Summary: | The FDIC has issued the attached final policy statement on the treatment of "covered bonds" if the issuing insured depository institution (IDI) is placed into FDIC receivership or conservatorship. The policy statement provides regulatory clarity by granting expedited access to covered bond collateral if the issuing institution fails and is placed into conservatorship or receivership and meets certain criteria. The FDIC guidance is intended to reduce market uncertainty on the treatment of covered bonds in a receivership or conservatorship, while allowing prudent development of the U.S. covered bond market. |
Highlights:
Generally, the FDIC's consent is required for access or liquidation of pledged collateral for the first 90 days after the FDIC is appointed receiver or the first 45 days after the FDIC is appointed as conservator. The policy statement provides expedited access to collateral for covered bonds if the FDIC remains in monetary default on the covered bond for 10 business days after receiving notice of default, or if the FDIC does not pay statutory damages within 10 business days after the effective date of repudiation. The policy statement applies only to covered bond issuances that meet the following criteria:
Under the policy statement, any liability of a conservator or receiver on covered bonds will be limited to the par value of the bonds issued, plus contract interest accrued up to the date of appointment of the conservator or receiver.
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