Circular
Board Issues Clarification on Debt Guaranteed under FDIC’s Temporary Liquidity Guarantee Program
February 6, 2009
Circular No. 12064

The Federal Reserve has released SR 09-3. This letter pertains to eligible bank and financial holding companies that are participating in the Debt Guarantee Program that is a part of the FDIC’s Temporary Liquidity Guarantee Program (TLG Program).

This letter clarifies that a holding company that did not have senior unsecured debt outstanding as of September 30, 2008, must seek prior approval before issuing any debt guaranteed by the FDIC under the TLG Program.

Under the TLG Program, the FDIC will guarantee, subject to certain limitations, all senior unsecured debt issued by participating eligible entities between October 14, 2008, and June 30, 2009, with guarantees expiring not later than June 30, 2012.

A participating holding company with no senior unsecured debt as of September 30, 2008, has a debt guarantee limit of zero. The alternate 2 percent of total liabilities cap that is available for insured depository institutions is not available for holding companies. Accordingly, a participating holding company with no senior unsecured debt outstanding as of September 30, 2008, may not issue guaranteed debt without the prior approval of the FDIC.

See SR 09-3 for full details.

SR 09-3 offsite