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").
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. 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
 For the full text of the Final Rule and other information on the TLGP, see http://www.fdic.gov/regulations/resources/tlgp/index.html.
 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@example.com) 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, firstname.lastname@example.org)
John F. Olson – Washington, D.C. (202-955-8522, email@example.com)
Amy L. Goodman – Washington, D.C. (202-955-8653, firstname.lastname@example.org)
Alan Platt – Washington, D.C. (202- 887-3660, email@example.com)
Michael Bopp – Washington, D.C. (202-955-8256, firstname.lastname@example.org)
Securities Law and Corporate Governance Expertise
Ronald O. Mueller – Washington, D.C. (202-955-8671, email@example.com)
K. Susan Grafton – Washington, D.C. (202- 887-3554, firstname.lastname@example.org)
Brian Lane – Washington, D.C. (202-887-3646, email@example.com)
Lewis Ferguson – Washington, D.C. (202- 955-8249, firstname.lastname@example.org)
Barry Goldsmith – Washington, D.C. (202- 955-8580, email@example.com)
John H. Sturc – Washington, D.C. (202-955-8243, firstname.lastname@example.org)
Alan Bannister – New York (212-351-2310, email@example.com)
Adam H. Offenhartz – New York (212-351-3808, firstname.lastname@example.org)
Mark K. Schonfeld – New York (212-351-2433, email@example.com)
Financial Institutions Law Expertise
Chuck Muckenfuss – Washington, D.C. (202- 955-8514, firstname.lastname@example.org)
Christopher Bellini – Washington, D.C. (202- 887-3693, email@example.com)
Amy Rudnick – Washington, D.C. (202-955-8210, firstname.lastname@example.org)
Howard Adler – Washington, D.C. (202- 955-8589, email@example.com)
Richard Russo – Denver (303- 298-5715, firstname.lastname@example.org)
Dennis Friedman – New York (212- 351-3900, email@example.com)
Stephanie Tsacoumis – Washington, D.C. (202-955-8277, firstname.lastname@example.org)
Robert Cunningham – New York (212-351-2308, email@example.com)
Joerg Esdorn – New York (212-351-3851, firstname.lastname@example.org)
Stewart McDowell – San Francisco (415-393-8322, email@example.com)
C. William Thomas, Jr. – Washington, D.C. (202-887-3735, firstname.lastname@example.org)
Real Estate Expertise
Jesse Sharf – Century City (310-552-8512, email@example.com)
Alan Samson – London (+44 20 7071 4222, firstname.lastname@example.org)
Andrew Levy – New York (212-351-4037, email@example.com)
Fred Pillon – San Francisco (415-393-8241, firstname.lastname@example.org)
Dennis Arnold – Los Angeles (213-229-7864, email@example.com)
Andrew Lance – New York (212-351-3871, firstname.lastname@example.org)
Eric M. Feuerstein – New York (212-351-2323, email@example.com)
David J. Furman – New York (212-351-3992, firstname.lastname@example.org)
Bankruptcy Law Expertise
Michael Rosenthal – New York (212-351-3969, email@example.com)
David M. Feldman – New York (212-351-2366, firstname.lastname@example.org)
Oscar Garza – Orange County (949-451-3849, email@example.com)
Craig H. Millet – Orange County (949-451-3986, firstname.lastname@example.org)
Janet M. Weiss – New York (212-351-3988, email@example.com)
Matthew J. Williams – New York (212-351-2322, firstname.lastname@example.org)
J. Eric Wise – New York (212-351-2620, email@example.com)
Executive and Incentive Compensation Expertise
Stephen W. Fackler – Palo Alto (650-849-5385, firstname.lastname@example.org)
Charles F. Feldman – New York (212-351-3908, email@example.com)
Michael J. Collins – Washington, D.C. (202-887-3551, firstname.lastname@example.org)
Sean C. Feller – Los Angeles (213-229-7579, email@example.com)
Amber Busuttil Mullen – Los Angeles (213-229-7023, firstname.lastname@example.org)
© 2008 Gibson, Dunn & Crutcher LLP
Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.