FDIC Extends Guarantees, Raises Fees
The Federal Deposit Insurance Corporation recently posted a release its "Final Rule regarding Limited Amendment of the Temporary Liquidity Guarantee Program to Extend the Transaction Account Guarantee Program with Modified Fee Structure," which says, "To assure an orderly phase out of the Transaction Account Guarantee (TAG) component of the Temporary Liquidity Guarantee Program (TLGP), the FDIC is extending the TAG program for six months until June 30, 2010. Each insured depository institution (IDI) that participates in the extended TAG program will be subject to increased fees during the extension period for the FDIC's guarantee of qualifying noninterest-bearing transaction accounts. However, each IDI that is currently participating in the TAG program will have an opportunity to opt out of the extended TAG program. Each IDI that is currently participating in the TAG program must review and update its disclosure postings and notices to accurately reflect whether it is participating in the extended TAG program." It explains, "The FDIC established the TLGP in October 2008 following a determination of systemic risk by the Secretary of the Treasury (after consultation with the President) that was supported by recommendations from the FDIC and the Board of Governors of the Federal Reserve System (Federal Reserve). The TLGP is part of a coordinated effort by the FDIC, the U.S. Department of the Treasury (Treasury), and the Federal Reserve to address unprecedented disruptions in credit markets and the resultant inability of financial institutions to fund themselves and make loans to creditworthy borrowers.... Designed to assist in the stabilization of the nation's financial system, the FDIC's TLGP is composed of two distinct components: the Debt Guarantee Program (DGP) and the TAG program.... Pursuant to the TAG program the FDIC guarantees all funds held in qualifying noninterest-bearing transaction accounts at participating IDIs."
