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Financial Institution Letter

Temporary Liquidity Guarantee Program FDIC Announces Temporary Program to Encourage Liquidity and Confidence in the Banking System

October 15, 2008
Notes
 
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.

Highlights:
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.

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.

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.
  • 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.
  • 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.
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/ .

Distribution:
All FDIC-Insured Institutions

Suggested Routing:
Chief Executive Office
Chief Financial Officer
Compliance Officer

  • 877-ASKFDIC (877-275-3342)
  • TDD: 800-925-4618

    • Note:
    FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/financial-institution-letters/2008/index.html .

    To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html .

    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.



    FIL-103-2008
    Attachment(s)
    The FDIC's Temporary Liquidity Guarantee Program

    Last Updated: October 15, 2008