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Quarterly Banking Profile

TEMPORARY LIQUIDITY GUARANTEE PROGRAM
Fourth Quarter 2010

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Notes to Users

  • Debt Guarantee Program Ended October 31, 2009
  • Transaction Account Guarantee Program Ended December 31, 2010
  • All Noninterest-Bearing Transaction Deposit Accounts Insured under Dodd-Frank Reform Bill
  • $267 Billion Outstanding in Debt Guarantee Program
  • FDIC Responds to Market Disruptions with TLGP

    The FDIC Board of Directors (Board) approved the Temporary Liquidity Guarantee Program (TLGP) on October 13, 2008, as major disruptions in credit markets blocked access to liquidity for financial institutions.1 The TLGP improved access to liquidity through two programs: the Transaction Account Guarantee Program (TAGP), which fully guarantees noninterest-bearing transaction deposit accounts above $250,000, regardless of dollar amount; and the Debt Guarantee Program (DGP), which guarantees eligible senior unsecured debt issued by eligible institutions.

    All insured depository institutions were eligible to participate in the TAGP. Institutions eligible to participate in the DGP were insured depository institutions, U.S. bank holding companies, certain U.S. savings and loan holding companies, and other affiliates of insured depository institutions that the FDIC designated as eligible entities.

    FDIC Extends Guarantee Programs

    Although financial markets improved significantly in the first half of 2009, portions of the industry were still affected by the recent economic turmoil. To facilitate the orderly phase-out of the TLGP, and to continue access to FDIC guarantees where they were needed, the Board extended both the DGP and TAGP.

    On March 17, 2009, the Board voted to extend the deadline for issuance of guaranteed debt from June 30, 2009, to October 31, 2009, and to extend the expiration date of the guarantee to the earlier of maturity of the debt or December 31, 2012, from June 30, 2012. The Board adopted a final rule on October 20, 2009, that allowed the DGP to expire on October 31, 2009.2

    A final rule extending the TAGP six months, to June 30, 2010, was adopted on August 26, 2009. On June 22, 2010, the Board adopted a final rule extending the TAGP for another six months, through December 31, 2010.

    Noninterest-Bearing Transaction Accounts Fully Insured under Dodd-Frank Reform Bill

    According to the Dodd-Frank Wall Street Reform and Consumer Protection Act, noninterest-bearing transaction accounts at all FDIC-insured institutions will be fully insured for two years. This amendment became effective on December 31, 2010. Coverage of noninterest-bearing transaction accounts is separate from the regular insurance limit of $250,000. Assessments for noninterest-bearing transaction accounts will be included in the regular assessments for insured institutions.3

    Program Funded by Industry Fees and Assessments

    The TLGP did not rely on taxpayer funding or the Deposit Insurance Fund. Both the TAGP and the DGP were paid for by direct user fees. As of March 31, 2010, fees totaling $10.4 billion had been assessed under the DGP. A total of $1.1 billion in fees had been collected under the TAGP by December 31, 2010.

    A Majority of Eligible Entities Chose to Participate in the TLGP

    About 74 percent of FDIC-insured institutions opted in to the TAGP extension through December 31, 2010. More than half of all eligible entities opted in to the DGP. Lists of institutions that opted out of the guarantee programs are posted at http://www.fdic.gov/regulations/resources/TLGP/optout.html.

    $114 Billion in Transaction Accounts over $250,000 Guaranteed

    According to fourth quarter 2010 Call and Thrift Financial Reports, insured institutions participating in the TAGP reported an average of 198,361 noninterest-bearing transaction accounts over $250,000 during the quarter. The average deposit balances in these accounts totaled $164 billion, of which $114 billion was guaranteed under the TAGP. More than 5,100 FDIC-insured institutions reported TAGP accounts.4

    $267 Billion in FDIC-Guaranteed Debt Was Outstanding at December 31, 2010

    Sixty-six financial entities—39 insured depository institutions and 27 bank and thrift holding companies and nonbank affiliates—had $267 billion in guaranteed debt outstanding at the end of fourth quarter 2010. 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 85 percent of FDIC-guaranteed debt outstanding at December 31, 2010.

    Debt outstanding at December 31, 2010, had longer terms at issuance, compared with debt outstanding at year-end 2008. Over 90 percent matures more than two years after issuance, compared with 39 percent at December 31, 2008. Among types of debt instruments, 92 percent was in medium-term notes, compared with 44 percent at year-end 2008. The share of outstanding debt in commercial paper fell to 0 percent from 43 percent at year-end 2008.

    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 Outstanding in Guarantee Program

    TABLE V-C.  Fees Assessed Under TLGP

    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.

    2See http://www.fdic.gov/regulations/laws/federal/2009/09finalAD37Oct23.pdf.

    3See http://www.fdic.gov/regulations/reform/summary.html.

    4Insured institutions participating in the TAGP reported the average daily amount in TAGP accounts and the average daily number of TAGP accounts in their September 30, 2010, and December 31, 2010, Call and Thrift Financial Reports.


    Last Updated 02/23/2011 Questions, Suggestions & Requests