26 November 2008. See final rule:
http://cryptome.info/0001/fdic112608.htm
7 November 2008
[Federal Register: November 7, 2008 (Volume 73, Number 217)]
[Rules and Regulations]
[Page 66160-66163]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07no08-3]
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 370
RIN 3064-AD37
Temporary Liquidity Guarantee Program
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Amendment to the Interim Rule with request for comments.
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SUMMARY: The FDIC is amending its Interim Rule with Request for Comment
(Interim Rule) relating to implementation of its Temporary Liquidity
Guarantee Program (TLG Program) by extending the opt out date for
eligible entities until December 5, 2008; extending the deadline for
complying with certain disclosure requirements related to the TLG
Program until December 19, 2008; and establishing assessment procedures
to accommodate the extended opt out period.
DATES: The Amended Interim Rule becomes effective on November 4, 2008.
The effective date of Sec. 370.5 paragraphs (h)(2) and (h)(3), added
at 73 FR 64186, October 29, 2008, is delayed from December 1, 2008
until December 19, 2008. The FDIC seeks general and specific comments
relating to questions raised in both the Amended Interim Rule and the
Interim Rule. Comments regarding both the Amended Interim Rule and the
Interim Rule must be received by November 13, 2008.
ADDRESSES: You may submit comments on the Amended Interim Rule by any
of the following methods:
Agency Web Site: http://www.FDIC.gov/regulations/laws/
federal/notices.html. Follow instructions for submitting comments on
the Agency Web Site.
E-mail: Comments@FDIC.gov. Include RIN 3064-AD37
on the subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW.,
Washington, DC 20429.
Hand Delivery: Comments may be hand delivered to the guard
station at the rear of the 550 17th Street Building (located on F
Street) on business days between 7 a.m. and 5 p.m.
Instructions: All comments received will be posted generally
without change to http://www.fdic.gov/regulations/laws/federal/
propose.html, including any personal information provided.
FOR FURTHER INFORMATION CONTACT: William V. Farrell, Manager,
Assessment Operations Section, Division of Finance, (703) 562-6168 or
wfarrell@fdic.gov; Donna Saulnier, Manager, Assessment Policy Section,
Division of Finance, (703) 562-6167 or dsaulnier@fdic.gov; Richard
Bogue, Counsel, Legal Division, (202) 898-3726 or rbogue@fdic.gov;
Robert Fick, Counsel, Legal Division, (202) 898-8962 or rfick@fdic.gov;
A. Ann Johnson, Counsel, Legal Division, (202) 898-3573 or
aajohnson@fdic.gov; Gail Patelunas, Deputy Director, Division of
Resolutions and Receiverships, (202) 898-6779 or gpatelunas@fdic.gov;
John Corston, Associate Director (Large Bank Supervision), Division of
Supervision and Consumer Protection, (202) 898-6548 or
jcorston@fdic.gov; Serena L. Owens, Associate Director, Supervision and
Applications Branch, Division of Supervision and Consumer Protection,
(202) 898-8996 or sowens@fdic.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The TLG Program was first announced by the FDIC on October 14,
2008, as an initiative to counter the current system-wide crisis in the
nation's financial sector. It provided two limited guarantee programs:
One, that guaranteed newly-issued senior unsecured debt of insured
depository institutions and most U.S. holding companies of such insured
depository institutions (the debt guarantee program), and another, that
guaranteed certain noninterest-bearing transaction accounts at insured
depository institutions (the transaction account guarantee program).
The FDIC's action in establishing the TLG Program was preceded by a
determination of systemic risk by the Secretary of the Treasury (after
consultation with the President), following receipt of the written
recommendation of the Board on October 13, 2008, along with a similar
written recommendation of the Board of Governors of the Federal Reserve
System.
The recommendations and eventual determination of systemic risk
were made in accordance with section 13(c)(4)(G) to the Federal Deposit
Insurance Act (FDI Act), 12 U.S.C. 1823(c)(4)(G). The determination of
systemic risk allowed the FDIC to take certain actions to avoid or
mitigate serious adverse effects on economic conditions and financial
stability. The FDIC believes that the TLG Program promotes financial
stability by preserving confidence in the banking system and
encouraging liquidity in order to ease lending to creditworthy
businesses and consumers. As a result, on October 23, 2008, the FDIC's
Board of Directors authorized publication in the Federal Register and
requested comment regarding an Interim Rule designed to implement the
TLG Program. The Interim Rule was published on October 29, 2008.\1\ It
became effective on October 23, 2008, with the exception of certain
disclosure requirements for which a delayed effective date of December
1, 2008 was established.\2\ The FDIC requested comments regarding the
Interim Rule by November 13, 2008.
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\1\ 73 FR 64179 (Oct. 29, 2008).
\2\ 12 CFR 370.5(h)(2) and (h)(3).
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II. Opt Out Deadline in the Interim Rule
The Interim Rule provides that no later than 11:59 p.m. Eastern
Standard Time (EST), on November 12, 2008, each eligible entity \3\
must inform the FDIC if it desires to opt out of the debt guarantee
component or the transaction account guarantee component (or both
components) of the TLG Program.\4\ If an eligible entity opts out of
the TLG Program, coverage under the program ends on the earlier of the
date of the opt out or on November 12, 2008.\5\ According to the
Interim Rule, failure to opt out by November 12, 2008 constitutes a
decision on behalf of an eligible entity to remain in the
[[Page 66161]]
program.\6\ Prior to November 12, 2008, an eligible entity may also
notify the FDIC that it will not opt out of (that is, that it will opt
in to) either or both programs.\7\ The choice to opt out or in, once
made, is irrevocable.\8\
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\3\ 12 CFR 370.2(a) defines ``eligible entity'' as any of the
following: (1) An insured depository institution; (2) a U.S. bank
holding company, provided that it has at least one chartered and
operating insured depository institution within its holding company
structure; (3) a U.S. savings and loan holding company, provided
that it has at least one chartered and operating insured depository
institution within its holding company structure; or (4) other
affiliates of insured depository institutions that the FDIC after
consultation with the appropriate Federal banking agency, designate
as eligible entities which affiliates, by seeking and obtaining such
designation, will have opted in to the debt guarantee program.
\4\ 12 CFR 370.5(c).
\5\ 12 CFR 370.5(a).
\6\ 12 CFR 370.5(c).
\7\ Id.
\8\ 12 CFR 370.5(d).
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The opt out deadline of November 12, 2008 is referenced in several
sections of the Interim Rule in describing the scope of the guarantees
provided by the TLG Program. For example, the Interim Rule provides
that funds held in noninterest-bearing transaction accounts at eligible
entities will be guaranteed from October 14, 2008, through November 12,
2008,\9\ and that eligible entities that do not opt out on or before
November 12, 2008 will not be able to select which newly issued senior
unsecured debt \10\ is guaranteed debt under the Debt Guarantee
Program.\11\
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\9\ 12 CFR 370.5(j)(2).
\10\ 12 CFR 370.2(f) defines ``newly issued senior unsecured
debt'' as senior unsecured debt issued by a participating entity on
or after October 14, 2008, and on or before: (1) The earlier of
November 12, 2008 or the date an eligible entity opts out, for an
eligible entity that opts out of the debt guarantee program; or (2)
June 30, 2009, for an eligible entity that does not opt out of the
debt guarantee program.
\11\ 12 CFR 370.5(f). The limitations of this provision are
subject to 12 CFR 370.3(f), describing the long term non-guaranteed
debt option.
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Significantly, in the Interim Rule calculations involving
assessments charged to an eligible entity for its participation in the
TLG Program are related to the November 12, 2008 opt out date. For
example, the Interim Rule permits eligible entities to participate in
both components of the TLG Program from October 14, 2008, through
November 12, 2008, at no cost to the entities.\12\
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\12\ 12 CFR 370.6(a) and 370.7(a).
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With respect to the Debt Guarantee Program, the Interim Rule
requires an eligible entity that does not opt out of the program by the
opt out date of November 12, 2008, and that issues guaranteed debt
during the period from October 14, 2008, through November 12, 2008 that
was still outstanding on November 12, 2008, to notify the FDIC and
certify that the issuances that it made did not exceed the guaranteed
limit.\13\ (An eligible entity that has not opted out of the Debt
Guarantee Program and that issues debt after November 12, 2008, is
subject to similar notification and certification requirements.)
Beginning on November 13, 2008, if an eligible entity has not opted
out, the Interim Rule provides for eligible entities to be charged
assessments for their participation in the Debt Guarantee Program.\14\
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\13\ 12 CFR 370.6(b)(1) and (2).
\14\ 12 CFR 370.6(c).
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With respect to the Transaction Account Guarantee Program, the
Interim Rule provides that, beginning on November 13, 2008 and
continuing through December 31, 2009, any eligible entity that has not
opted out of this component of the TLG Program will be subject to an
assessment for its participation in the Transaction Account Guarantee
Program.
III. Opt Out and Disclosure Deadlines Extended in the Amended Interim
Rule
The comment period for the Interim Rule will expire on November 13,
2008. Thus, the FDIC will not issue a final rule concerning its TLG
Program before eligible entities are required to opt out on November
12, 2008, as prescribed in the Interim Rule. The FDIC anticipates
issuing a final rule after the expiration of the comment period and
after its consideration of comments related to the Interim Rule. In
order to provide eligible entities an opportunity to review the final
rule before they are required to decide whether or not to opt out, this
Amended Interim Rule extends the opt out deadline for the TLG Program
until December 5, 2008. For similar reasons, this Amended Interim Rule
extends the deadline for compliance with certain disclosure
requirements described in section 370.5(h) until December 19, 2008.
By establishing December 5, 2008 as the new opt out deadline,
conforming modifications are required to provisions of part 370 that
refer to or are based upon the previous opt out deadline of November
12, 2008. The changes that result from the extended opt out period are
technical in nature, and are not discussed in further detail. Those
changes that relate to assessments under the Debt Guarantee Program and
the Transaction Guarantee Program are described further below.
Assessments under the Debt Guarantee Program are discussed in
section 370.6. Under section 370.6(a), eligible entities are not
required to pay any assessment associated with the Debt Guarantee
Program for the period from October 14, 2008, through November 12,
2008. The amendments made to the Interim Rule retain this provision. In
addition, section 370.6(a) of the Amended Interim Rule includes a
provision to the effect that an eligible entity that opts out of the
Debt Guarantee Program by the extended deadline of December 5, 2008
will not pay any assessment under the program.
Sections 370.6(b)(1) and (2) contain notice and certification
requirements for eligible entities that issue guaranteed debt under the
Debt Guarantee Program for the period from October 14, 2008 through
November 12, 2008 and for the period after November 12, 2008,
respectively. Although the notification and certification requirements
have not changed, the references in those sections to the former opt
out deadline of November 12, 2008, have been changed to reflect the new
opt out deadline of December 5, 2008.
Section 370.6(c) governs the initiation of assessments for the Debt
Guarantee Program. It originally provided that beginning on November
13, 2008, any eligible entity that has chosen not to opt out of this
aspect of the TLG Program would be charged assessments as provided
elsewhere in part 370. The section did not distinguish between
overnight debt instruments and other types of newly issued senior
secured debt. Although the manner of calculating assessments has not
changed, the revisions to section 370.6(c) reflect two changes. The
first change reflects the newly extended opt out deadline, and the
second change differentiates between overnight debt instruments and
other newly issued senior unsecured debt and explains how assessments
are initiated for overnight debt instruments as compared with other
newly issued senior unsecured debt.
Section 370.6(c), as amended, provides that assessments will
accrue, with respect to each eligible entity that does not opt out of
the debt guarantee program on or before December 5, 2008 (1) beginning
on November 13, 2008, on all senior unsecured debt, other than
overnight debt instruments, issued by it on or after October 14, 2008
that is still outstanding on November 13, 2008; (2) beginning on
November 13, 2008, on all senior unsecured debt, other than overnight
debt instruments, issued by it on or after November 13, 2008 and before
December 6, 2008; and (3) beginning on December 6, 2008, on all senior
unsecured debt issued by it on or after December 6, 2008. Calculations
related to both overnight debt instruments and other newly issued
unsecured debt will continue to be made in accordance with section
370.6(d). Section 370.6(d) remains unchanged.
Assessments under the Transaction Account Guarantee Program are
discussed in section 370.7. Under section 370.7(a), eligible entities
are not required to pay an assessment associated with the Transaction
Account Guarantee Program from the
[[Page 66162]]
period October 14, 2008, through November 12, 2008. The Amended Interim
Rule adds a new provision to section 370.7(a) to the effect that an
eligible entity that opts out of the Transaction Account Guarantee
Program by the extended opt out deadline of December 5, 2008 will not
pay any assessment under the program.
Section 370.7(b) governs the initiation of assessments for the
Transaction Account Guarantee Program. It originally provided that for
the period beginning on November 13, 2008, and continuing through
December 31, 2009, any eligible entity that failed to notify the FDIC
that it had opted out of the Transaction Account Guarantee Program
would be charged an assessment for its participation in the Transaction
Account Guarantee Program. Section 370.7(b) of the Amended Interim Rule
contains references to the newly extended opt out date. The amended
section now provides that beginning on November 13, 2008, an eligible
entity that does not opt out of the Transaction Account Guarantee
Program on or before December 5, 2008 will be required to pay the FDIC
assessments on all deposit amounts in noninterest-bearing transaction
accounts. Calculations related to the amount of assessments for the
Transaction Account Guarantee Program will continue to be made in
accordance with section 370.7(c). Section 370.7(c) remains unchanged.
IV. Request for Comments
The FDIC requests comments on all aspects of the Amended Interim
Rule. The FDIC specifically requests comments on the following
questions:
1. Should the FDIC charge different premium rates for Fed Funds
and/or other short-term borrowings versus longer term borrowings? If
so, why, what should be the criteria for determining which borrowings
qualify for which rates, and what should be the rate differential?
2. Should banks be allowed to issue guaranteed debt in an amount
equal to the bank's cap plus its holding company's(ies') cap, so long
as the total guaranteed debt issued by the bank and its holding
company(ies) does not exceed their combined cap? If so, why, and how
could this process be managed to assure, among other things, that the
entities together do not exceed their combined cap?
3. Section 370.3(b) of the Interim Rule states, ``If a
participating entity had no senior unsecured debt on September 30,
2008, the entity may seek to have some amount of debt covered by the
debt guarantee program. The FDIC, after consultation with the
appropriate Federal banking agency, will decide whether, and to what
extent, such requests will be granted on a case-by-case basis.'' Should
the FDIC establish an alternative guarantee cap, e.g., a percentage of
total liabilities, or an average of outstanding senior unsecured debt
over some period of time, for those eligible entities that had no or de
minimis amounts of senior unsecured debt outstanding on September 30,
2008? If so, what should that alternative be, and why?
V. Regulatory Analysis and Procedure
A. Administrative Procedure Act
Pursuant to section 553(b)(B) of the Administrative Procedure Act
(APA), notice and comment are not required prior to the issuance of a
final rule if an agency for good cause finds that notice and public
procedure thereon are impracticable, unnecessary, or contrary to the
public interest. In addition, section 553(d)(3) of the APA provides
that an agency, for good cause found and published with the rule, does
not have to comply with the requirements that a final rule be published
not less than 30 days before its effective date. The FDIC invoked these
good cause exceptions to make the Interim Rule effective on October 23,
2008, due to the severe financial conditions that threaten the
stability of the nation's economy generally and the banking system in
particular, the serious adverse effects on economic conditions and
financial stability that would result from any delay of the effective
date of the Interim Rule, and the fact that the Temporary Liquidity
Guarantee Program became effective on October 14, 2008.
For the same reasons, and because comments regarding the Interim
Rule may be submitted through November 13, 2008, and because the delay
that would result from complying with notice and public procedure in
connection with the Amended Interim Rule would frustrate the FDIC's
objective of quickly restoring liquidity to the financial markets, the
FDIC finds good cause to adopt the Amended Interim Rule without prior
notice and comment and without the 30-day delayed effective date.
B. Community Development and Regulatory Improvement Act
The Riegle Community Development and Regulatory Improvement Act
(RCDRIA) requires that any new rule prescribed by a Federal banking
agency that imposes additional reporting, disclosures, or other new
requirements on insured depository institutions take effect on the
first day of a calendar quarter unless the agency determines, for good
cause published with the rule, that the rule should become effective
before such time.\15\ The FDIC invoked the RCDRIA's good cause
exception to make the Interim Rule effective on October 23, 2008 due to
the severe financial conditions that threaten the stability of the
nation's economy generally and the banking system in particular, the
serious adverse effects on economic conditions and financial stability
that would result from any delay of the effective date of the Interim
Rule, and the fact that the Temporary Liquidity Guarantee Program has
been in effect since October 14, 2008.
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\15\ 12 U.S.C. 4802.
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For the same reasons, the FDIC finds good cause to make the Amended
Interim Rule effective immediately. In addition, the Amended Interim
Rule does not impose any additional reporting, disclosures, or other
new requirements on insured depository institutions that were not
already imposed by the Interim Rule.
C. Small Business Regulatory Enforcement Fairness Act
The Office of Management and Budget has previously determined that
the Interim Rule is not a ``major rule'' within the meaning of the
relevant sections of the Small Business Regulatory Enforcement Act of
1996 (SBREFA), 5 U.S.C. 801 et seq. As required by SBREFA, the FDIC
will file the appropriate reports with Congress and the General
Accounting Office so that the Interim Rule and the Amended Interim Rule
may be reviewed.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) requires an agency that is
issuing a proposed rule to prepare and make available for public
comment an initial regulatory flexibility analysis that describes the
impact of a proposed rule on small entities. Like the Interim Rule,
this Amended Interim Rule does not involve the issuance of a notice of
proposed rulemaking. As a result, the requirements of the RFA do not
apply.
E. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995, the
information collections contained in the Interim Rule issued by the
Board on October 23, 2008, were submitted to and approved by the Office
of Management and Budget (OMB) under emergency clearance procedures and
assigned OMB Control No. 3064-0166 (expiring on April 30, 2009). The
Amended Interim
[[Page 66163]]
Rules does not affect the collections of information outlined in the
Interim Rule nor does it affect the estimated burden set forth in the
Interim Rule.
List of Subjects in 12 CFR Part 370
Banks, Banking, Bank deposit insurance, Holding companies, National
banks, Reporting and recordkeeping requirements, Savings associations.
0
For the reasons stated above, The Board of Directors of the Federal
Deposit Insurance Corporation amends 12 CFR part 370 as follows:
PART 370--TEMPORARY LIQUIDITY GUARANTEE PROGRAM
0
1. The authority citation for part 370 continues to read as follows:
Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818, 1819(a)
(Tenth); 1820(f), 1821(a); 1821(c); 1821(d); 1823(c)(4).
Sec. 370.2 [Amended]
0
2. Amend Sec. 370.2 as follows:
0
A. In paragraph (f), remove ``November 12'' and replace it with
``December 5''.
0
B. In paragraph (g), remove ``November 12'' and replace it with
``December 5'' and remove ``November 13'' wherever it appears and
replace it with ``December 6''.
Sec. 370.3 [Amended]
0
3. Amend Sec. 370.3 as follows:
0
In paragraphs (b) and (f), remove ``November 12'' wherever it appears
and replace it with ``December 5''.
Sec. 370.5 [Amended]
0
4. Amend Sec. 370.5 as follows:
0
A. In paragraphs (a), (c), (f), and (j), remove ``November 12''
wherever it appears and replace it with ``December 5''.
0
B. In paragraph (h), remove ``December 1'' and replace it with
``December 19''.
0
5. Amend Sec. 370.6 by revising paragraphs (a), (b)(1), (b)(2), and
(c) to read as follows:
Sec. 370.6 Assessments under the Debt Guarantee Program.
(a) Waiver of assessment for certain initial periods. No eligible
entity shall pay any assessment associated with the debt guarantee
program for the period from October 14, 2008 through November 12, 2008.
An eligible entity that opts out of the program on or before December
5, 2008 will not pay any assessment under the program.
(b) * * *
(1) Any eligible entity that does not opt out of the Debt Guarantee
Program on or before December 5, 2008, as provided in Sec. 370.5, and
that issues any guaranteed debt during the period from October 14, 2008
through December 5, 2008 which is still outstanding on December 5,
2008, shall notify the FDIC of that issuance via the FDIC's e-business
Web site FDICconnect on or before December 19, 2008, and the eligible
entity's Chief Financial Officer or equivalent shall certify that the
issuances outstanding at each point of time did not exceed the
guaranteed amount limit as set forth in Sec. 370.3.
(2) Any eligible entity that does not opt out of the program and
that issues guaranteed debt after December 5, 2008, shall notify the
FDIC of that issuance via the FDIC's e-business Web site FDICconnect
within the time period specified by the FDIC. The eligible entity's
Chief Financial Officer or equivalent shall certify that the issuance
of guaranteed debt does not exceed the guarantee limit as set forth in
Sec. 370.3.
* * * * *
(c) Initiation of assessments. Assessments, calculated in
accordance with paragraph (d) of this section, will accrue, with
respect to each eligible entity that does not opt out of the debt
guarantee program on or before December 5, 2008.
(1) Beginning on November 13, 2008, on all senior unsecured debt,
other than overnight debt instruments, issued by it on or after October
14, 2008 that is still outstanding on November 13, 2008;
(2) Beginning on November 13, 2008, on all senior unsecured debt,
other than overnight debt instruments, issued by it on or after
November 13, 2008 and before December 6, 2008; and
(3) Beginning on December 6, 2008, on all senior unsecured debt
issued by it on or after December 6, 2008.
0
6. Amend Sec. 370.7 by revising paragraphs (a) and (b) to read as
follows:
Sec. 370.7 Assessments under the Transaction Account Guarantee
Program.
(a) Waiver of assessment for certain initial periods. No eligible
entity shall pay any assessment associated with the transaction account
guarantee program for the period from October 14, 2008, through
November 12, 2008. An eligible entity that opts out of the program on
or before December 5, 2008 will not pay any assessment under the
program
(b) Initiation of assessments. Beginning on November 13, 2008 each
eligible entity that does not opt out of the transaction account
guarantee program on or before December 5, 2008 will be required to pay
the FDIC assessments on all deposit amounts in noninterest-bearing
transaction accounts calculated in accordance with paragraph (c) of
this section.
* * * * *
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. E8-26569 Filed 11-4-08; 4:15 pm]
BILLING CODE 6714-01-P
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