TLGP Updated FAQ

December 3, 2008

Authored by: Robert Klingler

On December 2, 2008, the FDIC added several questions and answers to its TLGP FAQ.  We have highlighted some of these clarifications below.

  • Credit unions are not eligible to participate in any aspect of the TLGP.
  • Fed funds purchased can be covered under the Debt Guarantee Program, so long as the term of the debt exceeds 30 days.
  • CDs owed to an insured depository instutiton through the CDARS network are not considered senior unsecured debt, and therefore not eligible to be guaranteed.  Under the Debt Guarantee Program, certificates of deposit owed to an insured depository instituion are considered senior unsecured debt (and eligible for an FDIC guarantee) only if they are owed to the institution solely in that bank’s own capacity and not as an agent.
  • Negotiable (or transferable) CDs are excluded from the definition of senior unsecured debt for purposes of the Debt Guarantee Program.
  • The FDIC will calculate the 2 percent of liabilities debt guarantee limit using Call Report Schedule RC, Item 21 (total liabilities).
  • Interbank CDs will not be assessed under the Debt Guarantee Program to the extent the CDs are otherwise insured on the date the CD is issued.  Whether a CD is otherwise insured will be determined by first applying deposit insurance to all existing deposits owed to the holder of the CD in the same right and capacity.  Institutions will be required to provide the FDIC with a good faith estimate of the amount of interbank CDs that are uninsured.
  • The Fee for the Debt Guarantee Program is based on the amount and type of debt issued.  If a participating entity opts into the program, but never issues senior unsecured debt, no fee will be assessed.