The Temporary Liquidity Guarantee Program And Bearer Debt

The FDIC announced the TLGP on October 14, 2008 in response to the current market crisis. Under the TLGP, newly-issued senior unsecured debt issued by participating "eligible institutions" will be guaranteed by the FDIC and backed by the full faith and credit of the United States. Pursuant to the TLGP, the FDIC will guarantee debt issued through June 30, 2009 and the debt will be covered by the guarantee through June 30, 2012.

In 1982, Congress passed the Tax Equity and Fiscal Responsibility Act ("TEFRA") which restricts the issuance of debt instruments in bearer form. Under TEFRA, issuers of bearer debt generally are denied deductions for U.S. federal income tax purposes for interest paid on the bearer debt and are subject to an excise tax. However, the issuer sanctions do not apply in the case of bearer debt instruments that are issued under arrangements reasonably designed to ensure that they will not be sold to United States persons. These arrangements include an