FDIC Approves Temporary Liquidity Guarantee Program Final Rule

On November 21, 2008, the Board of the Federal Deposit Insurance Corporation (FDIC) approved a final rule for the Temporary Liquidity Guarantee Program (TLGP). The final rule provides significant changes from the interim rule, including that the FDIC guarantee on newly-issued senior unsecured debt will provide timely payment of interest and principal upon the issuing institution's failure to pay and that the guarantee is backed by the full faith and credit of the United States. The provisions of the final rule are discussed below in more detail. All eligible entities are required to take action under the TLGP no later than 11:59 p.m. on December 5, 2008: to opt-out of either or both programs under TLGP or to report their applicable issuance cap under the debt guarantee program. Additionally, some notice provisions apply to non-participating as well as participating eligible entities.