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Deadline Approaching – Opt-Out Deadline for Extended Transaction Account Guarantee is November 2, 2009

October 22, 2009

Authors

Robert Klingler

Deadline Approaching – Opt-Out Deadline for Extended Transaction Account Guarantee is November 2, 2009

October 22, 2009

by: Robert Klingler

As a reminder, the FDIC has extended the Transaction Account Guarantee portion of the Temporary Liquidity Guarantee Program until June 30, 2010.  Institutions that have not previously opted-out of the program will automatically continue in the program (at increased costs) unless they pro-actively opt-out of the extension.

Starting January 1, 2009, the FDIC assessment for its full guarantee of funds held in non-interest bearing demand deposit accounts will rise to an annualized rate of 15 to 25 basis points, depending on the Risk Category rating of the institution.

The deadline to affirmatively opt out of the Transaction Account Guarantee

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FDIC Extends Transaction Account Guarantee until June 30, 2010

August 28, 2009

Authors

Robert Klingler

FDIC Extends Transaction Account Guarantee until June 30, 2010

August 28, 2009

by: Robert Klingler

Update: On April 13, 2010, the FDIC granted a further extension until December 31, 2010.

On August 26, 2009, the FDIC extended the Transaction Account Guarantee (TAG) portion of the Temporary Liquidity Guarantee Program for six months, through June 30, 2010.  In addition to extending the expiration date of the TAG program, the FDIC’s final rule (1) increases the assessment fee for participation; and (2) provides an opportunity for participating institutions to opt out of the program as of January 1, 2010 (and thereby avoid the additional assessments).

All currently participating institutions have until November 2, 2009

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FDIC Proposes Possible Extension of Transaction Account Guarantee

June 23, 2009

Authors

Robert Klingler

FDIC Proposes Possible Extension of Transaction Account Guarantee

June 23, 2009

by: Robert Klingler

On June 23, 2009, the FDIC voted to seek comment on whether to extend the Transaction Account Guarantee under beyond its current expiration date of December 31, 2009.  The Transaction Account Guarantee provides unlimited deposit insurance for funds held in noninterest-bearing accounts (as well as IOLTA accounts and certain NOW accounts).  The Transaction Account Guarantee is part of the FDIC’s Temporary Liquidity Guarantee Program.

The FDIC proposal offers two alternatives:

  • allow the guarantee to expire as scheduled on December 31, 2009; or
  • extend the guarantee through June 30, 2010, with increased fees.

If the guarantee is allowed

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FDIC Updates TLGP Opt-Out Lists

May 7, 2009

Authors

Robert Klingler

FDIC Updates TLGP Opt-Out Lists

May 7, 2009

by: Robert Klingler

On May 6, 2009, the FDIC provided updated opt-out lists for the Debt Guarantee Program and Transaction Account Guarantee Program.  The decision to opt-out of either program was a binding decision as of December 5, 2008, and the FDIC has not given any explanation for why the opt-out lists have been updated, other than a generic statement that “entities may be added as we finalize the election submissions.”

As of December 12, 2008, 863 banks had elected to opt-out of the Transaction Account Guarantee, but that number is 1,110 banks as of May 6, 2009.  Similarly, 3,116 entities (which

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An Update on All Things TARP

February 2, 2009

Authors

Robert Klingler

An Update on All Things TARP

February 2, 2009

by: Robert Klingler

On January 30, 2009, Rob Klingler presented An Update on All Things TARP at the Alabama Bankers Association Community Bank Directors College.  The presentation gives an overview of the TARP Capital Purchase Program and FDIC’s Temporary Liquidity Guarantee Program.

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Issuance of FDIC Guaranteed Debt

January 14, 2009

Authors

Robert Klingler

Issuance of FDIC Guaranteed Debt

January 14, 2009

by: Robert Klingler

Over the last several weeks, we have had further conversations with clients and the FDIC regarding the details of the Debt Guarantee Program under the FDIC’s Temporary Liquidity Guarantee Program.  In the course of these conversations, we have noticed a misunderstanding of several key components of the program.

FDIC Clarifies Use of Guaranteed Debt to Provide Capital

December 19, 2008

Authors

Robert Klingler

FDIC Clarifies Use of Guaranteed Debt to Provide Capital

December 19, 2008

by: Robert Klingler

We have previously posted on the possibility of bank holding companies using the TLGP Debt Guarantee to provide capital to subsidiary banks.  In that post, we commented on the odds of success and noted that the FDIC had not taken a formal position.  Today, the FDIC updated its TLGP FAQ and confirmed that the odds of success are in fact very low.

The FDIC’s revised answer states:

Can guaranteed debt issued by the parent company be put in a subsidiary bank as capital?

The FDIC envisions few if any circumstances under which it would approve holding company applications

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TLGP Opt-Out Lists

December 12, 2008

Authors

Robert Klingler

TLGP Opt-Out Lists

December 12, 2008

by: Robert Klingler

On December 10, 2008, the FDIC published preliminary lists of financial institutions that have elected to opt-out of either the Debt or Transaction Account Guarantees under the Temporary Liquidity Guarantee Program.  As noted by the FDIC,  the decision to opt-out should not be read as a signal, either positive or negative, about the financial health of the entity.  The FDIC recommends that depositors and investors with questions ask the entities on either of these lists for a further explanation concerning the entity’s decision to opt-out of the TLGP.

As of December 12, 2008, 863 banks elected to opt-out of

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Further Guidance on Debt Guarantee

December 11, 2008

Authors

Robert Klingler

Further Guidance on Debt Guarantee

December 11, 2008

by: Robert Klingler

On December 11, 2008, the FDIC updated its Frequently Asked Questions (FAQ) on the Temporary Liquidity Guarantee Program.  The updated questions address both the Transaction Account and Debt Guarantee portions of the TLGP, but this post focuses on the Debt Guarantee.

Further Clarification on Brokered Interbank CDs

The FAQ clarifies that if an issuing bank owes a CD to a broker, the CD does not meet the definition of senior unsecured debt (and will not be guaranteed) even where an insured depository institution or credit union is the beneficiary of the CD.  If, on the other hand, the

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Further Guidance on Transaction Account Guarantee

December 11, 2008

Authors

Robert Klingler

Further Guidance on Transaction Account Guarantee

December 11, 2008

by: Robert Klingler

On December 11, 2008, the FDIC updated its Frequently Asked Questions (FAQ) on the Temporary Liquidity Guarantee Program.  The updated questions address both the Transaction Account and Debt Guarantee portions of the TLGP, but this post focuses on the Transaction Account Guarantee.  Bank action is likely required to assure that NOW accounts are covered by the TLGP’s Transaction Account Guarantee.

The updated FAQ addresses four questions related to the guarantee of NOW accounts under the Transaction Account Guarantee.  NOW accounts with interest rates no higher than 0.50 percent are treated as noninterest-bearing transaction accounts and eligible for the guarantee

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