Amendment of the Temporary Liquidity Guarantee Program To Extend the Debt Guarantee Program and To Impose Surcharges on Assessments for Certain Debt Issued on or After April 1, 2009, 12078-12085 [E9-6115]

Agencies

• FEDERAL DEPOSIT INSURANCE CORPORATION

[Federal Register Volume 74, Number 54 (Monday, March 23, 2009)]
[Rules and Regulations]
[Pages 12078-12085]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-6115]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 370

RIN 3064-AD37


Amendment of the Temporary Liquidity Guarantee Program To Extend 
the Debt Guarantee Program and To Impose Surcharges on Assessments for 
Certain Debt Issued on or After April 1, 2009

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Interim Rule with request for comments.

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SUMMARY: The FDIC is issuing this Interim Rule to amend the Temporary 
Liquidity Guarantee Program (TLGP) by providing a limited extension of 
the Debt Guarantee Program (DGP) for insured depository institutions 
(IDIs) participating in the DGP. The extended DGP also would apply to 
other participating entities; however, other participating entities 
that have not issued FDIC-guaranteed debt before April 1, 2009 are 
required to submit an application to and obtain approval from the FDIC 
to participate in the extended DGP. The Interim Rule imposes surcharges 
on certain debt issued on or after April 1, 2009. Any surcharge 
collected will be deposited into the Deposit Insurance Fund (DIF or 
Fund). The Interim Rule also establishes an application process whereby 
entities participating in the extended DGP may apply to issue non-FDIC-
guaranteed debt during the extension period.

DATES: The Interim Rule becomes effective on March 23, 2009. Comments 
on the Interim Rule must be received by April 7, 2009.

ADDRESSES: You may submit comments on the Interim Rule by any of the 
following methods:
     Agency Web Site: https://www.FDIC.gov/regulations/laws/federal/notices.html. Follow instructions for submitting comments on 
the Agency Web Site.
     E-mail: Comments@FDIC.gov. Include RIN  3064-AD37 
on the subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
     Hand Delivery: Comments may be hand delivered to the guard 
station at the rear of the 550 17th Street Building (located on F 
Street) on business days between 7 a.m. and 5 p.m.
    Instructions: All comments received will be posted generally 
without change to https://www.fdic.gov/regulations/laws/federal/propose.html, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Mark L. Handzlik, Senior Attorney, 
Legal Division, (202) 898-3990 or mhandzlik@fdic.gov; Robert C. Fick, 
Counsel, Legal Division, (202) 898-8962 or rfick@fdic.gov; A. Ann 
Johnson, Counsel, Legal Division, (202) 898-3573 or aajohnson@fdic.gov; 
(for questions or comments related to applications) Lisa D Arquette, 
Associate Director, Division of Supervision and Consumer Protection, 
(202) 898-8633 or larquette@fdic.gov; Serena L. Owens, Associate 
Director, Supervision and Applications Branch, Division of Supervision 
and Consumer Protection, (202) 898-8996 or sowens@fdic.gov; Gail 
Patelunas, Deputy Director, Division of Resolutions and Receiverships, 
(202) 898-6779 or gpatelunas@fdic.gov; Donna Saulnier, Manager, 
Assessment Policy Section, Division of Finance, (703) 562-6167 or 
dsaulnier@fdic.gov; or Munsell St. Clair, Chief, Bank and Regulatory 
Policy Section, Division of Insurance and Research, (202) 898-8967 or 
mstclair@fdic.gov.

SUPPLEMENTARY INFORMATION:

[[Page 12079]]

I. Background

    The FDIC adopted the TLGP in October 2008 following a determination 
of systemic risk by the Secretary of the Treasury (after consultation 
with the President) that was supported by recommendations from the FDIC 
and the Board of Governors of the Federal Reserve System (Federal 
Reserve). The TLGP is part of a coordinated effort by the FDIC, the 
U.S. Department of the Treasury (Treasury), and the Federal Reserve to 
address unprecedented disruptions in credit markets and the resultant 
inability of financial institutions to fund themselves and make loans 
to creditworthy borrowers.
    More broadly, Congress, the Treasury, and the federal banking 
agencies, have taken coordinated steps to preserve confidence in the 
American economy. Congress enacted sweeping laws to deal with the 
economic crisis, including the Emergency Economic Stabilization Act \1\ 
(which temporarily raised deposit insurance limits) and the American 
Recovery and Reinvestment Act of 2009; \2\ the Federal Reserve made 
commercial paper facilities available; and the Treasury provided banks 
with capital injections.
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    \1\ Public Law 110-343 (October 3, 2008).
    \2\ Public Law 111-5 (February 17, 2009).
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    The disruption in credit markets that emerged in the second half of 
2008 impaired the ability of financial institutions to obtain funding, 
make loans to creditworthy borrowers, and intermediate credit 
transactions. Although the financial system and credit markets remain 
stressed, credit market conditions have improved in response to 
government stabilization efforts such as the TLGP. Interbank short-term 
funding rates have fallen notably since mid-October 2008. The three-
month Libor rate has fallen about 350 basis points from the 4.75 
percent peak in mid-October 2008. The three-month Libor spread over 
Treasuries has also declined to under one percent, down from 4.57 
percent in mid-October 2008, but remains above a historical spread of 
approximately 40 basis points.
    While liquidity in the financial markets has not returned to pre-
crisis levels, the TLGP debt guarantee program has been effective to 
date in improving short-term and intermediate-term funding for banking 
organizations. More than two-thirds of new public debt issuances by 
banking organizations between October 14, 2008, and March 4, 2009, that 
matures on or before June 30, 2012, are FDIC-guaranteed. Thus far, non-
FDIC-guaranteed debt issued by banking organizations has mostly been 
for relatively small amounts with some exceptions. During the first two 
months of the year, one banking organization issued $2 billion in 10-
year senior notes, and another banking organization issued $4 billion 
in 30-year bonds, both without government guarantees.
    At its inception, the Federal Reserve and the Treasury recommended 
extending the DGP to bank holding companies, given the difficulties 
that these institutions were having with gaining access to funding. 
Concerns were raised that under the circumstances at that time, there 
would be risk to IDIs and to the banking system as a whole if the FDIC 
did not guarantee debt issued by bank holding companies under the 
TLGP.\3\ The FDIC believes that certain aspects of the credit markets 
have improved, and with this Interim Rule, the FDIC is acting to ensure 
the orderly phase-out of the TLGP, a program that has provided benefit 
to IDIs, bank and certain savings and loan holding companies, and 
certain of their affiliates.
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    \3\ Memorandum dated November 19, 2008, to FDIC Chairman Sheila 
C. Bair from Federal Reserve Board Staff at page 1.
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    The FDIC expects the Interim Rule to provide an orderly transition 
period for participating entities returning to non-FDIC-guaranteed 
funding, and reduce the potential for market disruption when the DGP 
ends. Also, the extension should enhance bank liquidity while the 
elements of the Treasury's proposed Financial Stability Plan are fully 
implemented.\4\
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    \4\ Secretary Geithner Introduces Financial Stability Plan, 
https://www.treas.gov/press/releases/tg18.htm (last visited Feb. 19, 
2009).
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II. Authority To Provide Limited Extension of the TLGP

    The amendment to the DGP provided under the Interim Rule is 
consistent with the rationale for establishing the existing TLGP and 
the determination of systemic risk made on October 14, 2008, pursuant 
to section 13(c)(4)(G),\5\ by the Secretary of the Treasury (after 
consultation with the President) following receipt of the written 
recommendation dated October 13, 2008, by the Board of Directors of the 
FDIC (Board) and the similar written recommendation of the Federal 
Reserve. The determination of systemic risk authorized the FDIC to take 
actions to avoid or mitigate serious adverse effects on economic 
conditions or financial stability by providing a guarantee of senior 
unsecured debt, and the FDIC initiated the TLGP in response. The 
limited extension of the TLGP provided for in the Interim Rule 
represents continued action by the FDIC to avoid or mitigate further 
deterioration in the economic condition and stability of the U.S. 
financial system and is consistent with the systemic risk determination 
made by the Secretary of the Treasury based on recommendations of the 
FDIC and the FRB in October 2008.
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    \5\ 12 U.S.C. 1823(c)(4)(G).
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    In addition to the authority granted to the FDIC by the systemic 
risk determination made under Section 13(c)(4) of the FDI Act, as 
described above, the FDIC is authorized under Section 9(a) Tenth of the 
FDI Act,\6\ to prescribe, by its Board, such rules and regulations as 
it may deem necessary to carry out the provisions of the FDI Act. The 
FDIC has determined that this Interim Rule is necessary to further 
enhance the TLGP.
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    \6\ 12 U.S.C. 1819(a)Tenth.
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III. The Interim Rule

A. Extension of the Debt Guarantee Program for IDIs Participating in 
the TLGP

    Under the existing DGP, participating entities are permitted to 
issue senior unsecured debt until June 30, 2009. The FDIC will 
guarantee this debt until the earlier of the maturity of the debt or 
June 30, 2012.
    The Interim Rule provides a limited four-month extension for the 
issuance of debt under the DGP and is consistent with extensions to 
other liquidity programs recently announced by the Federal Reserve.\7\ 
The Interim Rule permits all IDIs participating in the DGP to issue 
FDIC-guaranteed senior unsecured debt until October 31, 2009. For debt 
issued on or after April 1, 2009, the Interim Rule extends the FDIC's 
guarantee (previously set to expire under the existing program on the 
earliest of the opt-out date, if any, the maturity of the debt, the 
mandatory conversion date for mandatory convertible debt, or June 30, 
2012) until the earliest of the opt-out date, the maturity of the debt, 
the mandatory conversion date for mandatory convertible debt, or 
December 31, 2012.\8\
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    \7\ 2009 Monetary Press Release, Release Date: February 3, 2009, 
https://www.federalreserve.gov/newsevents/press/monetary/20090203a.htm (last visited February 20, 2009) (announcing four 
month extensions until October 2009 of six liquidity programs 
originally scheduled to expire in April 2009).
    \8\ Unless those other participating entities that have not 
issued debt before April 1, 2009, apply and receive the approval of 
the FDIC to participate in the extended DGP, the FDIC's guarantee 
will expire for such entities no later than June 30, 2012. (See 
Section III.B.)

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[[Page 12080]]

B. Extension of the Debt Guarantee Program for Other Entities 
Participating in the TLGP

    The Interim Rule permits other participating entities that have 
issued FDIC-guaranteed debt before April 1, 2009 to participate in the 
extended DGP. However, other participating entities that have not 
issued FDIC-guaranteed debt before April 1, 2009 must apply to and 
receive approval from the FDIC to participate in the extended DGP.\9\ 
The deadline for submitting an application to participate in the 
extended DGP is June 30, 2009. The FDIC will review such applications 
on a case-by-case basis.
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    \9\ Unlike IDIs (for whom the FDIC has either primary or backup 
supervision authority) and other participating entities that have 
issued debt before April 1, 2009 (for whom the FDIC is aware of 
current debt issuances and the evolving financial condition of those 
entities), for other participating entities that have not issued 
debt before April 1, 2009, the FDIC has chosen to mitigate its risk 
during the extension period by establishing an application process 
that will enable the FDIC to become more familiar with the current 
financial situation for these entities and with their plans for 
issuing debt during the extension period.
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    As with other applications submitted to the FDIC for purposes of 
the DGP, the application must include a summary of the applicant's 
strategic operating plan; the proposed use of the debt proceeds; the 
entity's plans for retiring any FDIC-guaranteed debt; a description of 
the entity's financial history, current condition and future prospects; 
the risk presented by the proposal to the FDIC; and any other relevant 
information that the FDIC deems appropriate. The FDIC also may 
condition its approval on any requirement deemed appropriate, including 
without limitation, the pledge of collateral by the applicant to secure 
the applicant's obligation to reimburse the FDIC for any payments made 
pursuant to the FDIC's guarantee.
    This Interim Rule will not change a participating entity's existing 
debt guarantee limit or affect any conditions that the FDIC may have 
placed on the issuance of debt by an IDI or other participating entity. 
In addition, consistent with prudent liquidity management practices, 
issuance levels under the TLGP should be consistent with existing 
funding plans and estimated liquidity needs. The chart that follows 
provides a summary of the relevant dates for entities that participate 
(and those that do not participate) in the extended DGP.

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                                                                                          Guarantee expiration
                                        Application date             Issue date                   date
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IDIs currently participating in    Not required to submit an  Senior unsecured debt     For debt issued on or
 the DGP, and other participating   application to             may be issued no later    after April 1, 2009,
 entities that have issued FDIC-    participate in the         than Oct. 31, 2009.       FDIC-guarantee of
 guaranteed debt before April 1,    extension of the DGP.                                senior unsecured debt
 2009.                                                                                   expires on the earliest
                                                                                         of the opt-out date, if
                                                                                         any, the mandatory
                                                                                         conversion date for
                                                                                         mandatory convertible
                                                                                         debt, the stated date
                                                                                         of maturity, or Dec.
                                                                                         31, 2012.
Other participating entities that  Application due on or      With FDIC approval,       For debt issued on or
 have not issued FDIC-guaranteed    before June 30, 2009.      senior unsecured debt     after April 1, 2009,
 debt before April 1, 2009, which                              may be issued no later    with FDIC approval,
 have received approval to                                     than Oct. 31, 2009.       FDIC-guarantee of
 participate in the extension of                                                         senior unsecured debt
 the DGP.                                                                                expires on the earliest
                                                                                         of the opt-out date, if
                                                                                         any, the mandatory
                                                                                         conversion date for
                                                                                         mandatory convertible
                                                                                         debt, the stated date
                                                                                         of maturity, or Dec.
                                                                                         31, 2012.
Other participating entities       N/A......................  Senior unsecured debt     FDIC-guarantee of senior
 currently participating in the                                may be issued no later    unsecured debt expires
 DGP, but not participating in                                 than June 30, 2009.       on the earliest of the
 the extension of the DGP.                                                               mandatory conversion
                                                                                         date for mandatory
                                                                                         convertible debt, the
                                                                                         stated date of
                                                                                         maturity, or June 30,
                                                                                         2012.
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C. Surcharges on Assessments for Certain Debt Issued on or After April 
1, 2009

    Surcharges provided for in the Interim Rule will be imposed on an 
annualized basis and apply only to FDIC-guaranteed debt with maturities 
(or, in the case of mandatory convertible debt, time periods to 
conversion) of at least one year; the assessment rates for shorter term 
FDIC-guaranteed debt remain unchanged, as do the rates for guaranteed 
debt issued before April 1, 2009.
    For FDIC-guaranteed debt with maturities (or, in the case of 
mandatory convertible debt, time periods to conversion) of at least one 
year issued on or after April 1, 2009, until and including June 30, 
2009, and maturing on or before June 30, 2012, the annualized surcharge 
on the assessments is 10 basis points for IDIs and 20 basis points for 
other participating entities.
    The Interim Rule also imposes an additional surcharge on 
assessments for FDIC-guaranteed debt issued under the extended DGP--
that is, FDIC-guaranteed debt issued after June 30, 2009 and on or 
before October 31, 2009, or FDIC-guaranteed debt issued on or after 
April 1, 2009 with a maturity date after June 30, 2012. The applicable 
annualized surcharge on the assessments for IDIs is 25 basis points. 
For other participating entities that have issued FDIC-guaranteed debt 
under the DGP before April 1, 2009 (and for such entities that have not 
issued FDIC-guaranteed debt under the DGP before April 1, 2009, but 
that have been approved by the FDIC to participate in the extended 
DGP), the annualized applicable surcharge on the assessments is 50 
basis points.
    Unlike TLGP fees, which are reserved for possible TLGP losses and 
not generally available for DIF purposes, the amount of any surcharge 
collected in connection with the extended DGP will be deposited into 
the DIF and used by the FDIC when calculating the reserve ratio of the 
Fund. The FDIC has every expectation that the TLGP will pay for itself 
and has set TLGP fees accordingly.
    The surcharge provisions recognize that a relatively small portion 
of the

[[Page 12081]]

industry is actively using the DGP, but all IDIs ultimately bear the 
risk that a systemic risk assessment might be necessary to recover any 
excess losses attributable to the program. The surcharge is intended to 
compensate the DIF members, by increasing funds deposited directly into 
the DIF, for bearing the risk that TLGP fees will be insufficient and 
that a systemic risk will be levied.
    The surcharges also are intended to reduce the subsidy provided by 
the DGP and to encourage institutions to seek funding in ways that do 
not involve government guarantees, so that the DGP can be wound down in 
an orderly fashion. The DGP extension will also partially address 
potential competitive disparities with similar programs in other 
countries. The FDIC anticipates that the amount of revenue that the 
surcharge produces will enable the FDIC to reduce the amount of the 
special assessment provided for in the Interim Rule adopted on February 
27, 2009.\10\
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    \10\ See 74 FR 9525 (March 4, 2009).
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D. Opportunity To Apply To Issue Non-Guaranteed Debt

    Any entities participating in the extended DGP may apply to the 
FDIC to issue non-FDIC-guaranteed debt. If approved, such entities may 
issue non-guaranteed debt after June 30, 2009, without cost to the 
entity.\11\
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    \11\ Some participating entities elected to pay a fee to issue 
long-term non-guaranteed debt that could mature beyond June 30, 
2012, pursuant to 12 CFR 370.6(f). If those entities are eligible to 
participate in the extension of the TLGP, the Interim Rule requires 
such entities to apply to issue other than long-term non-guaranteed 
debt, without cost for such issuances if approved by the FDIC.
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IV. Request for Comments

    The FDIC invites comments on all aspects of the Interim Rule and 
solicits suggestions regarding its implementation. In particular, the 
FDIC seeks comment as to the appropriateness of the surcharges imposed 
on participating entities beginning April 1, 2009, for their 
participation in the DGP.

V. Regulatory Analysis and Procedure

A. Administrative Procedure Act

    The process of amending Part 370 by means of this Interim Rule is 
governed by the Administrative Procedure Act (APA). Pursuant to section 
553(b)(B) of the APA, general notice and opportunity for public comment 
are not required with respect to a rule making when an agency for good 
cause finds that ``notice and public procedure thereon are 
impracticable, unnecessary, or contrary to the public interest.'' 
Similarly, section 553(d)(3) of the APA provides that the publication 
of a rule shall be made not less than 30 days before its effective 
date, except ``* * * (3) as otherwise provided by the agency for good 
cause found and published with the rule.''
    Consistent with section 553(b)(B) of the APA, the FDIC finds that 
good cause exists for a finding that general notice and opportunity for 
public comment are impracticable and contrary to the public interest. 
The TLGP was announced by the FDIC on October 14, 2008, as an 
initiative to counter the system-wide crisis in the nation's financial 
sector, and involved a determination of systemic risk by the Secretary 
of the Treasury after consultation with the President. The systemic 
risk determination allowed the FDIC to take certain actions to avoid or 
mitigate serious adverse effects on economic conditions and financial 
stability. The purpose of the TLGP is to promote financial stability by 
preserving confidence in the banking system and facilitating the flow 
of liquidity to creditworthy businesses and consumers, favorably 
impacting both the availability and cost of credit. Immediate issuance 
of this Interim Rule furthers the public interest by addressing the 
unprecedented disruption in credit markets, which remain largely closed 
to financial institutions unless their bonds and notes carry an FDIC 
guarantee. For these same reasons, the FDIC finds good cause to publish 
this Interim Rule with an immediate effective date. See 5 U.S.C. 
553(d)(3).
    Although general notice and opportunity for public comment are not 
required prior to the effective date, the FDIC invites comments on all 
aspects of the Interim Rule, which the FDIC may revise if necessary or 
appropriate in light of the comments received.

B. Riegle Community Development and Regulatory Improvement Act

    The Riegle Community Development and Regulatory Improvement Act 
(RCDRIA) provides that any new regulations or amendments to regulations 
prescribed by a Federal banking agency that impose additional 
reporting, disclosures, or other new requirements on IDIs shall take 
effect on the first day of a calendar quarter which begins on or after 
the date on which the regulations are published in final form, unless 
the agency determines, for good cause published with the rule, that the 
rule should become effective before such time.\12\ For the same reasons 
discussed above, the FDIC finds that good cause exists for an immediate 
effective date for the Interim Rule.
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    \12\ 12 U.S.C. 4802.
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C. Small Business Regulatory Enforcement Fairness Act Not Finalized 
With OMB

    The Office of Management and Budget has previously determined that 
the Interim Rule is not a ``major rule'' within the meaning of the 
relevant sections of the Small Business Regulatory Enforcement Act of 
1996 (SBREFA), 5 U.S.C. 801 et seq. As required by SBREFA, the FDIC 
will file the appropriate reports with Congress and the Government 
Accountability Office so that the Interim Rule may be reviewed.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (Pub. L. 96-354, Sept. 19, 1980) 
(RFA) applies only to rules for which an agency publishes a general 
notice of proposed rule making pursuant to 5 U.S.C. 553(b). As 
discussed above, consistent with section 553(b)(B) of the APA, the FDIC 
has determined for good cause that general notice and opportunity for 
public comment would be impracticable and contrary to the public 
interest. Therefore, the RFA, pursuant to 5 U.S.C. 601(2), does not 
apply.

E. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.), an agency may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless it 
displays a currently valid Office of Management and Budget (OMB) 
control number. This Interim Rule contains new reporting requirements 
that modify an existing collection of information, entitled ``Temporary 
Liquidity Guarantee Program'' (OMB Control No. 3064-0166), and that 
have been submitted to OMB under emergency clearance procedures, with a 
request for clearance by March 17, 2009. The use of emergency clearance 
procedures is necessary to facilitate an orderly transition period for 
participating institutions to return to non-guaranteed funding and to 
reduce the potential for market disruption and sudden, unanticipated 
systemic risks to the nation's financial system when the TLGP ends. A 
limited four-month extension of the DGP should also help to enhance 
bank liquidity while the elements of the Treasury's proposed Financial 
Stability Plan are fully implemented. These new collections of 
information are necessary to give effect to the extension. 
Specifically, section 370.3(h)(1)(vi) requires other

[[Page 12082]]

participating entities that have not issued FDIC-guaranteed debt before 
April 1, 2009 and that wish to participate in the extended DGP to 
submit a written application to the FDIC. Any such application must be 
submitted on or before June 30, 2009. In addition, section 
370.3(h)(1)(vii) requires any participating entity that wishes to issue 
non-FDIC-guaranteed debt after June 30, 2009, to submit a written 
application to the FDIC. The estimated burden for the new applications 
is as follows:
    Title: Temporary Liquidity Guarantee Program.
    OMB Number: 3064-0166.
    Estimated Number of Respondents: Application to issue non-
guaranteed debt--1,000. Application by other participating entity that 
has not issued FDIC-guaranteed debt before April 1, 2009, to 
participate in the extended DGP--25.
    Frequency of Response: Application to issue non-guaranteed debt--
once. Application by other participating entity that has not issued 
FDIC-guaranteed debt before April 1, 2009, to participate in the 
extended DGP--once.
    Affected Public: Thrift holding companies, bank and financial 
holding companies, and affiliates of insured depository institutions.
    Average Time per Response: Application to issue non-guaranteed 
debt--2 hours. Application by other participating entity that has not 
issued FDIC-guaranteed debt before April 1, 2009, to participate in the 
extended DGP--2 hours.
    Estimated Annual Burden: Application to issue non-guaranteed debt--
2,000 hours. Application by other participating entity that has not 
issued FDIC-guaranteed debt before April 1, 2009, to participate in the 
extended DGP--50 hours.
    Previous Annual Burden--2,201,625 hours.
    Total New Burden--2,050.
    Total Annual Burden--2,203,675 hours.
    If the FDIC obtains OMB approval of its emergency clearance 
request, it will be followed by a request for clearance under normal 
procedures in accordance with the provisions of OMB regulation 5 CFR 
1320.10. In accordance with normal clearance procedures, public comment 
will be invited for an initial 60-day comment period and a subsequent 
30-day comment period on: (1) Whether these collections of information 
are necessary for the proper performance of the FDIC's functions, 
including whether the information has practical utility; (2) the 
accuracy of the estimates of the burden of the information collections, 
including the validity of the methodologies and assumptions used; (3) 
ways to enhance the quality, utility, and clarity of the information to 
be collected; and (4) ways to minimize the burden of the information 
collections on respondents, including through the use of automated 
collection techniques or other forms of information technology. All 
comments should refer to the name and number of the collection. 
Interested parties are invited to submit written comments by any of the 
following methods:
     https://www.FDIC.gov/regulations/laws/federal/propose.html.
     E-mail: comments@fdic.gov. Include the name and number of 
the collection in the subject line of the message.
     Mail: Leneta Gregorie (202-898-3719), Counsel, Federal 
Deposit Insurance Corporation, 550 17th Street, NW., Washington, DC 
20429.
     Hand Delivery: Comments may be hand-delivered to the guard 
station at the rear of the 550 17th Street Building (located on F 
Street), on business days between 7 a.m. and 5 p.m.
    A copy of the comment may also be submitted to the OMB Desk Officer 
for the FDIC, Office of Information and Regulatory Affairs, Office of 
Management and Budget, New Executive Office Building, Room 3208, 
Washington, DC 20503.

F. Solicitation of Comments on Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, 113 
Stat. 1338, 1471 (Nov. 12, 1999), requires the federal banking agencies 
to use plain language in all proposed and final rules published after 
January 1, 2000. The FDIC invites your comments on how to make this 
proposal easier to understand. For example:
     Has the FDIC organized the material to suit your needs? If 
not, how could this material be better organized?
     Are the requirements in the regulation clearly stated? If 
not, how could the regulation be more clearly stated?
     Does the regulation contain language or jargon that is not 
clear? If so, which language requires clarification?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the regulation easier to 
understand? If so, what changes to the format would make the regulation 
easier to understand?
     What else could the FDIC do to make the regulation easier 
to understand?

G. The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    The FDIC has determined that the interim rule will not affect 
family well-being within the meaning of section 654 of the Treasury and 

General Government Appropriations Act, enacted as part of the Omnibus 
Consolidated and Emergency and Emergency Supplemental Appropriations 
Act of 1999 (Pub. L. 105-277, 112 Stat. 2681).

List of Subjects in 12 CFR Part 370

    Banks, Banking, Bank deposit insurance, Holding companies, National 
banks, Reporting and recordkeeping requirements, Savings associations.

0
For the reasons stated in the preamble, the Federal Deposit Insurance 
Corporation amends part 370 of chapter III of Title 12 of the Code of 
Federal Regulations to read as follows:

PART 370--TEMPORARY LIQUIDITY GUARANTEE PROGRAM

0
1. The authority citation for part 370 continues to read as follows:

    Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818, 
1819(a)(Tenth), 1820(f), 1821(a), 1821(c), 1821(d), 1823(c)(4).


0
2. Amend Sec.  370.2 as follows:
0
a. Revise paragraph (f);
0
b. Revise paragraph (m) introductory text; and
0
c. Add a new paragraph (n) as follows:


Sec.  370.2  Definitions.

* * * * *
    (f) Newly issued senior unsecured debt. (1) The term ``newly issued 
senior unsecured debt'' means :
    (i) With respect to a participating entity that opted out of the 
debt guarantee program, senior unsecured debt that is issued on or 
after October 14, 2008, and on or before the date the entity opted out; 
and
    (ii) With respect to a participating entity that has not opted out 
of the debt guarantee program, senior unsecured debt that is issued 
during the issuance period.
    (2) The term ``newly issued senior unsecured debt'' includes, 
without limitation, senior unsecured debt
    (i) That matures and is renewed during the issuance period; or
    (ii) That is issued during such period pursuant to a shelf 
registration, regardless of the date of creation of the shelf 
registration.
* * * * *
    (m) Mandatory convertible debt. The term ``mandatory convertible 
debt''

[[Page 12083]]

means senior unsecured debt that is required by the terms of the debt 
instrument to convert into common shares of the issuing entity on a 
fixed and specified date, on or before the expiration of the guarantee, 
unless the issuing entity:
* * * * *
    (n) Issuance period. The term ``issuance period'' means
    (1) With respect to the issuance, by a participating entity that is 
either an insured depository institution, an entity that has issued 
FDIC-guaranteed debt before April 1, 2009, or an entity that has been 
approved pursuant to Sec.  370.3(h) to issue FDIC-guaranteed debt after 
June 30, 2009 and on or before October 31, 2009, of:
    (i) Mandatory convertible debt, the period from February 27, 2009 
to and including October 31, 2009, and
    (ii) All other senior unsecured debt, the period from October 14, 
2008 to and including October 31, 2009; and
    (2) With respect to the issuance, by any other participating 
entity, of
    (i) Mandatory convertible debt, the period from February 27, 2009 
to and including June 30, 2009, and
    (ii) All other senior unsecured debt, the period from October 14, 
2008 to and including June 30, 2009.

0
3. Amend Sec.  370.3 as follows:
0
a. Revise the introductory text of paragraph (c);
0
b. Revise paragraph (d);
0
c. Revise paragraph (e)(3);
0
d. Revise paragraphs (h)(1)(i) and (h)(1)(v) and add new paragraphs 
(h)(1)(vi) and (h)(1)(vii);
0
e. Revise paragraph (h)(2);
0
f. Revise paragraph (h)(3);
0
g. Revise paragraph (h)(4);
0
h. Revise paragraph (h)(5);
0
i. Add a new paragraph (h)(6);
0
j. Revise paragraph (i); and
0
k. Add a new paragraph (j) as follows:


Sec.  370.3  Debt Guarantee Program.

* * * * *
    (c) Calculation and reporting responsibility. Participating 
entities are responsible for calculating and reporting to the FDIC the 
amount of senior unsecured debt as defined in Sec.  370.2(e)(1)(i) as 
of September 30, 2008.
* * * * *
    (d) Expiration of Guarantee.
    (1) With respect to debt that is issued before April 1, 2009 by any 
participating entity, the guarantee expires on the earliest of the 
mandatory conversion date for mandatory convertible debt, the maturity 
date of the debt, or June 30, 2012.
    (2) With respect to debt that is issued on or after April 1, 2009 
by a participating entity that is either an insured depository 
institution, a participating entity that has issued guaranteed debt 
before April 1, 2009, or a participating entity that has been approved 
pursuant to paragraph (h) of this section to issue guaranteed debt 
after June 30, 2009 and on or before October 31, 2009, the guarantee 
expires on the earliest of the mandatory conversion date for mandatory 
convertible debt, the maturity date of the debt, or December 31, 2012.
    (3) With respect to guaranteed debt that is issued on or after 
April 1, 2009 by a participating entity other than an entity described 
in paragraph (d)(2) of this section, the guarantee expires on the 
earliest of the mandatory conversion date for mandatory convertible 
debt, the maturity date of the debt, or on June 30, 2012.
    (e) * * *
* * * * *
    (3) The issuing entity has had its participation in the debt 
guarantee program terminated by the FDIC or is not a participating 
entity;
* * * * *
    (h) * * *
    (1) * * *
    (i) A request by a participating entity to establish, increase, or 
decrease its debt guarantee limit,
* * * * *
    (v) A request by a participating entity to issue FDIC-guaranteed 
mandatory convertible debt,
    (vi) A request by a participating entity that is neither an insured 
depository institution nor an entity that has issued FDIC-guaranteed 
debt before April 1, 2009, to issue FDIC-guaranteed debt after June 30, 
2009 and on or before October 31, 2009, and
    (vii) A request by a participating entity to issue senior unsecured 
non-guaranteed debt after June 30, 2009.
    (2) Each letter application must describe the details of the 
request, provide a summary of the applicant's strategic operating plan, 
describe the proposed use of the debt proceeds, and
    (i) With respect to an application for approval of the issuance of 
mandatory convertible debt, must also include:
    (A) The proposed date of issuance,
    (B) The total amount of the mandatory convertible debt to be 
issued,
    (C) The mandatory conversion date,
    (D) The conversion rate (i.e., the total number of shares of common 
stock that will result from the conversion divided by the total dollar 
amount of the mandatory convertible debt to be issued),
    (E) Confirmation that all applications and all notices required 
under the Bank Holding Company Act of 1956, as amended, the Home 
Owners' Loan Act, as amended, or the Change in Bank Control Act, as 
amended, have been submitted to the applicant's appropriate Federal 
banking agency in connection with the proposed issuance, and
    (F) Any other relevant information that the FDIC deems appropriate;
    (ii) With respect to an application pursuant to paragraph 
(h)(1)(vi) of this section to extend the period for issuance of FDIC-
guaranteed debt to and including October 31, 2009, the entity's plans 
for the retirement of the guaranteed debt, a description of the 
entity's financial history, current condition, and future prospects, 
and any other relevant information that the FDIC deems appropriate; and
    (iii) With respect to an application pursuant to paragraph 
(h)(1)(vii) of this section to issue senior unsecured non-guaranteed 
debt, a summary of the applicant's strategic operating plan and the 
entity's plans for the retirement of any guaranteed debt.
    (3) In addition to any other relevant factors that the FDIC deems 
appropriate, the FDIC will consider the following factors in evaluating 
applications filed pursuant to paragraph (h) of this section:
    (i) For applications pursuant to paragraphs (h)(1)(i), (h)(1)(ii), 
(h)(1)(iii), and (h)(1)(v) of this section: The proposed use of the 
proceeds; the financial condition and supervisory history of the 
eligible/surviving entity;
    (ii) For applications pursuant to paragraph (h)(1)(iv) of this 
section: The proposed use of the proceeds; the extent of the financial 
activity of the entities within the holding company structure; the 
strength, from a ratings perspective of the issuer of the obligations 
that will be guaranteed; the size and extent of the activities of the 
organization;
    (iii) For applications pursuant to paragraph (h)(1)(vi) of this 
section: The proposed use of the proceeds; the entity's plans for the 
retirement of the guaranteed debt, the entity's financial history, 
current condition, future prospects, capital, management, and the risk 
presented to the FDIC, and
    (iv) For applications pursuant to paragraph (h)(1)(vii) of this 
section: The entity's plans for the retirement of the guaranteed debt.
    (4) Applications required under this part must be in letter form 
and addressed to the Director, Division of Supervision and Consumer 
Protection, Federal Deposit Insurance Corporation, 550 17th Street, 
NW., Washington, DC 20429.
    (5) The filing deadlines for certain applications are:

[[Page 12084]]

    (i) At the same time the merger application is filed with the 
appropriate Federal banking agency, for an application pursuant to 
paragraph (h)(1)(iii) of this section (which must include a copy of the 
merger application);
    (ii) October 31, 2009, for an application pursuant to paragraph 
(h)(1)(v) of this section that is filed by a participating entity that 
is either an insured depository institution, an entity that has issued 
FDIC-guaranteed debt before April 1, 2009, or an entity that has been 
approved pursuant to paragraph (h) of this section to issue FDIC-
guaranteed debt after June 30, 2009 and on or before October 31, 2009;
    (iii) June 30, 2009, for an application pursuant to paragraph 
(h)(1)(v) of this section that is filed by a participating entity other 
than an entity described in paragraph (h)(5)(ii) of this section; and
    (iv) June 30, 2009, for an application pursuant to paragraph 
(h)(1)(vi).
    (6) In granting its approval of an application filed pursuant to 
paragraph (h) of this section the FDIC may impose any conditions it 
deems appropriate, including without limitation, a requirement that the 
issuer
    (i) Hedge any foreign currency risk, or
    (ii) Pledge collateral to secure the issuer's obligation to 
reimburse the FDIC for any payments made pursuant to the guarantee.
    (i) Time limits on issuance of guaranteed debt.
    (1) A participating entity that is either an insured depository 
institution, an entity that has issued FDIC-guaranteed debt before 
April 1, 2009, or an entity that has been approved pursuant to 
paragraph (h) of this section to issue FDIC-guaranteed debt after June 
30, 2009 and on or before October 31, 2009, may issue FDIC-guaranteed 
debt under the debt guarantee program through and including October 31, 
2009.
    (2) A participating entity other than an entity described in 
paragraph (i)(1) of this section may issue FDIC-guaranteed debt under 
the debt guarantee program through and including June 30, 2009.
    (j) Issuance of non-guaranteed debt after June 30, 2009.
    (1) After obtaining the FDIC's prior written approval to issue non-
guaranteed debt pursuant to paragraph (h)(1) of this section, any 
participating entity that has elected pursuant to paragraph (g) of this 
section to issue senior unsecured non-guaranteed debt with maturities 
after June 30, 2012 and that has paid the fee provided in Sec.  
370.6(f), may issue after June 30, 2009 senior unsecured non-guaranteed 
debt in any amount with maturities on or before June 30, 2012. A 
participating entity that has both made the election provided by 
paragraph (g) of this section and paid the fee provided by Sec.  
370.6(f) does not need the FDIC's approval to issue senior unsecured 
non guaranteed debt that matures after June 30, 2012.
    (2) After obtaining the FDIC's prior written approval to issue non-
guaranteed debt pursuant to paragraph (h)(1) of this section, any 
participating entity, other than an entity described in paragraph 
(j)(1) of this section, may issue after June 30, 2009 senior unsecured 
non-guaranteed debt in any amount with any maturity.

0
4. Amend Sec.  370.5 as follows:
0
a. Revise paragraph (b)(1);
0
b. Revise paragraph (f); and
0
c. Revise paragraphs (h)(2), (h)(3), (h)(4) and (h)(5) as follows:


Sec.  370.5  Participation.

* * * * *
    (b) * * *
    (1) Bound by the terms and conditions of the program, including 
without limitation, assessments and the terms of the Master Agreement 
as set forth on the FDIC's Web site;
* * * * *
    (f) Except as provided in paragraphs (g) and (j) of Sec.  370.3, 
participating entities are not permitted to select which newly issued 
senior unsecured debt is guaranteed debt; all senior unsecured debt 
issued by a participating entity up to its debt guarantee limit must be 
issued and identified as FDIC-guaranteed debt as and when issued.
* * * * *
    (h) * * *
    (2) Each participating entity that is either an insured depository 
institution, an entity that has issued FDIC-guaranteed debt before 
April 1, 2009, or an entity that has been approved pursuant to Sec.  
370.3(h) to issue FDIC-guaranteed debt after June 30, 2009 and on or 
before October 31, 2009 must include the following disclosure statement 
in all written materials provided to lenders or creditors regarding any 
senior unsecured debt that is issued by it during the applicable 
issuance period and that is guaranteed under the debt guarantee 
program:

    This debt is guaranteed under the Federal Deposit Insurance 
Corporation's Temporary Liquidity Guarantee Program and is backed by 
the full faith and credit of the United States. The details of the 
FDIC guarantee are provided in the FDIC's regulations, 12 CFR Part 
370, and at the FDIC's Web site, https://www.fdic.gov/tlgp. [If the 
debt being issued is mandatory convertible debt, add: The expiration 
date of the FDIC's guarantee is the earlier of the mandatory 
conversion date or December 31, 2012.] [If the debt being issued is 
any other senior unsecured debt, add: The expiration date of the 
FDIC's guarantee is the earlier of the maturity date of the debt or 
December 31, 2012.]

    (3) Each participating entity other than an entity described in 
paragraph (h)(2) of this section must include the following disclosure 
statement in all written materials provided to lenders or creditors 
regarding any senior unsecured debt that is issued by it during the 
applicable issuance period and that is guaranteed under the debt 
guarantee program:

    This debt is guaranteed under the Federal Deposit Insurance 
Corporation's Temporary Liquidity Guarantee Program and is backed by 
the full faith and credit of the United States. The details of the 
FDIC guarantee are provided in the FDIC's regulations, 12 CFR Part 
370, and at the FDIC's Web site, https://www.fdic.gov/tlgp. [If the 
debt being issued is mandatory convertible debt, add: The expiration 
date of the FDIC's guarantee is the earlier of the mandatory 
conversion date or June 30, 2012. [If the debt being issued is any 
other senior unsecured debt, add: The expiration date of the FDIC's 
guarantee is the earlier of the maturity date of the debt or June 
30, 2012.]

    (4) Each participating entity must include the following disclosure 
statement in all written materials provided to lenders or creditors 
regarding any senior unsecured debt issued by it during the applicable 
issuance period that is not guaranteed under the debt guarantee 
program:

    This debt is not guaranteed under the Federal Deposit Insurance 
Corporation's Temporary Liquidity Guarantee Program.

    (5) Each insured depository institution that offers noninterest-
bearing transaction accounts must post a prominent notice in the lobby 
of its main office, each domestic branch and, if it offers Internet 
deposit services, on its Web site clearly indicating whether the 
institution is participating in the transaction account guarantee 
program. If the institution is participating in the transaction account 
guarantee program, the notice must state that funds held in 
noninterest-bearing transactions accounts at the entity are guaranteed 
in full by the FDIC.
    (i) These disclosures must be provided in simple, readily 
understandable text. Sample disclosures are as follows:

For Participating Institutions

    [Institution Name] is participating in the FDIC's Transaction 
Account Guarantee Program. Under that program, through December 31, 
2009, all noninterest-bearing transaction accounts are fully 
guaranteed by the FDIC for the entire amount in the account. 
Coverage under the Transaction Account Guarantee Program is in 
addition to and separate from the coverage available

[[Page 12085]]

under the FDIC's general deposit insurance rules.

For Non-Participating Institutions

    [Institution Name] has chosen not to participate in the FDIC's 
Transaction Account Guarantee Program. Customers of [Institution 
Name] with noninterest-bearing transaction accounts will continue to 
be insured through December 31, 2009 for up to $250,000 under the 
FDIC's general deposit insurance rules.

    (ii) If the institution uses sweep arrangements or takes other 
actions that result in funds being transferred or reclassified to an 
account that is not guaranteed under the transaction account guarantee 
program, for example, an interest-bearing account, the institution must 
disclose those actions to the affected customers and clearly advise 
them, in writing, that such actions will void the FDIC's guarantee with 
respect to the swept, transferred, or reclassified funds.
* * * * *

0
5. Amend Sec.  370.6 as follows:
0
a. Revise paragraph (c)(2);
0
b. Revise paragraphs (d)(1) introductory text, (d)(2), and the first 
sentence of paragraph (d)(3);
0
c. Revise paragraph (d)(4); and
0
d. Add new paragraphs (g)(4) and (h) as follows:


Sec.  370.6  Assessments under the Debt Guarantee Program.

* * * * *
    (c) * * *
    (2) Beginning on December 6, 2008, on all senior unsecured debt, as 
defined in paragraphs (e)(1)(ii) or (e)(1)(iii) of Sec.  370.2, issued 
by it on or after December 6, 2008.
    (d) * * *
    (1) Calculation of assessment. Subject to paragraphs (d)(3) and (h) 
of this section, the amount of assessment will be determined by 
multiplying the amount of FDIC-guaranteed debt times the term of the 
debt or, in the case of mandatory convertible debt, the time period 
from issuance to the mandatory conversion date, times an annualized 
assessment rate determined in accordance with the following table.
* * * * *
    (2) If the debt being issued has a maturity date that occurs after 
the expiration date of the guarantee, the expiration date of the 
guarantee instead of the maturity date will be used to calculate the 
assessment.
    (3) The amount of assessment for a participating entity, other than 
an insured depository institution, that controls, directly or 
indirectly, or is otherwise affiliated with, at least one insured 
depository institution will be determined by multiplying the amount of 
FDIC-guaranteed debt times the term of the debt or, in the case of 
mandatory convertible debt, the time period from issuance to the 
mandatory conversion date, times an annualized assessment rate 
determined in accordance with the rates set forth in the table in 
paragraph (d)(1) of this section, except that each such rate shall be 
increased by 10 basis points, if the combined assets of all insured 
depository institutions affiliated with such entity constitute less 
than 50 percent of consolidated holding company assets. * * *
    (4) Assessment Invoicing. As soon as the participating entity 
provides notice as required in paragraph (b) of this section, the 
invoice for the appropriate fee will be automatically generated and 
posted on FDICconnect for the account associated with the participating 
entity, and the time limits for providing payment in paragraph (g) of 
this section will apply.
* * * * *
    (g) * * *
    (4) For purposes of this paragraph (g) of this section, assessments 
shall include all applicable surcharges imposed pursuant to paragraph 
(h) of this section.
    (h) Surcharges on assessments.
    (1) For FDIC-guaranteed debt that has a time period to conversion 
(in the case of mandatory convertible debt) or a maturity of one year 
or more, that is issued on or after April 1, 2009 and on or before June 
30, 2009, and that matures or converts on or before June 30, 2012, the 
assessment rate provided in the table in paragraph (d)(1) of this 
section shall be increased by:
    (i) 10 basis points for such debt that is issued by a participating 
entity that is an insured depository institution, and
    (ii) 20 basis points for such debt that is issued by any other 
participating entity.
    (2) For FDIC-guaranteed debt that has a time period to conversion 
(in the case of mandatory convertible debt) or a maturity of one year 
or more, and that is either issued on or after April 1, 2009 with a 
maturity or conversion date after June 30, 2012, or issued after June 
30, 2009, the assessment rate provided in the table in paragraph (d)(1) 
of this section shall be increased by
    (i) 25 basis points for such debt that is issued by a participating 
entity that is an insured depository institution, and
    (ii) 50 basis points for such debt that is issued by any other 
participating entity.

0
6. Revise Sec.  370.8 to read as follows:


Sec.  370.8  Systemic risk emergency special assessment to recover 
loss.

    To the extent that the assessments provided under Sec.  370.6 or 
Sec.  370.7, other than the surcharges provided in Sec.  370.6(h), are 
insufficient to cover any loss or expenses arising from the temporary 
liquidity guarantee program, the Corporation shall impose an emergency 
special assessment on insured depository institutions as provided under 
12 U.S.C. 1823(c)(4)(G)(ii) of the FDI Act.

0
7. Revise Sec.  370.9 to read as follows:


Sec.  370.9  Recordkeeping requirements.

    The FDIC will establish procedures, require reports, and require 
participating entities to provide and preserve any information needed 
for the operation and supervision of this program.

0
8. Revise Sec.  370.12(b)(2) to read as follows:


Sec.  370.12  Payment on the guarantee.

* * * * *
    (b) * * *.
    (2) Method of payment. Upon the occurrence of a payment default, 
the FDIC shall satisfy its guarantee obligation by making scheduled 
payments of principal and interest pursuant to the terms of the debt 
instrument through maturity (without regard to default or penalty 
provisions). For purposes of mandatory convertible debt, principal 
payment shall be limited to amounts paid by holders under the issuance. 
The FDIC may in its discretion, at any time after the expiration of the 
guarantee period, elect to make a final payment of all outstanding 
principal and interest due under a guaranteed debt instrument whose 
maturity extends beyond that date. In such case, the FDIC shall not be 
liable for any prepayment penalty.
* * * * *

    Dated at Washington, DC, this 17th day of March, 2009.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. E9-6115 Filed 3-20-09; 8:45 am]
BILLING CODE 6714-01-P