This article was originally published 24 October, 2008
On October 23, 2008, the Federal Deposit Insurance Corporation ("FDIC") issued an interim rule (the "Rule") relating to the Temporary Liquidity Guarantee Program ("TLGP") that the FDIC announced on October 14, 2008. The Rule sets forth the terms of both components of the TLGP: the Debt Guarantee Program ("DGP"), under which the FDIC guarantees the payments of certain newly-issued senior unsecured debt, and the Transaction Account Guarantee Program ("TAGP"), under which the FDIC guarantees the totality of certain noninterest-bearing transaction accounts. The following briefly summarizes the terms set forth in the Rule, which in several respects vary from informal positions discussed by FDIC staff in earlier public conference calls on the Rule.
The Rule is effective as of October 23, although the FDIC takes the position that the TLGP itself was effective as of October 14. Among other things, this means that Eligible Entities (as defined in the Rule) should immediately focus on their decision whether to continue participation in the TLGP and their current disclosure obligations under the TLGP.
The FDIC has requested comment on the Rule. After the comment period (which will end 15 days after the Rule is published in the Federal Register), the terms of the Rule may be modified or adjusted.
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