Each depositor insured to at least $250,000 per insured bank

Quarterly Banking Profile

TEMPORARY LIQUIDITY GUARANTEE PROGRAM
FOURTH QUARTER 2008

    For more detailed information regarding the Temporary Liquidity Guarantee Program please Click Here

Notes to Users

  • Non-Interest-Bearing Transaction Accounts Can Be Fully Guaranteed
  • FDIC Debt Guarantees Improve Access to Liquidity
  • The TLGP Is an Industry Funded Program
  • More Than 500,000 Additional Transaction Accounts Receive Full Coverage
  • $224 Billion in Debt Outstanding in Program
  • FDIC Responds to Market Disruptions with TLGP

    The FDIC Board approved the Temporary Liquidity Guarantee Program (TLGP)1 on October 13, 2008, as major disruptions in credit markets blocked access to liquidity for financial institutions. The TLGP improves access to liquidity by fully guaranteeing non-interest-bearing transaction deposit accounts and by guaranteeing eligible senior unsecured debt. The final rule for the TLGP was adopted on November 21, 2008.

    Non-Interest-Bearing Transaction Accounts at Participating Institutions Are Fully Guaranteed

    The Transaction Account Guarantee Program provides a full guarantee of non-interest-bearing transaction deposit accounts above $250,000, regardless of dollar amount, at depository institutions that elected to participate in the program. The guarantee is in effect until December 31, 2009. Accounts covered by the guarantee also include NOW accounts where interest rates are maintained at 0.5 percent or less and IOLTA2 accounts.

    FDIC Offers Guarantees on Senior Unsecured Debt

    The Debt Guarantee Program provides a full guarantee of senior unsecured debt issued by eligible institutions between October 14, 2008, and June 30, 2009, with the guarantee expiring on or before June 30, 2012. Senior unsecured debt must have a stated maturity of more than 30 days and may include term Federal funds purchased, promissory notes, commercial paper, unsubordinated unsecured notes, and U.S. dollar denominated certificates of deposit owed to an insured depository institution. Institutions eligible for participation in the Debt Guarantee Program include insured depository institutions, U.S. bank holding companies, certain U.S. savings and loan holding companies, and other affiliates of an insured depository institution that the FDIC designates as eligible entities.

    Program Funded by Industry Fees and Assessments

    The TLGP does not rely on taxpayer funding or the Deposit Insurance Fund. Both components of the program will be paid for by direct user fees. Institutions participating in the Transaction Account Guarantee Program provide customers full coverage on non-interest-bearing transaction accounts for an annual fee of 10 basis points. Fees for participation in the Debt Guarantee Program depend on the maturity of debt issued. The cost of the guarantee to insured depository institutions is 50 basis points for maturities of 180 days or less, 75 basis points for maturities of 181 days to 364 days, and 100 basis points for maturities 365 days or greater. Bank holding companies and participating affiliates are required to pay an additional 10 basis points if, as of September 30, 2008, the combined assets of all insured depository institutions affiliated with such entity constitute less than 50 percent of consolidated holding company assets.

    A Majority of Eligible Entities Have Chosen to Participate in the TLGP

    According to submissions received by the FDIC, more than 85 percent of FDIC-insured institutions have opted in to the Transaction Account Guarantee Program, and more than half of all eligible entities have elected to opt in to the Debt Guarantee Program. Lists of institutions that opted out of the guarantee programs are posted at http://www.fdic.gov/regulations/resources/TLGP/optout.html.

    Insured Institutions Report Half a Million Transaction Accounts over $250,000

    According to fourth quarter Call Reports, insured institutions reported 522,862 non-interest-bearing transaction accounts over $250,000. These accounts totaled $814 billion, of which $684 billion in deposit accounts was guaranteed under the Transaction Account Guarantee Program. Almost 6,000 FDIC-insured institutions reported non-interest-bearing transaction accounts over $250,000 in value.

    Limits on Debt Issuance Based on Third Quarter 2008 Balances

    The amount of FDIC-guaranteed debt that can be issued by each eligible entity, or its "cap," is based on the amount of senior unsecured debt outstanding as of September 30, 2008, that matures on or before June 30, 2009. Eligible entities may issue debt up to 125 percent of that outstanding amount. The cap for FDIC-insured institutions that had no outstanding short-term senior unsecured debt other than Fed funds is set at 2 percent of liabilities as of September 30, 2008. Holding companies with no short-term senior unsecured debt outstanding must apply to the FDIC to raise the limit on their issuance of FDIC-guaranteed debt above $0. Initial caps for all 8,191 entities that could exercise their option to issue guaranteed debt under the TLGP total almost $1.0 trillion.

    By year-end, $224 Billion in FDIC-Guaranteed Debt Was Outstanding

    Sixty-four financial entities-39 insured depository institutions and 25 bank and thrift holding companies and nonbank affiliates-had $224 billion in guaranteed debt outstanding at year-end. Some banking groups issued FDIC-guaranteed debt at both the subsidiary and holding company level, but most guaranteed debt was issued by holding companies or nonbank affiliates of depository institutions. Bank and thrift holding companies and nonbank affiliates issued 86 percent of FDIC-guaranteed debt outstanding at year-end. Short-term commercial paper and medium-term notes represented 86 percent of outstanding debt instruments, in almost equal shares. Almost one-half of guaranteed debt outstanding as of December 31, 2008, matures in 180 days or less, and one-fourth matures between two and three years of issuance.

    TABLE I-C.   Participation in Temporary Liquidity Guarantee Program

    TABLE II-C.  Cap on FDIC-Guaranteed Debt for Opt-In Entities

    TABLE III-C. Transaction Account Guarantee Program

    TABLE IV-C. Debt Issuance under Guarantee Program

    TABLE V-C.  Fees Assessed under TLGP Debt Program

    TABLE VI-C. Term at Issuance of Debt Instruments Outstanding

    Footnotes

    1The FDIC invoked the systemic risk exception pursuant to section 141 of the Federal Deposit Improvement Act of 1991, 12 U.S.C 1823(c)(4) on October 13, 2008. For further information on the TLGP, see http://www.fdic.gov/regulations/resources/TLGP/index.html.

    2NOW accounts are Negotiable Order of Withdrawal Accounts, and IOLTA, or Interest on Lawyers Trust Accounts, are interest-bearing accounts maintained by an attorney or law firm for its clients.


    Last Updated 02/26/2009 Questions, Suggestions & Requests