November 21, 2008
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is tracking closely government responses to the turmoil that has catalyzed dramatic and rapid reshaping of our capital and credit markets.
We are providing updates on key regulatory and legislative issues, as well as information on legal issues that we believe could prove useful as firms and other entities navigate these challenging times.
This update focuses on the final rule issued today by the Federal Deposit Insurance Corporation (the "FDIC") governing its Temporary Liquidity Guarantee Program (the "TLGP").[1]
On October 13, 2008, the FDIC adopted the TLGP, which guarantees newly issued senior unsecured debt of banks, thrifts, and most holding companies of federally insured depository institutions (the "Debt Guarantee Program") as well as non-interest bearing transaction deposit accounts (the "Transaction Account Guarantee Program"). Through these programs, the FDIC hopes to restore liquidity to the frozen credit markets, and in particular, to encourage interbank lending. The program covers eligible debt issued between October 14, 2008 and June 30, 2009 with guarantees expiring no later than June 30, 2012.
On October 23, 2008, the FDIC issued an interim rule with a comment period lasting until November 13, 2008; the FDIC subsequently amended the Interim Rule on November 3, 2008 (the "Interim Rule"). After receiving more than 700 comments on the Interim Rule, the FDIC Board approved, today, a final rule (the "Final Rule") governing the program. The Final Rule includes some important amendments to the Interim Rule. We have noted some of these changes below. Key provisions of the TLGP under the Final Rule are as follows:
Eligibility: Entities eligible to participate in the TLGP include federally-insured depository institutions, United States bank holding companies, and United States savings and loan companies that engage only in activities permissible for financial holding companies. The FDIC may extend eligibility to affiliates of eligible entities on an individual basis.
Enrollment: Eligible entities will be enrolled automatically in the TLGP. Entities must decide whether to opt out by December 5, 2008.[2] Participation for the first 30 days of the program is free. If an entity remains in the program after December 5, 2008, the entity will be subject to certain fees retroactive to November 13, 2008.
Conditions of Participation: Once an entity issues debt guaranteed under the TLGP, the entity consents to certain conditions of participation in the program, including that it will provide certain disclosures to the FDIC and to allow the FDIC to conduct on-site inspections as needed. Non-compliance with the program’s conditions may result in civil monetary penalties and termination of deposit insurance.
Publication of Participation: The FDIC will publish a list of eligible entities that have opted out of either the debt guarantee program or out of the transaction account guarantee program.
Details of the Debt Guarantee Program
Details of the Transaction Account Guarantee Program
[1] For the full text of the Final Rule and other information on the TLGP, see http://www.fdic.gov/regulations/resources/tlgp/index.html.
[2] Eligible entities must submit a completed election form to opt out of the program. A sample election form is available on the FDIC web site (http://www.fdic.gov/regulations/resources/TLGP/index.html). The official form is expected to be on the site on Monday, November 24th.
Gibson Dunn has assembled a team of experts who are prepared to meet client needs as they arise in conjunction with the issues discussed above. Please contact Michael Bopp (202-955-8256, [email protected]) in the firm’s Washington, D.C. office or any of the following members of the Financial Markets Crisis Group:
Public Policy Expertise
Mel Levine – Century City (310-557-8098, [email protected])
John F. Olson – Washington, D.C. (202-955-8522, [email protected])
Amy L. Goodman – Washington, D.C. (202-955-8653, [email protected])
Alan Platt – Washington, D.C. (202- 887-3660, [email protected])
Michael Bopp – Washington, D.C. (202-955-8256, [email protected])
Securities Law and Corporate Governance Expertise
Ronald O. Mueller – Washington, D.C. (202-955-8671, [email protected])
K. Susan Grafton – Washington, D.C. (202- 887-3554, [email protected])
Brian Lane – Washington, D.C. (202-887-3646, [email protected])
Lewis Ferguson – Washington, D.C. (202- 955-8249, [email protected])
Barry Goldsmith – Washington, D.C. (202- 955-8580, [email protected])
John H. Sturc – Washington, D.C. (202-955-8243, [email protected])
Alan Bannister – New York (212-351-2310, [email protected])
Adam H. Offenhartz – New York (212-351-3808, [email protected])
Mark K. Schonfeld – New York (212-351-2433, [email protected])
Financial Institutions Law Expertise
Chuck Muckenfuss – Washington, D.C. (202- 955-8514, [email protected])
Christopher Bellini – Washington, D.C. (202- 887-3693, [email protected])
Amy Rudnick – Washington, D.C. (202-955-8210, [email protected])
Corporate Expertise
Howard Adler – Washington, D.C. (202- 955-8589, [email protected])
Richard Russo – Denver (303- 298-5715, [email protected])
Dennis Friedman – New York (212- 351-3900, [email protected])
Stephanie Tsacoumis – Washington, D.C. (202-955-8277, [email protected])
Robert Cunningham – New York (212-351-2308, [email protected])
Joerg Esdorn – New York (212-351-3851, [email protected])
Stewart McDowell – San Francisco (415-393-8322, [email protected])
C. William Thomas, Jr. – Washington, D.C. (202-887-3735, [email protected])
Private Equity Expertise
E. Michael Greaney – New York (212-351-4065, [email protected])
Private Investment Funds Expertise
Edward Sopher – New York (212-351-3918, [email protected])
Real Estate Expertise
Jesse Sharf – Century City (310-552-8512, [email protected])
Alan Samson – London (+44 20 7071 4222, [email protected])
Andrew Levy – New York (212-351-4037, [email protected])
Fred Pillon – San Francisco (415-393-8241, [email protected])
Dennis Arnold – Los Angeles (213-229-7864, [email protected])
Andrew Lance – New York (212-351-3871, [email protected])
Eric M. Feuerstein – New York (212-351-2323, [email protected])
David J. Furman – New York (212-351-3992, [email protected])
Crisis Management Expertise
Theodore J. Boutrous, Jr. – Los Angeles (213-229-7804, [email protected])
Bankruptcy Law Expertise
Michael Rosenthal – New York (212-351-3969, [email protected])
David M. Feldman – New York (212-351-2366, [email protected])
Oscar Garza – Orange County (949-451-3849, [email protected])
Craig H. Millet – Orange County (949-451-3986, [email protected])
Janet M. Weiss – New York (212-351-3988, [email protected])
Matthew J. Williams – New York (212-351-2322, [email protected])
J. Eric Wise – New York (212-351-2620, [email protected])
Tax Law Expertise
Arthur D. Pasternak – Washington, D.C. (202-955-8582, [email protected])
Paul Issler – Los Angeles (213-229-7763, [email protected])
Executive and Incentive Compensation Expertise
Stephen W. Fackler – Palo Alto (650-849-5385, [email protected])
Charles F. Feldman – New York (212-351-3908, [email protected])
Michael J. Collins – Washington, D.C. (202-887-3551, [email protected])
Sean C. Feller – Los Angeles (213-229-7579, [email protected])
Amber Busuttil Mullen – Los Angeles (213-229-7023, [email protected])
© 2008 Gibson, Dunn & Crutcher LLP
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