on the
recordkeeping, billing and reporting aspects of the program, including
how institutions may opt out. Please check the website for more
information and answers to common questions at
http://www.fdic.gov/tlgp/.
UNITED STATES GOVERNMENT ACTIONS TO STRENGTHEN MARKET
STABILITY AND FDIC’s TEMPORARY LIQUIDITY GUARANTEE PROGRAM
The Federal Deposit Insurance Corporation’s (FDIC) Temporary Liquidity Guarantee
Program will operate as set out below.
Purposes of the Action
The U.S. Government is implementing a series of initiatives to strengthen market stability,
improve the strength of financial institutions, and enhance market liquidity. These collective
actions, including the Federal Deposit Insurance Corporation’s guarantee program, will help
restore market confidence and better enable the functioning of our credit markets. The FDIC
program includes guaranteeing newly issued senior unsecured debt of banks and thrifts and
certain holding companies, and providing full coverage of non-interest bearing deposit
transaction accounts.
This initiative is being implemented under the powers granted to the FDIC to mitigate
significant risks to our economic system and to address a general lack of liquidity among
financial institutions. The FDIC’s action is a response to the broad uncertainty that is causing
banks to be unwilling to lend generally and especially the vital activity of banks lending to
each other.
The additional protection for non-interest bearing deposit transaction accounts will be
especially beneficial to smaller institutions, which is important to the continued health and
viability of community banks.
Eligible Institutions
Eligible institutions include FDIC-insured depository institutions and certain bank, financial,
and savings and loan holding companies that engage only in activities that are permissible for
financial holding companies to conduct under section 4(k) of the Bank Holding Company
Act. For those institutions that currently have no unsecured debt, special eligibility
arrangements will be considered on a case-by-case basis.
Scope and Term of Guarantee
The FDIC’s guarantee would apply only to the following liabilities:
• Newly issued senior unsecured debt issued between October 14, 2008, and June 30,
2009, including promissory notes, commercial paper, inter-bank funding, and any
unsecured portion of secured debt. Prepayment of term debt instruments expiring
during this period and replacement with FDIC-guaranteed debt will not be allowed.
The amount of debt covered by the guarantee may not exceed 125 percent of debt that
was outstanding as of September 30, 2008, that was scheduled to mature before June
30, 2009. For eligible debt issued on or before June 30, 2009, coverage would only
be provided until June 30, 2012, even if the liability has not matured.
STABILITY AND FDIC’s TEMPORARY LIQUIDITY GUARANTEE PROGRAM
The Federal Deposit Insurance Corporation’s (FDIC) Temporary Liquidity Guarantee
Program will operate as set out below.
Purposes of the Action
The U.S. Government is implementing a series of initiatives to strengthen market stability,
improve the strength of financial institutions, and enhance market liquidity. These collective
actions, including the Federal Deposit Insurance Corporation’s guarantee program, will help
restore market confidence and better enable the functioning of our credit markets. The FDIC
program includes guaranteeing newly issued senior unsecured debt of banks and thrifts and
certain holding companies, and providing full coverage of non-interest bearing deposit
transaction accounts.
This initiative is being implemented under the powers granted to the FDIC to mitigate
significant risks to our economic system and to address a general lack of liquidity among
financial institutions. The FDIC’s action is a response to the broad uncertainty that is causing
banks to be unwilling to lend generally and especially the vital activity of banks lending to
each other.
The additional protection for non-interest bearing deposit transaction accounts will be
especially beneficial to smaller institutions, which is important to the continued health and
viability of community banks.
Eligible Institutions
Eligible institutions include FDIC-insured depository institutions and certain bank, financial,
and savings and loan holding companies that engage only in activities that are permissible for
financial holding companies to conduct under section 4(k) of the Bank Holding Company
Act. For those institutions that currently have no unsecured debt, special eligibility
arrangements will be considered on a case-by-case basis.
Scope and Term of Guarantee
The FDIC’s guarantee would apply only to the following liabilities:
• Newly issued senior unsecured debt issued between October 14, 2008, and June 30,
2009, including promissory notes, commercial paper, inter-bank funding, and any
unsecured portion of secured debt. Prepayment of term debt instruments expiring
during this period and replacement with FDIC-guaranteed debt will not be allowed.
The amount of debt covered by the guarantee may not exceed 125 percent of debt that
was outstanding as of September 30, 2008, that was scheduled to mature before June
30, 2009. For eligible debt issued on or before June 30, 2009, coverage would only
be provided until June 30, 2012, even if the liability has not matured.