Amendment of the Debt Guarantee Program To Provide for the Establishment of a Limited Six-Month Emergency Guarantee Facility, 54743-54749 [E9-25555]

Download as PDF 54743 Rules and Regulations Federal Register Vol. 74, No. 204 Friday, October 23, 2009 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. Prices of new books are listed in the first FEDERAL REGISTER issue of each week. FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 370 RIN 3064–AD37 Amendment of the Debt Guarantee Program To Provide for the Establishment of a Limited Six-Month Emergency Guarantee Facility CPrice-Sewell on DSKGBLS3C1PROD with RULES AGENCY: Federal Deposit Insurance Corporation (FDIC). ACTION: Final rule. SUMMARY: To ensure an orderly phaseout of the Debt Guarantee Program (DGP), a component of the Temporary Liquidity Guarantee Program (TLGP), the FDIC is establishing a limited emergency guarantee facility. For most insured depository institutions and other entities participating in the DGP, the Debt Guarantee Program will conclude on October 31, 2009, with the FDIC’s guarantee expiring no later than December 31, 2012. To the extent that certain of those entities become unable to issue non-guaranteed debt to replace maturing senior unsecured debt because of market disruptions or other circumstances beyond their control, the emergency guarantee facility will be available on an application basis. In order to utilize the emergency guarantee facility, an entity must apply to, and receive prior approval from, the FDIC. If the application is approved, the FDIC will guarantee the applicant’s senior unsecured debt issued on or before April 30, 2010. Debt guaranteed under the emergency guarantee facility will be subject to an annualized assessment rate equal to a minimum of 300 basis points. DATES: The final rule becomes effective on October 23, 2009. FOR FURTHER INFORMATION CONTACT: (For questions or comments related to applications) Lisa D. Arquette, Associate Director, Division of Supervision and Consumer Protection, VerDate Nov<24>2008 13:34 Oct 22, 2009 Jkt 220001 (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; A. Ann Johnson, Counsel, Legal Division, (202) 898–3573 or aajohnson@fdic.gov; Ryan K. Clougherty, Senior Attorney, Legal Division, (202) 898–3843 or rclougherty@fdic.gov; or Robert C. Fick, Counsel, Legal Division, (202) 898–8962 or rfick@fdic.gov. SUPPLEMENTARY INFORMATION: 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).1 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 the credit markets and the resultant difficulty of many financial institutions to obtain funds and to make loans to creditworthy borrowers. On October 23, 2008, the FDIC’s Board of Directors (Board) authorized the publication in the Federal Register of an interim rule that outlined the structure of the TLGP.2 Designed to assist in the stabilization of the nation’s financial system, the FDIC’s TLGP is composed of two distinct components: The DGP and the Transaction Account Guarantee Program (TAG program). Under the DGP, the FDIC guarantees certain senior unsecured debt issued by participating entities. Under the TAG program, the FDIC guarantees all funds held in qualifying noninterest-bearing transaction accounts at participating insured depository institutions (IDIs).3 The DGP initially permitted participating entities to issue FDICguaranteed senior unsecured debt until June 30, 2009, with the FDIC’s guarantee for such debt to expire on the earlier of the maturity of the debt (or the conversion date, for mandatory convertible debt) or June 30, 2012. To reduce the potential for market disruptions at the conclusion of the DGP and to begin the orderly phase-out of the program, on May 29, 2009 the Board issued a final rule that extended for four months the period during which certain participating entities could issue FDICguaranteed debt.4 All IDIs and those other participating entities that had issued FDIC-guaranteed debt on or before April 1, 2009 were permitted to participate in the extended DGP without application to the FDIC. Other participating entities that received approval from the FDIC also were permitted to participate in the extended DGP. The expiration of the guarantee period was also extended from June 30, 2012 to December 31, 2012. As a result, all such participating entities were permitted to issue FDIC-guaranteed debt through and including October 31, 2009, with the FDIC’s guarantee expiring on the earliest of the debt’s mandatory conversion date (for mandatory convertible debt), the stated maturity date, or December 31, 2012. With over $600 billion in guaranteed debt having been issued by 118 entities, the TLGP has been an important factor in restoring liquidity and confidence in the banking system. The program enabled banking organizations to meet financing needs at affordable terms during a period of system-wide turmoil. Recently, credit and liquidity conditions have become less stressed. Narrowing 1 See Section 13(c)(4)(G) of the Federal Deposit Insurance Act (FDI Act), 12 U.S.C. 1823(c)(4)(G). The determination of systemic risk triggered the FDIC’s authority—‘‘in its sole discretion and upon such terms and conditions as the [FDIC’s] Board of Directors may prescribe—to take actions to avoid or mitigate serious adverse effects on economic conditions or financial stability.’’ See also Section 9(a) Tenth of the FDI Act, 12 U.S.C. 1819(a)Tenth. The FDIC implemented the TLGP in response. 2 73 FR 64179 (October 29, 2008). This interim rule was finalized and a final rule was published in the Federal Register on November 26, 2008. 73 FR 72244 (November 26, 2008). 3 On June 23, 2009, the Board proposed two alternatives for phasing out the TAG. The first alternative provided that the TAG would expire on December 31, 2009, as required by the terms of the existing rule. The second alternative provided for a limited six-month extension to that program. Following consideration of the comments submitted in response to the two alternatives, on August 26, 2009, the Board adopted and approved for publication in the Federal Register a final rule providing for a six-month extension of the TAG program, through June 30, 2010. See 74 FR 45093 (September 1, 2009). 4 74 FR 26521 (June 3, 2009). PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 E:\FR\FM\23OCR1.SGM 23OCR1 54744 Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / Rules and Regulations spreads on both TLGP debt and nonguaranteed debt indicate that access to funding has improved. Only a few entities have issued TLGP debt during the extended DGP period, and recently several banking organizations have successfully issued non-guaranteed debt. The total amount of FDICguaranteed debt outstanding as of October 1, 2009 under the TLGP is $300 billion. Noting the evidence that the domestic credit and liquidity markets are beginning to normalize, on September 9, 2009, the Board authorized publication of a Notice of Proposed Rulemaking that proposed two alternatives for concluding the DGP.5 II. The Notice of Proposed Rulemaking The Notice of Proposed Rulemaking (Proposed Rule) presented two alternatives for concluding the FDIC’s guarantee of senior unsecured debt under the DGP, Alternative A and Alternative B. CPrice-Sewell on DSKGBLS3C1PROD with RULES A. Alternative A Alternative A would have preserved the expiration dates for the issuance periods and for the duration of the guarantees under the DGP. Thus, all IDIs participating in the DGP and other participating entities that had either (i) issued guaranteed debt before April 1, 2009, or (ii) had not issued guaranteed debt before April 1, 2009, but had received the FDIC’s permission to issue guaranteed debt through October 31, 2009 would be permitted to issue FDICguaranteed senior unsecured debt through October 31, 2009. The FDIC’s guarantee for such debt issuances would expire no later than December 31, 2012. B. Alternative B Like Alternative A, Alternative B provided that the basic DGP would expire as structured under the existing regulation. However, Alternative B also proposed the establishment of a limited, six-month emergency guarantee facility upon expiration of the DGP on October 31, 2009. The emergency guarantee facility under Alternative B was intended to address a participating entity’s inability to replace maturing senior unsecured debt with non-guaranteed debt as a result of market disruptions or other circumstances beyond the control of the participating entity. Under this emergency guarantee facility, certain participating entities could apply to the FDIC for permission to issue FDICguaranteed debt after October 31, 2009. If the FDIC approved an entity’s request, 5 74 FR 47489 (September 16, 2009). VerDate Nov<24>2008 13:34 Oct 22, 2009 Jkt 220001 the FDIC would guarantee the entity’s senior unsecured debt issued after October 31, 2009, through and including April 30, 2010. Any such approval would be subject to such restrictions and conditions as the FDIC deemed appropriate including, but not limited to, a pledge of collateral, and limitations on executive compensation, bonuses, or the payment of dividends. Under Alternative B, the FDIC would assess a fee using an annualized assessment rate equal to at least 300 basis points on any FDIC-guaranteed debt issued by entities under the emergency guarantee facility. The FDIC would reserve the right to increase the assessment rate on a caseby-case basis, depending upon the risks presented by the issuing entity. The FDIC’s guarantee of principal and interest payments for senior unsecured debt issuances approved under the emergency guarantee facility would extend through the earliest of the mandatory conversion date (for mandatory convertible debt), the stated maturity date, or December 31, 2012. Under Alternative B, all of the terms and provisions of the FDIC’s guarantee under the DGP would apply to such debt except as amended by the final rule. Further, under Alternative B, there would be no effect on any conditions that the FDIC may have placed on the issuance of debt by an IDI or other entity participating in the DGP. Any IDI participating in the DGP and any other entity participating in the DGP that has issued FDIC-guaranteed debt by September 9, 2009, would be permitted to apply to use this emergency guarantee facility. III. Summary of Comments Received The FDIC requested comments on all aspects of the Proposed Rule. The FDIC specifically requested that commenters indicate a preference for either Alternative A or Alternative B. The FDIC also sought comments on whether, under Alternative B, eligibility for the emergency guarantee facility should be limited to participating IDIs and to those other entities that had issued FDICguaranteed debt on or before September 9, 2009. In response to the request, the FDIC received four (4) comments from the following: One comment (1) from an individual; one comment (1) from an industry association; and two comments (2) from two separate groups of LL.M. candidates at a law school. A summary of the comments the FDIC received follows. The individual commenter expressed the belief that the DGP provides a valuable service and, therefore, should not be concluded as currently structured. The commenter noted that PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 the DGP has value as a support mechanism regardless of whether it is under-utilized. A banking industry association commented in support of Alternative B as the most appropriate phase-out of the DGP. Specifically, the association expressed support for allowing access to the emergency guarantee facility on a limited case-by-case basis for emergency circumstances. The association also noted that domestic credit and liquidity markets have begun to normalize and the number of entities issuing debt under the DGP has decreased. The association expressed the opinion that access to the emergency guarantee facility should be limited to IDIs or other entities that have issued FDICguaranteed senior unsecured debt on or before September 9, 2009. The association also supported a robust participation fee and noted that such a fee could both encourage a winding down of the DGP and generate increased TLGP revenue. The FDIC also received comment letters from two groups of law students. Both groups supported the adoption of Alternative B as the most appropriate phase-out of the DGP, and both also requested that any final rule provide the FDIC with the discretion to decrease the proposed 300 basis points assessment rate. The FDIC is establishing the emergency guarantee facility to serve as a mechanism to phase-out the DGP, it is not intended to encourage indefinite participation. The FDIC believes that establishing a 300 basis point minimum assessment rate will provide a more effective incentive for participating entities to wean themselves off of the FDIC’s guarantee program. Consequently, the FDIC has decided to retain the 300 basis point minimum assessment rate. Regarding access to the emergency guarantee facility, one student group supported restricting access to the emergency guarantee facility as proposed in Alternative B, noting that such a restriction would both provide an adequate safeguard against dependency and ensure that the facility is available only in severe circumstances. The second student group recommended that the FDIC expand the emergency guarantee facility eligibility to all financial institutions originally eligible under the DGP. This group asserted that expanding eligibility would protect the DIF, perpetuate the objectives of the TLGP, help deserving nonparticipating institutions avoid receivership, grant the FDIC greater discretion, and result in minimal additional costs to the FDIC. E:\FR\FM\23OCR1.SGM 23OCR1 CPrice-Sewell on DSKGBLS3C1PROD with RULES Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / Rules and Regulations As noted above, the FDIC is establishing the emergency guarantee facility to phase-out the DGP in an orderly manner. Expanding access to all entities originally eligible would be inconsistent with that goal. As a result, the FDIC believes that limiting the eligibility as provided in Alternative B is the more appropriate way to achieve the goal of the emergency guarantee facility. The two student groups also expressed a number of additional concerns regarding the proposed Alternative B. One group recommended that a final rule adopting Alternative B should include mandatory end-use restrictions, such as limitations on executive compensation. This group also recommended that the application requirements for access to the emergency guarantee facility include a statement identifying any changes from all prior plans for the retirement of FDIC-guaranteed debt that an applicant had submitted to the FDIC under the DGP. Moreover, this group recommended requiring that applications for the emergency guarantee facility include a business plan that states clear objectives for avoiding use of the emergency guarantee facility in the future. The second group expressed concern that Alternative B includes overly-broad language when describing the types of situations that would warrant granting access to the emergency guarantee facility. The group recommended that the FDIC provide clearer guidelines and principles outlining the kind of financial challenges that can be construed as stemming from market disruption. The group also recommended that the FDIC provide greater guidance on how participation in the emergency guarantee facility would impact the participant’s disclosures, raising the question of whether an applicant that has been denied access to the emergency guarantee facility must disclose the fact that it has been denied such access. The FDIC believes that the emergency guarantee facility as designed can adequately address the concerns underlying these suggestions. In order to be effective, the emergency guarantee facility must be available to handle a variety of adverse circumstances, including some that have not yet been encountered or even forseen. Providing too narrow a description of the circumstances when the facility would be available could limit its effectiveness. The FDIC also believes that imposing too many mandatory requirements could also be counterproductive. The FDIC needs flexibility in responding to VerDate Nov<24>2008 13:34 Oct 22, 2009 Jkt 220001 these situations. Since the FDIC can impose any condition it deems appropriate and can, of course, decide not to approve an entity’s use of the emergency guarantee facility, the FDIC believes that it has the ability to address these concerns and the flexibility to effectively respond to unforeseen circumstances. IV. The Final Rule The FDIC is adopting the proposal described in Alternative B as a final rule. As discussed below, the final rule will allow the basic DGP to expire on October 31, 2009 as currently structured. However, the final rule will also establish a limited six-month emergency guarantee facility upon the expiration of the basic DGP. The FDIC believes this approach provides the most appropriate phase-out of the basic DGP. A. Expiration of Debt Guarantee Program Under the final rule, the DGP will expire as currently structured under existing regulation. Thus, all IDI’s participating in the DGP and other participating entities that had either (i) issued guaranteed debt before April 1, 2009, or (ii) had not issued guaranteed debt before April 1, 2009, but had received FDIC’s permission to issue guaranteed debt through October 31, 2009, are permitted to issue FDICguaranteed senior unsecured debt through October 31, 2009. The FDIC’s guarantee for such debt issuances will expire no later than December 31, 2012. B. Emergency Guarantee Facility Additionally, the final rule establishes a limited six-month emergency guarantee facility upon the expiration of the basic DGP. The emergency guarantee facility addresses an entity’s inability to replace maturing senior unsecured debt with non-guaranteed debt as a result of market disruptions or other circumstances beyond the control of the participating entity. Under the final rule, the FDIC will guarantee senior unsecured debt issued after October 31, 2009, subject to the FDIC’s prior approval on a case-by-case basis, through April 30, 2010 by certain entities participating in the DGP; such guarantee will be subject to such restrictions and conditions that the FDIC deems appropriate. The duration of the FDIC’s guarantee of senior unsecured debt issuances approved under the emergency guarantee facility will extend through the earliest of the mandatory conversion date (for mandatory convertible debt), the stated maturity date, or December 31, 2012. All PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 54745 of the terms and provisions of the DGP that are not amended by this final rule will apply to such debt issuances. The final rule does not affect any conditions that the FDIC has placed on the issuance of debt by an IDI or other entity participating in the DGP. Any IDI participating in the DGP and any other entity participating in the DGP that has issued FDIC-guaranteed debt by September 9, 2009, is permitted to apply to use the emergency guarantee facility. i. Application Requirements for Participation in the Emergency Guarantee Facility The final rule requires prior approval by the FDIC before an entity may participate in the emergency guarantee facility. Applications to participate in the emergency guarantee facility must be submitted to the Director of the Division of Supervision and Consumer Protection on or before April 30, 2010. FDIC prior approval to participate in the emergency guarantee facility will be granted on a case-by-case basis subject to such terms and conditions as the FDIC deems appropriate. Under the final rule, participation in the emergency guarantee facility is limited. Only those eligible entities that demonstrate an inability to issue nonguaranteed debt to replace maturing senior unsecured debt as a result of market disruptions or other circumstances beyond the entity’s control may apply. The final rule requires that applications to participate in the emergency guarantee facility include the following: A projection of the sources and uses of funds through December 31, 2012; a summary of the entity’s contingency plans; a description of any collateral that the entity can make available to secure the entity’s obligation to reimburse the FDIC for any payments made pursuant to the guarantee; a description of the plans for retirement of the FDIC-guaranteed debt; a description of the market disruptions or other circumstances beyond the entity’s control that prevent the entity from replacing maturing debt with nonguaranteed debt; a description of management’s efforts to mitigate the effects of such disruptions or circumstances; conclusive evidence that demonstrates the entity’s inability to issue non-guaranteed debt; and any other relevant information that the FDIC deems appropriate. ii. Participation Fee Under the final rule, the FDIC will assess a fee equal to the amount of the debt to be guaranteed times the number of years (or portions thereof) from E:\FR\FM\23OCR1.SGM 23OCR1 54746 Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / Rules and Regulations issuance date through the earliest of the mandatory conversion date (for mandatory convertible debt), the stated maturity date, or December 31, 2012 times an assessment rate of at least 300 basis points on any guaranteed debt issued under the emergency guarantee facility. The FDIC reserves the right to increase the fee on a case-by-case basis, depending upon the risks presented by the issuing entity. The FDIC believes that the fee established under the final rule will provide an appropriate deterrent to applications based on other, less severe circumstances or concerns. Under the final rule, a participating entity may be required to pledge sufficient collateral to ensure the repayment of any principal and interest payments made by the FDIC under the emergency guarantee facility, subject to any other conditions and restrictions that the FDIC deems appropriate. Such conditions and restrictions may include, for example, limiting executive compensations, bonuses, or the payment of dividends. V. Regulatory Analysis and Procedure CPrice-Sewell on DSKGBLS3C1PROD with RULES A. Administrative Procedure Act The process of amending Part 370 by means of this final rule is governed by the Administrative Procedure Act (APA). 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 ‘‘as otherwise provided by the agency for good cause found and published with the rule.’’ 6 When it issued the interim rule and the final rule initially implementing the TLGP, the FDIC invoked this good cause exception based on the severe financial conditions that threatened the stability of the nation’s economy generally and the banking system in particular.7 Recently, credit and liquidity conditions have become less stressed. Narrowing spreads on both TLGP debt and nonguaranteed debt indicate that access to funding has improved. Only a few entities have issued TLGP debt during the extended DGP period, and recently several banking organizations have successfully issued non-guaranteed debt. In order to continue the orderly phase out of the basic DGP and to ensure that the creation of the emergency guarantee facility occurs at the conclusion of the basic DGP on October 31, 2009, the FDIC finds that good cause exists for an immediate effective date for the final rule. 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.8 For the same reasons as discussed above, the FDIC finds that good cause exists for an immediate effective date for the final rule. C. Small Business Regulator Enforcement Fairness Act The Office of Management and Budget (OMB) has determined that this final 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 appropriate reports with Congress and the Government Accountability Office. D. Regulatory Flexibility Act Under the Regulatory Flexibility Act (RFA), the FDIC must prepare a final regulatory flexibility analysis in connection with the promulgation of a final rule,9 or certify that the final rule will not have a significant economic impact on a substantial number of small entities.10 For purposes of the RFA analysis or certification, financial institutions with total assets of $175 million or less are considered to be ‘‘small entities.’’ For reasons discussed below, the FDIC certifies that the final rule will not have a significant economic impact on a substantial number of small entities. Currently, 4,394 IDIs participate in the DGP, of which approximately 2,120 (or approximately 48 percent) are small entities. Under the final rule, all 2,120 IDIs that would be considered small entities for purposes of this analysis are eligible to apply to access the emergency guarantee facility. As a result, the FDIC asserts that the final rule may affect a substantial number of IDIs that are small entities that participate in the DGP. Nevertheless, the FDIC has determined that the final rule’s 65 8 12 7 See 95 U.S.C. 553(d)(3). 74 FR 26521 (June 3, 2009) and 73 FR 72244 (Nov. 26, 2008). VerDate Nov<24>2008 13:34 Oct 22, 2009 Jkt 220001 U.S.C. 4802. U.S.C. 604. 10 5 U.S.C. 605(b). PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 economic impact on small entities will not be significant for the following reasons. The emergency guarantee facility is designed to be accessed on an emergency case-by-case basis by IDIs (and other entities that issued debt under the DGP) only if such entities are unable to replace maturing debt as a result of market disruptions or other circumstances beyond the entities’ control. Eighty-one IDIs have issued FDIC-guaranteed debt through the DGP since the program’s inception. It is unlikely that a significant number of IDIs (or other qualifying entities) would satisfy the requirements to issue FDICguaranteed debt during such emergency circumstances. Accordingly, the final rule will not have a significant economic impact on a substantial number of small entities. 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 OMB control number. This Final Rule implements Alternative B of the Notice of Proposed Rulemaking, which establishes an emergency guarantee facility to ensure an orderly phase-out of the debt guarantee component of the Temporary Liquidity Guarantee Program. Alternative B includes, in section 370.3(h)(viii), an application requirement for IDIs and non-IDIs wishing to access the emergency guarantee facility. In conjunction with publication of the Notice of Proposed Rulemaking, the FDIC submitted to OMB a request for clearance of the paperwork burden associated with the application requirement in Alternative B. That request is still pending. The proposed rule document requested comment on the estimated paperwork burden. However, none of the comments received addressed the estimated paperwork burden. Therefore, the FDIC has not altered its initial burden estimates. The estimated burden for the application requirement, as set forth in the Notice of Proposed Rulemaking and Final Rule, is as follows: Title: ‘‘Temporary Liquidity Guarantee Program—Emergency Guarantee Facility.’’ OMB Number: 3064—NEW. Estimated Number of Respondents: Application to access emergency guarantee facility submitted by IDIs—8. Application to access emergency guarantee facility submitted by non-IDIs that issued FDIC-guaranteed debt under the DGP—4. E:\FR\FM\23OCR1.SGM 23OCR1 CPrice-Sewell on DSKGBLS3C1PROD with RULES Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / Rules and Regulations Frequency of Response: Application to access emergency guarantee facility submitted by IDIs—once. Application to access emergency guarantee facility submitted by non-IDIs that issued FDIC-guaranteed debt under the DGP—once. Affected Public: IDIs; thrift holding companies, bank and financial holding companies, and affiliates of IDIs that issued debt under the DGP. Average Time per Response: Application to access emergency guarantee facility submitted by IDIs—4 hours. Application to access emergency guarantee facility submitted by non-IDIs that issued FDIC-guaranteed debt under the DGP—4 hours. Estimated Annual Burden: Application to access emergency guarantee facility submitted by IDIs—32 hours. Application to access emergency guarantee facility submitted by non-IDIs that issued FDIC-guaranteed debt under the DGP—16 hours. Total Annual Burden—48 hours. Comment Request: The FDIC has an ongoing interest in public comments on its collections of information, including comments on: (1) Whether this collection of information is 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 collection, 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 collection on respondents, including through the use of automated collection techniques or other forms of information technology. Comments may be submitted to the FDIC by any of the following methods: • http://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 VerDate Nov<24>2008 13:34 Oct 22, 2009 Jkt 220001 Executive Office Building, Room 3208, Washington, DC 20503. All comments should refer to the ‘‘Temporary Liquidity Guarantee Program— Emergency Guarantee Facility (OMB No. 3064—New)’’. F. Solicitation of Comments on Use of Plain Language Section 722 of the Gramm-LeachBliley 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. In issuing the Notice of Proposed Rulemaking the FDIC requested comment on how to make the regulation easier to understand. The FDIC received one comment in response to the request. The comment supported the FDIC’s use of plain language in the NPR. G. The Treasury and General Government Appropriations Act, 1999— Assessment of Federal Regulations and Policies on Families The FDIC has determined that the Final Rule will not affect family wellbeing within the measure of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated 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. ■ For the reasons discussed in the preamble, the Federal Deposit Insurance Corporation amends 12 CFR part 370 as follows: PART 370—TEMPORARY LIQUIDITY GUARANTEE PROGRAM 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). 2. Amend § 370.2 by revising paragraph (n) to read as follows: ■ § 370.2 Definitions. * * * * * (n) Issuance period. (1) Except as provided in paragraph (n)(2) of this section, the term ‘‘issuance period’’ means (i) 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 PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 54747 has been approved pursuant to § 370.3(h) to issue FDIC-guaranteed debt after June 30, 2009, and on or before October 31, 2009, of: (A) Mandatory convertible debt, the period from February 27, 2009, to and including October 31, 2009, and (B) All other senior unsecured debt, the period from October 14, 2008, to and including October 31, 2009; and (ii) With respect to the issuance, by any other participating entity, of (A) Mandatory convertible debt, the period from February 27, 2009, to and including June 30, 2009, and (B) All other senior unsecured debt, the period from October 14, 2008, to and including June 30, 2009. (2) The ‘‘issuance period’’ for a participating entity that has been approved to issue FDIC-guaranteed debt pursuant to § 370.3(k) of this part is the period after October 31, 2009, and on or before April 30, 2010. * * * * * ■ 3. Amend § 370.3 as follows: ■ a. Revise paragraph (d)(2); ■ b. Revise paragraphs (h)(1) through (h)(3), (h)(5), and (h)(6); and ■ c. Add paragraph (k), to read as follows: § 370.3 Debt Guarantee Program * * * * * (d) * * * (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, a participating entity that has been approved pursuant to § 370.3(h) to issue guaranteed debt after June 30, 2009, and on or before October 31, 2009, or a participating entity that has been approved pursuant to § 370.3(k) to issue guaranteed debt after 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. * * * * * (h) Applications for exceptions, eligibility, and issuance of certain debt. (1) The following requests require written application to the FDIC and the appropriate Federal banking agency of the entity or the entity’s lead affiliated insured depository institution: (i) A request by a participating entity to establish, increase, or decrease its debt guarantee limit, (ii) A request by an entity that becomes an eligible entity after October 13, 2008, for an increase in its presumptive debt guarantee limit of zero, E:\FR\FM\23OCR1.SGM 23OCR1 CPrice-Sewell on DSKGBLS3C1PROD with RULES 54748 Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / Rules and Regulations (iii) A request by a non-participating surviving entity in a merger transaction to opt in to either the debt guarantee program or the transaction account guarantee program, (iv) A request by an affiliate of an insured depository institution to participate in the debt guarantee program, (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, (vii) A request by a participating entity to issue senior unsecured nonguaranteed debt after June 30, 2009, and (viii) A request by a participating entity to issue FDIC-guaranteed debt after October 31, 2009 under the Emergency Guarantee Facility pursuant to paragraph (k) of this section. (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; (iii) With respect to an application pursuant to paragraph (h)(1)(vii) of this VerDate Nov<24>2008 13:34 Oct 22, 2009 Jkt 220001 section to issue senior unsecured nonguaranteed debt, a summary of the applicant’s strategic operating plan and the entity’s plans for the retirement of any guaranteed debt; and (iv) With respect to an application pursuant to paragraph (h)(1)(viii) of this section to issue FDIC-guaranteed debt under the Emergency Guarantee Facility, a projection of the sources and uses of funds through December 31, 2012, a summary of the entity’s contingency plans, a description of the collateral that an entity can make available to secure the entity’s obligation to reimburse the FDIC for any payments made pursuant to the guarantee, a description of the plans for retirement of the FDIC-guaranteed debt, a description of the market disruptions or other circumstances beyond the entity’s control that prevent the entity from replacing maturing debt with nonguaranteed debt, a description of management’s efforts to mitigate the effects of such disruptions or circumstances, conclusive evidence that demonstrates an entity’s inability to issue non-guaranteed debt, and any other relevant information. (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; (iv) For applications pursuant to paragraph (h)(1)(vii) of this section: The entity’s plans for the retirement of the guaranteed debt; and (v) For applications pursuant to paragraph (h)(1)(viii) of this section, the applicant’s strategic operating plan, the proposed use of the debt proceeds, the entity’s plans for the retirement of the FDIC-guaranteed debt, the entity’s PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 contingency plans, the nature and extent of the market disruptions or other circumstances beyond the entity’s control that prevent the entity from replacing maturing debt with nonguaranteed debt, the collateral that an entity can make available to secure the entity’s obligation to reimburse the FDIC for any payments made pursuant to the guarantee, management’s efforts to mitigate the effects of such conditions or circumstances, the evidence that demonstrates an entity’s inability to issue non-guaranteed debt, and the risk presented to the FDIC. * * * * * (5) The filing deadlines for certain applications are: (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; (iv) June 30, 2009, for an application pursuant to paragraph (h)(1)(vi); and (v) April 30, 2010, for applications pursuant to paragraph (h)(1)(viii). (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, requirements 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. (iii) Limit executive compensation and bonuses, and/or (iv) Limit or refrain from the payment of dividends. * * * * * (k) Emergency Guarantee Facility. In the event that a participating entity that is either an insured depository institution or an entity that has issued FDIC-guaranteed debt on or before September 9, 2009 is unable, after October 31, 2009, to issue non- E:\FR\FM\23OCR1.SGM 23OCR1 Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / Rules and Regulations guaranteed debt to replace maturing senior unsecured debt as a result of market disruptions or other circumstances beyond the entity’s control, the participating entity may, with the FDIC’s prior approval under paragraph (h) of this section, issue FDIC-guaranteed debt after October 31, 2009, and on or before April 30, 2010. Any such issuance is subject to all of the terms and conditions imposed by the FDIC in its approval decision as well as all of the provisions of this part, including without limitation, the payment of the applicable assessment and compliance with the disclosure requirements. * * * * * ■ 4. Amend § 370.5 as follows: ■ a. Revise paragraph (f); and ■ b. Revise paragraph (h)(2), to read as follows: § 370.5 Participation. CPrice-Sewell on DSKGBLS3C1PROD with RULES * * * * * (f) Except as provided in paragraphs (g), (j), and (k) of § 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 FDICguaranteed debt as and when issued. * * * * * (h) * * * (2) Each participating entity that is either an insured depository institution, an entity that has issued FDICguaranteed debt before April 1, 2009, an entity that has been approved pursuant to § 370.3(h) to issue FDIC-guaranteed debt after June 30, 2009, and on or before October 31, 2009, or a participating entity that has been approved pursuant to § 370.3(k) to issue FDIC-guaranteed debt after 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, http://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 VerDate Nov<24>2008 13:34 Oct 22, 2009 Jkt 220001 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.] * * * * * 5. Amend § 370.6 as follows: ■ a. Revise paragraph (d)(1); and ■ b. Add paragraph (i), to read as follows: 54749 DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 514 [Docket No. FDA–2009–N–0436] ■ § 370.6 Assessments under the Debt Guarantee Program. New Animal Drug Applications AGENCY: Food and Drug Administration, HHS. ACTION: Direct final rule. SUMMARY: The Food and Drug Administration (FDA) is amending the regulations regarding new animal drug applications (NADAs). Specifically, this direct final rule is being issued to provide that NADAs shall be submitted in the described form, as appropriate for the particular submission. Currently, the regulation requires that all NADAs contain the same informational sections and does not explicitly provide the appropriate flexibility needed to address the development of all types of new animal drug products. This amendment will allow the agency to appropriately review safety and effectiveness data submitted to support the approval of new animal drug products. FDA is amending the regulations in accordance with its direct final rule procedures. The For debt with a maturity or annualized Elsewhere in this issue of the Federal time period to conversion assessment Register, we are publishing a date of— rate (in basis companion proposed rule, under FDA’s points) is— usual procedure for notice-andcomment rulemaking, to provide a 180 days or less (excluding overnight debt) .................. 50 procedural framework to finalize the 181–364 days ....................... 75 rule in the event the agency receives any 365 days or greater .............. 100 significant adverse comments and withdraws this direct final rule. The companion proposed rule and this * * * * * direct final rule are substantively (i) Assessment for debt issued under identical. the Emergency Guarantee Facility. The DATES: This rule is effective March 8, amount of the assessment for FDIC2010. Submit written comments on or guaranteed debt issued pursuant to before January 6, 2010. If FDA receives § 370.3(k) of this part is equal to the amount of the debt times the term of the no significant adverse comments within the specified comment period, the debt (or in the case of mandatory agency will publish a document convertible debt, the time period to confirming the effective date of the final conversion) times an annualized rule in the Federal Register within 30 assessment rate of 300 basis points, or days after the comment period on this such greater rate as the FDIC may direct final rule ends. If timely determine in its decision approving significant adverse comments are such issuance. received, the agency will publish a By order of the Board of Directors. document in the Federal Register withdrawing this direct final rule before Dated at Washington, DC, this 20th day of October 2009. its effective date. Robert E. Feldman, ADDRESSES: You may submit comments, identified by Docket No. FDA–2009–N– Executive Secretary, Federal Deposit 0436 by any of the following methods: Insurance Corporation. Electronic Submissions [FR Doc. E9–25555 Filed 10–22–09; 8:45 am] Submit electronic comments in the BILLING CODE 6714–01–P following ways: * * * * * (d) Amount of assessments for debt within the debt guarantee limit (1) Calculation of assessment. Subject to paragraphs (d)(3) and (h) of this section, and except as provided in paragraph (i) of this section, the amount of assessment will be determined by multiplying the amount of FDICguaranteed 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. PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 E:\FR\FM\23OCR1.SGM 23OCR1

Agencies

[Federal Register Volume 74, Number 204 (Friday, October 23, 2009)]
[Rules and Regulations]
[Pages 54743-54749]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-25555]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
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Federal Register / Vol. 74, No. 204 / Friday, October 23, 2009 / 
Rules and Regulations

[[Page 54743]]



FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 370

RIN 3064-AD37


Amendment of the Debt Guarantee Program To Provide for the 
Establishment of a Limited Six-Month Emergency Guarantee Facility

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

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SUMMARY: To ensure an orderly phase-out of the Debt Guarantee Program 
(DGP), a component of the Temporary Liquidity Guarantee Program (TLGP), 
the FDIC is establishing a limited emergency guarantee facility. For 
most insured depository institutions and other entities participating 
in the DGP, the Debt Guarantee Program will conclude on October 31, 
2009, with the FDIC's guarantee expiring no later than December 31, 
2012. To the extent that certain of those entities become unable to 
issue non-guaranteed debt to replace maturing senior unsecured debt 
because of market disruptions or other circumstances beyond their 
control, the emergency guarantee facility will be available on an 
application basis. In order to utilize the emergency guarantee 
facility, an entity must apply to, and receive prior approval from, the 
FDIC. If the application is approved, the FDIC will guarantee the 
applicant's senior unsecured debt issued on or before April 30, 2010. 
Debt guaranteed under the emergency guarantee facility will be subject 
to an annualized assessment rate equal to a minimum of 300 basis 
points.

DATES: The final rule becomes effective on October 23, 2009.

FOR FURTHER INFORMATION CONTACT: (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; A. 
Ann Johnson, Counsel, Legal Division, (202) 898-3573 or 
aajohnson@fdic.gov; Ryan K. Clougherty, Senior Attorney, Legal 
Division, (202) 898-3843 or rclougherty@fdic.gov; or Robert C. Fick, 
Counsel, Legal Division, (202) 898-8962 or rfick@fdic.gov.

SUPPLEMENTARY INFORMATION:

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).\1\ 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 the credit markets and the 
resultant difficulty of many financial institutions to obtain funds and 
to make loans to creditworthy borrowers. On October 23, 2008, the 
FDIC's Board of Directors (Board) authorized the publication in the 
Federal Register of an interim rule that outlined the structure of the 
TLGP.\2\ Designed to assist in the stabilization of the nation's 
financial system, the FDIC's TLGP is composed of two distinct 
components: The DGP and the Transaction Account Guarantee Program (TAG 
program). Under the DGP, the FDIC guarantees certain senior unsecured 
debt issued by participating entities. Under the TAG program, the FDIC 
guarantees all funds held in qualifying noninterest-bearing transaction 
accounts at participating insured depository institutions (IDIs).\3\
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    \1\ See Section 13(c)(4)(G) of the Federal Deposit Insurance Act 
(FDI Act), 12 U.S.C. 1823(c)(4)(G). The determination of systemic 
risk triggered the FDIC's authority--``in its sole discretion and 
upon such terms and conditions as the [FDIC's] Board of Directors 
may prescribe--to take actions to avoid or mitigate serious adverse 
effects on economic conditions or financial stability.'' See also 
Section 9(a) Tenth of the FDI Act, 12 U.S.C. 1819(a)Tenth. The FDIC 
implemented the TLGP in response.
    \2\ 73 FR 64179 (October 29, 2008). This interim rule was 
finalized and a final rule was published in the Federal Register on 
November 26, 2008. 73 FR 72244 (November 26, 2008).
    \3\ On June 23, 2009, the Board proposed two alternatives for 
phasing out the TAG. The first alternative provided that the TAG 
would expire on December 31, 2009, as required by the terms of the 
existing rule. The second alternative provided for a limited six-
month extension to that program. Following consideration of the 
comments submitted in response to the two alternatives, on August 
26, 2009, the Board adopted and approved for publication in the 
Federal Register a final rule providing for a six-month extension of 
the TAG program, through June 30, 2010. See 74 FR 45093 (September 
1, 2009).
---------------------------------------------------------------------------

    The DGP initially permitted participating entities to issue FDIC-
guaranteed senior unsecured debt until June 30, 2009, with the FDIC's 
guarantee for such debt to expire on the earlier of the maturity of the 
debt (or the conversion date, for mandatory convertible debt) or June 
30, 2012.
    To reduce the potential for market disruptions at the conclusion of 
the DGP and to begin the orderly phase-out of the program, on May 29, 
2009 the Board issued a final rule that extended for four months the 
period during which certain participating entities could issue FDIC-
guaranteed debt.\4\ All IDIs and those other participating entities 
that had issued FDIC-guaranteed debt on or before April 1, 2009 were 
permitted to participate in the extended DGP without application to the 
FDIC. Other participating entities that received approval from the FDIC 
also were permitted to participate in the extended DGP. The expiration 
of the guarantee period was also extended from June 30, 2012 to 
December 31, 2012. As a result, all such participating entities were 
permitted to issue FDIC-guaranteed debt through and including October 
31, 2009, with the FDIC's guarantee expiring on the earliest of the 
debt's mandatory conversion date (for mandatory convertible debt), the 
stated maturity date, or December 31, 2012.
---------------------------------------------------------------------------

    \4\ 74 FR 26521 (June 3, 2009).
---------------------------------------------------------------------------

    With over $600 billion in guaranteed debt having been issued by 118 
entities, the TLGP has been an important factor in restoring liquidity 
and confidence in the banking system. The program enabled banking 
organizations to meet financing needs at affordable terms during a 
period of system-wide turmoil. Recently, credit and liquidity 
conditions have become less stressed. Narrowing

[[Page 54744]]

spreads on both TLGP debt and non-guaranteed debt indicate that access 
to funding has improved. Only a few entities have issued TLGP debt 
during the extended DGP period, and recently several banking 
organizations have successfully issued non-guaranteed debt. The total 
amount of FDIC-guaranteed debt outstanding as of October 1, 2009 under 
the TLGP is $300 billion.
    Noting the evidence that the domestic credit and liquidity markets 
are beginning to normalize, on September 9, 2009, the Board authorized 
publication of a Notice of Proposed Rulemaking that proposed two 
alternatives for concluding the DGP.\5\
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    \5\ 74 FR 47489 (September 16, 2009).
---------------------------------------------------------------------------

II. The Notice of Proposed Rulemaking

    The Notice of Proposed Rulemaking (Proposed Rule) presented two 
alternatives for concluding the FDIC's guarantee of senior unsecured 
debt under the DGP, Alternative A and Alternative B.

A. Alternative A

    Alternative A would have preserved the expiration dates for the 
issuance periods and for the duration of the guarantees under the DGP. 
Thus, all IDIs participating in the DGP and other participating 
entities that had either (i) issued guaranteed debt before April 1, 
2009, or (ii) had not issued guaranteed debt before April 1, 2009, but 
had received the FDIC's permission to issue guaranteed debt through 
October 31, 2009 would be permitted to issue FDIC-guaranteed senior 
unsecured debt through October 31, 2009. The FDIC's guarantee for such 
debt issuances would expire no later than December 31, 2012.

B. Alternative B

    Like Alternative A, Alternative B provided that the basic DGP would 
expire as structured under the existing regulation. However, 
Alternative B also proposed the establishment of a limited, six-month 
emergency guarantee facility upon expiration of the DGP on October 31, 
2009.
    The emergency guarantee facility under Alternative B was intended 
to address a participating entity's inability to replace maturing 
senior unsecured debt with non-guaranteed debt as a result of market 
disruptions or other circumstances beyond the control of the 
participating entity. Under this emergency guarantee facility, certain 
participating entities could apply to the FDIC for permission to issue 
FDIC-guaranteed debt after October 31, 2009. If the FDIC approved an 
entity's request, the FDIC would guarantee the entity's senior 
unsecured debt issued after October 31, 2009, through and including 
April 30, 2010. Any such approval would be subject to such restrictions 
and conditions as the FDIC deemed appropriate including, but not 
limited to, a pledge of collateral, and limitations on executive 
compensation, bonuses, or the payment of dividends. Under Alternative 
B, the FDIC would assess a fee using an annualized assessment rate 
equal to at least 300 basis points on any FDIC-guaranteed debt issued 
by entities under the emergency guarantee facility. The FDIC would 
reserve the right to increase the assessment rate on a case-by-case 
basis, depending upon the risks presented by the issuing entity. The 
FDIC's guarantee of principal and interest payments for senior 
unsecured debt issuances approved under the emergency guarantee 
facility would extend through the earliest of the mandatory conversion 
date (for mandatory convertible debt), the stated maturity date, or 
December 31, 2012. Under Alternative B, all of the terms and provisions 
of the FDIC's guarantee under the DGP would apply to such debt except 
as amended by the final rule. Further, under Alternative B, there would 
be no effect on any conditions that the FDIC may have placed on the 
issuance of debt by an IDI or other entity participating in the DGP. 
Any IDI participating in the DGP and any other entity participating in 
the DGP that has issued FDIC-guaranteed debt by September 9, 2009, 
would be permitted to apply to use this emergency guarantee facility.

III. Summary of Comments Received

    The FDIC requested comments on all aspects of the Proposed Rule. 
The FDIC specifically requested that commenters indicate a preference 
for either Alternative A or Alternative B. The FDIC also sought 
comments on whether, under Alternative B, eligibility for the emergency 
guarantee facility should be limited to participating IDIs and to those 
other entities that had issued FDIC-guaranteed debt on or before 
September 9, 2009. In response to the request, the FDIC received four 
(4) comments from the following: One comment (1) from an individual; 
one comment (1) from an industry association; and two comments (2) from 
two separate groups of LL.M. candidates at a law school. A summary of 
the comments the FDIC received follows.
    The individual commenter expressed the belief that the DGP provides 
a valuable service and, therefore, should not be concluded as currently 
structured. The commenter noted that the DGP has value as a support 
mechanism regardless of whether it is under-utilized.
    A banking industry association commented in support of Alternative 
B as the most appropriate phase-out of the DGP. Specifically, the 
association expressed support for allowing access to the emergency 
guarantee facility on a limited case-by-case basis for emergency 
circumstances. The association also noted that domestic credit and 
liquidity markets have begun to normalize and the number of entities 
issuing debt under the DGP has decreased. The association expressed the 
opinion that access to the emergency guarantee facility should be 
limited to IDIs or other entities that have issued FDIC-guaranteed 
senior unsecured debt on or before September 9, 2009. The association 
also supported a robust participation fee and noted that such a fee 
could both encourage a winding down of the DGP and generate increased 
TLGP revenue.
    The FDIC also received comment letters from two groups of law 
students. Both groups supported the adoption of Alternative B as the 
most appropriate phase-out of the DGP, and both also requested that any 
final rule provide the FDIC with the discretion to decrease the 
proposed 300 basis points assessment rate.
    The FDIC is establishing the emergency guarantee facility to serve 
as a mechanism to phase-out the DGP, it is not intended to encourage 
indefinite participation. The FDIC believes that establishing a 300 
basis point minimum assessment rate will provide a more effective 
incentive for participating entities to wean themselves off of the 
FDIC's guarantee program. Consequently, the FDIC has decided to retain 
the 300 basis point minimum assessment rate.
    Regarding access to the emergency guarantee facility, one student 
group supported restricting access to the emergency guarantee facility 
as proposed in Alternative B, noting that such a restriction would both 
provide an adequate safeguard against dependency and ensure that the 
facility is available only in severe circumstances. The second student 
group recommended that the FDIC expand the emergency guarantee facility 
eligibility to all financial institutions originally eligible under the 
DGP. This group asserted that expanding eligibility would protect the 
DIF, perpetuate the objectives of the TLGP, help deserving 
nonparticipating institutions avoid receivership, grant the FDIC 
greater discretion, and result in minimal additional costs to the FDIC.

[[Page 54745]]

    As noted above, the FDIC is establishing the emergency guarantee 
facility to phase-out the DGP in an orderly manner. Expanding access to 
all entities originally eligible would be inconsistent with that goal. 
As a result, the FDIC believes that limiting the eligibility as 
provided in Alternative B is the more appropriate way to achieve the 
goal of the emergency guarantee facility.
    The two student groups also expressed a number of additional 
concerns regarding the proposed Alternative B. One group recommended 
that a final rule adopting Alternative B should include mandatory end-
use restrictions, such as limitations on executive compensation. This 
group also recommended that the application requirements for access to 
the emergency guarantee facility include a statement identifying any 
changes from all prior plans for the retirement of FDIC-guaranteed debt 
that an applicant had submitted to the FDIC under the DGP. Moreover, 
this group recommended requiring that applications for the emergency 
guarantee facility include a business plan that states clear objectives 
for avoiding use of the emergency guarantee facility in the future. The 
second group expressed concern that Alternative B includes overly-broad 
language when describing the types of situations that would warrant 
granting access to the emergency guarantee facility. The group 
recommended that the FDIC provide clearer guidelines and principles 
outlining the kind of financial challenges that can be construed as 
stemming from market disruption. The group also recommended that the 
FDIC provide greater guidance on how participation in the emergency 
guarantee facility would impact the participant's disclosures, raising 
the question of whether an applicant that has been denied access to the 
emergency guarantee facility must disclose the fact that it has been 
denied such access.
    The FDIC believes that the emergency guarantee facility as designed 
can adequately address the concerns underlying these suggestions. In 
order to be effective, the emergency guarantee facility must be 
available to handle a variety of adverse circumstances, including some 
that have not yet been encountered or even forseen. Providing too 
narrow a description of the circumstances when the facility would be 
available could limit its effectiveness. The FDIC also believes that 
imposing too many mandatory requirements could also be 
counterproductive. The FDIC needs flexibility in responding to these 
situations. Since the FDIC can impose any condition it deems 
appropriate and can, of course, decide not to approve an entity's use 
of the emergency guarantee facility, the FDIC believes that it has the 
ability to address these concerns and the flexibility to effectively 
respond to unforeseen circumstances.

IV. The Final Rule

    The FDIC is adopting the proposal described in Alternative B as a 
final rule. As discussed below, the final rule will allow the basic DGP 
to expire on October 31, 2009 as currently structured. However, the 
final rule will also establish a limited six-month emergency guarantee 
facility upon the expiration of the basic DGP. The FDIC believes this 
approach provides the most appropriate phase-out of the basic DGP.

A. Expiration of Debt Guarantee Program

    Under the final rule, the DGP will expire as currently structured 
under existing regulation. Thus, all IDI's participating in the DGP and 
other participating entities that had either (i) issued guaranteed debt 
before April 1, 2009, or (ii) had not issued guaranteed debt before 
April 1, 2009, but had received FDIC's permission to issue guaranteed 
debt through October 31, 2009, are permitted to issue FDIC-guaranteed 
senior unsecured debt through October 31, 2009. The FDIC's guarantee 
for such debt issuances will expire no later than December 31, 2012.

B. Emergency Guarantee Facility

    Additionally, the final rule establishes a limited six-month 
emergency guarantee facility upon the expiration of the basic DGP. The 
emergency guarantee facility addresses an entity's inability to replace 
maturing senior unsecured debt with non-guaranteed debt as a result of 
market disruptions or other circumstances beyond the control of the 
participating entity. Under the final rule, the FDIC will guarantee 
senior unsecured debt issued after October 31, 2009, subject to the 
FDIC's prior approval on a case-by-case basis, through April 30, 2010 
by certain entities participating in the DGP; such guarantee will be 
subject to such restrictions and conditions that the FDIC deems 
appropriate. The duration of the FDIC's guarantee of senior unsecured 
debt issuances approved under the emergency guarantee facility will 
extend through the earliest of the mandatory conversion date (for 
mandatory convertible debt), the stated maturity date, or December 31, 
2012. All of the terms and provisions of the DGP that are not amended 
by this final rule will apply to such debt issuances. The final rule 
does not affect any conditions that the FDIC has placed on the issuance 
of debt by an IDI or other entity participating in the DGP.
    Any IDI participating in the DGP and any other entity participating 
in the DGP that has issued FDIC-guaranteed debt by September 9, 2009, 
is permitted to apply to use the emergency guarantee facility.
i. Application Requirements for Participation in the Emergency 
Guarantee Facility
    The final rule requires prior approval by the FDIC before an entity 
may participate in the emergency guarantee facility. Applications to 
participate in the emergency guarantee facility must be submitted to 
the Director of the Division of Supervision and Consumer Protection on 
or before April 30, 2010. FDIC prior approval to participate in the 
emergency guarantee facility will be granted on a case-by-case basis 
subject to such terms and conditions as the FDIC deems appropriate.
    Under the final rule, participation in the emergency guarantee 
facility is limited. Only those eligible entities that demonstrate an 
inability to issue non-guaranteed debt to replace maturing senior 
unsecured debt as a result of market disruptions or other circumstances 
beyond the entity's control may apply. The final rule requires that 
applications to participate in the emergency guarantee facility include 
the following: A projection of the sources and uses of funds through 
December 31, 2012; a summary of the entity's contingency plans; a 
description of any collateral that the entity can make available to 
secure the entity's obligation to reimburse the FDIC for any payments 
made pursuant to the guarantee; a description of the plans for 
retirement of the FDIC-guaranteed debt; a description of the market 
disruptions or other circumstances beyond the entity's control that 
prevent the entity from replacing maturing debt with non-guaranteed 
debt; a description of management's efforts to mitigate the effects of 
such disruptions or circumstances; conclusive evidence that 
demonstrates the entity's inability to issue non-guaranteed debt; and 
any other relevant information that the FDIC deems appropriate.
ii. Participation Fee
    Under the final rule, the FDIC will assess a fee equal to the 
amount of the debt to be guaranteed times the number of years (or 
portions thereof) from

[[Page 54746]]

issuance date through the earliest of the mandatory conversion date 
(for mandatory convertible debt), the stated maturity date, or December 
31, 2012 times an assessment rate of at least 300 basis points on any 
guaranteed debt issued under the emergency guarantee facility. The FDIC 
reserves the right to increase the fee on a case-by-case basis, 
depending upon the risks presented by the issuing entity. The FDIC 
believes that the fee established under the final rule will provide an 
appropriate deterrent to applications based on other, less severe 
circumstances or concerns. Under the final rule, a participating entity 
may be required to pledge sufficient collateral to ensure the repayment 
of any principal and interest payments made by the FDIC under the 
emergency guarantee facility, subject to any other conditions and 
restrictions that the FDIC deems appropriate. Such conditions and 
restrictions may include, for example, limiting executive 
compensations, bonuses, or the payment of dividends.

V. Regulatory Analysis and Procedure

A. Administrative Procedure Act

    The process of amending Part 370 by means of this final rule is 
governed by the Administrative Procedure Act (APA). 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 ``as otherwise 
provided by the agency for good cause found and published with the 
rule.'' \6\
---------------------------------------------------------------------------

    \6\ 5 U.S.C. 553(d)(3).
---------------------------------------------------------------------------

    When it issued the interim rule and the final rule initially 
implementing the TLGP, the FDIC invoked this good cause exception based 
on the severe financial conditions that threatened the stability of the 
nation's economy generally and the banking system in particular.\7\ 
Recently, credit and liquidity conditions have become less stressed. 
Narrowing spreads on both TLGP debt and non-guaranteed debt indicate 
that access to funding has improved. Only a few entities have issued 
TLGP debt during the extended DGP period, and recently several banking 
organizations have successfully issued non-guaranteed debt. In order to 
continue the orderly phase out of the basic DGP and to ensure that the 
creation of the emergency guarantee facility occurs at the conclusion 
of the basic DGP on October 31, 2009, the FDIC finds that good cause 
exists for an immediate effective date for the final rule.
---------------------------------------------------------------------------

    \7\ See 74 FR 26521 (June 3, 2009) and 73 FR 72244 (Nov. 26, 
2008).
---------------------------------------------------------------------------

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.\8\ For the same reasons 
as discussed above, the FDIC finds that good cause exists for an 
immediate effective date for the final rule.
---------------------------------------------------------------------------

    \8\ 12 U.S.C. 4802.
---------------------------------------------------------------------------

C. Small Business Regulator Enforcement Fairness Act

    The Office of Management and Budget (OMB) has determined that this 
final 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 appropriate reports with Congress and the Government 
Accountability Office.

D. Regulatory Flexibility Act

    Under the Regulatory Flexibility Act (RFA), the FDIC must prepare a 
final regulatory flexibility analysis in connection with the 
promulgation of a final rule,\9\ or certify that the final rule will 
not have a significant economic impact on a substantial number of small 
entities.\10\ For purposes of the RFA analysis or certification, 
financial institutions with total assets of $175 million or less are 
considered to be ``small entities.'' For reasons discussed below, the 
FDIC certifies that the final rule will not have a significant economic 
impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \9\ 5 U.S.C. 604.
    \10\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    Currently, 4,394 IDIs participate in the DGP, of which 
approximately 2,120 (or approximately 48 percent) are small entities. 
Under the final rule, all 2,120 IDIs that would be considered small 
entities for purposes of this analysis are eligible to apply to access 
the emergency guarantee facility. As a result, the FDIC asserts that 
the final rule may affect a substantial number of IDIs that are small 
entities that participate in the DGP.
    Nevertheless, the FDIC has determined that the final rule's 
economic impact on small entities will not be significant for the 
following reasons. The emergency guarantee facility is designed to be 
accessed on an emergency case-by-case basis by IDIs (and other entities 
that issued debt under the DGP) only if such entities are unable to 
replace maturing debt as a result of market disruptions or other 
circumstances beyond the entities' control. Eighty-one IDIs have issued 
FDIC-guaranteed debt through the DGP since the program's inception. It 
is unlikely that a significant number of IDIs (or other qualifying 
entities) would satisfy the requirements to issue FDIC-guaranteed debt 
during such emergency circumstances. Accordingly, the final rule will 
not have a significant economic impact on a substantial number of small 
entities.

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 OMB control number. This Final Rule 
implements Alternative B of the Notice of Proposed Rulemaking, which 
establishes an emergency guarantee facility to ensure an orderly phase-
out of the debt guarantee component of the Temporary Liquidity 
Guarantee Program. Alternative B includes, in section 370.3(h)(viii), 
an application requirement for IDIs and non-IDIs wishing to access the 
emergency guarantee facility. In conjunction with publication of the 
Notice of Proposed Rulemaking, the FDIC submitted to OMB a request for 
clearance of the paperwork burden associated with the application 
requirement in Alternative B. That request is still pending.
    The proposed rule document requested comment on the estimated 
paperwork burden. However, none of the comments received addressed the 
estimated paperwork burden. Therefore, the FDIC has not altered its 
initial burden estimates. The estimated burden for the application 
requirement, as set forth in the Notice of Proposed Rulemaking and 
Final Rule, is as follows:
    Title: ``Temporary Liquidity Guarantee Program--Emergency Guarantee 
Facility.''
    OMB Number: 3064--NEW.
    Estimated Number of Respondents: Application to access emergency 
guarantee facility submitted by IDIs--8.
    Application to access emergency guarantee facility submitted by 
non-IDIs that issued FDIC-guaranteed debt under the DGP--4.

[[Page 54747]]

    Frequency of Response: Application to access emergency guarantee 
facility submitted by IDIs--once.
    Application to access emergency guarantee facility submitted by 
non-IDIs that issued FDIC-guaranteed debt under the DGP--once.
    Affected Public: IDIs; thrift holding companies, bank and financial 
holding companies, and affiliates of IDIs that issued debt under the 
DGP.
    Average Time per Response: Application to access emergency 
guarantee facility submitted by IDIs--4 hours.
    Application to access emergency guarantee facility submitted by 
non-IDIs that issued FDIC-guaranteed debt under the DGP--4 hours.
    Estimated Annual Burden: Application to access emergency guarantee 
facility submitted by IDIs--32 hours.
    Application to access emergency guarantee facility submitted by 
non-IDIs that issued FDIC-guaranteed debt under the DGP--16 hours.
    Total Annual Burden--48 hours.
    Comment Request: The FDIC has an ongoing interest in public 
comments on its collections of information, including comments on: (1) 
Whether this collection of information is 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 collection, 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 collection on respondents, 
including through the use of automated collection techniques or other 
forms of information technology. Comments may be submitted to the FDIC 
by any of the following methods:
     http://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. All comments should refer to the ``Temporary 
Liquidity Guarantee Program--Emergency Guarantee Facility (OMB No. 
3064--New)''.

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. In issuing the Notice of Proposed Rulemaking the FDIC 
requested comment on how to make the regulation easier to understand. 
The FDIC received one comment in response to the request. The comment 
supported the FDIC's use of plain language in the NPR.

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

    The FDIC has determined that the Final Rule will not affect family 
well-being within the measure of section 654 of the Treasury and 
General Government Appropriations Act, enacted as part of the Omnibus 
Consolidated 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 discussed in the preamble, the Federal Deposit 
Insurance Corporation amends 12 CFR part 370 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 by revising paragraph (n) to read as follows:


Sec.  370.2  Definitions.

* * * * *
    (n) Issuance period.
    (1) Except as provided in paragraph (n)(2) of this section, the 
term ``issuance period'' means
    (i) 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:
    (A) Mandatory convertible debt, the period from February 27, 2009, 
to and including October 31, 2009, and
    (B) All other senior unsecured debt, the period from October 14, 
2008, to and including October 31, 2009; and
    (ii) With respect to the issuance, by any other participating 
entity, of
    (A) Mandatory convertible debt, the period from February 27, 2009, 
to and including June 30, 2009, and
    (B) All other senior unsecured debt, the period from October 14, 
2008, to and including June 30, 2009.
    (2) The ``issuance period'' for a participating entity that has 
been approved to issue FDIC-guaranteed debt pursuant to Sec.  370.3(k) 
of this part is the period after October 31, 2009, and on or before 
April 30, 2010.
* * * * *

0
3. Amend Sec.  370.3 as follows:
0
a. Revise paragraph (d)(2);
0
b. Revise paragraphs (h)(1) through (h)(3), (h)(5), and (h)(6); and
0
c. Add paragraph (k), to read as follows:


Sec.  370.3  Debt Guarantee Program

* * * * *
    (d) * * *
    (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, a participating entity that has been approved 
pursuant to Sec.  370.3(h) to issue guaranteed debt after June 30, 
2009, and on or before October 31, 2009, or a participating entity that 
has been approved pursuant to Sec.  370.3(k) to issue guaranteed debt 
after 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.
* * * * *
    (h) Applications for exceptions, eligibility, and issuance of 
certain debt.
    (1) The following requests require written application to the FDIC 
and the appropriate Federal banking agency of the entity or the 
entity's lead affiliated insured depository institution:
    (i) A request by a participating entity to establish, increase, or 
decrease its debt guarantee limit,
    (ii) A request by an entity that becomes an eligible entity after 
October 13, 2008, for an increase in its presumptive debt guarantee 
limit of zero,

[[Page 54748]]

    (iii) A request by a non-participating surviving entity in a merger 
transaction to opt in to either the debt guarantee program or the 
transaction account guarantee program,
    (iv) A request by an affiliate of an insured depository institution 
to participate in the debt guarantee program,
    (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,
    (vii) A request by a participating entity to issue senior unsecured 
non-guaranteed debt after June 30, 2009, and
    (viii) A request by a participating entity to issue FDIC-guaranteed 
debt after October 31, 2009 under the Emergency Guarantee Facility 
pursuant to paragraph (k) of this section.
    (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;
    (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; and
    (iv) With respect to an application pursuant to paragraph 
(h)(1)(viii) of this section to issue FDIC-guaranteed debt under the 
Emergency Guarantee Facility, a projection of the sources and uses of 
funds through December 31, 2012, a summary of the entity's contingency 
plans, a description of the collateral that an entity can make 
available to secure the entity's obligation to reimburse the FDIC for 
any payments made pursuant to the guarantee, a description of the plans 
for retirement of the FDIC-guaranteed debt, a description of the market 
disruptions or other circumstances beyond the entity's control that 
prevent the entity from replacing maturing debt with non-guaranteed 
debt, a description of management's efforts to mitigate the effects of 
such disruptions or circumstances, conclusive evidence that 
demonstrates an entity's inability to issue non-guaranteed debt, and 
any other relevant information.
    (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;
    (iv) For applications pursuant to paragraph (h)(1)(vii) of this 
section: The entity's plans for the retirement of the guaranteed debt; 
and
    (v) For applications pursuant to paragraph (h)(1)(viii) of this 
section, the applicant's strategic operating plan, the proposed use of 
the debt proceeds, the entity's plans for the retirement of the FDIC-
guaranteed debt, the entity's contingency plans, the nature and extent 
of the market disruptions or other circumstances beyond the entity's 
control that prevent the entity from replacing maturing debt with non-
guaranteed debt, the collateral that an entity can make available to 
secure the entity's obligation to reimburse the FDIC for any payments 
made pursuant to the guarantee, management's efforts to mitigate the 
effects of such conditions or circumstances, the evidence that 
demonstrates an entity's inability to issue non-guaranteed debt, and 
the risk presented to the FDIC.
* * * * *
    (5) The filing deadlines for certain applications are:
    (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;
    (iv) June 30, 2009, for an application pursuant to paragraph 
(h)(1)(vi); and
    (v) April 30, 2010, for applications pursuant to paragraph 
(h)(1)(viii).
    (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, requirements 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.
    (iii) Limit executive compensation and bonuses, and/or
    (iv) Limit or refrain from the payment of dividends.
* * * * *
    (k) Emergency Guarantee Facility. In the event that a participating 
entity that is either an insured depository institution or an entity 
that has issued FDIC-guaranteed debt on or before September 9, 2009 is 
unable, after October 31, 2009, to issue non-

[[Page 54749]]

guaranteed debt to replace maturing senior unsecured debt as a result 
of market disruptions or other circumstances beyond the entity's 
control, the participating entity may, with the FDIC's prior approval 
under paragraph (h) of this section, issue FDIC-guaranteed debt after 
October 31, 2009, and on or before April 30, 2010. Any such issuance is 
subject to all of the terms and conditions imposed by the FDIC in its 
approval decision as well as all of the provisions of this part, 
including without limitation, the payment of the applicable assessment 
and compliance with the disclosure requirements.
* * * * *

0
4. Amend Sec.  370.5 as follows:
0
a. Revise paragraph (f); and
0
b. Revise paragraph (h)(2), to read as follows:


Sec.  370.5  Participation.

* * * * *
    (f) Except as provided in paragraphs (g), (j), and (k) 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, 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, or a participating entity that has been 
approved pursuant to Sec.  370.3(k) to issue FDIC-guaranteed debt after 
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, http://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.]
* * * * *

0
5. Amend Sec.  370.6 as follows:
0
a. Revise paragraph (d)(1); and
0
b. Add paragraph (i), to read as follows:


Sec.  370.6  Assessments under the Debt Guarantee Program.

* * * * *
    (d) Amount of assessments for debt within the debt guarantee limit
    (1) Calculation of assessment. Subject to paragraphs (d)(3) and (h) 
of this section, and except as provided in paragraph (i) 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.

------------------------------------------------------------------------
                                                          The annualized
                                                             assessment
  For debt with a maturity or time period to conversion   rate (in basis
                        date of--                          points) is--
 
------------------------------------------------------------------------
180 days or less (excluding overnight debt).............              50
181-364 days............................................              75
365 days or greater.....................................             100
------------------------------------------------------------------------

* * * * *
    (i) Assessment for debt issued under the Emergency Guarantee 
Facility. The amount of the assessment for FDIC-guaranteed debt issued 
pursuant to Sec.  370.3(k) of this part is equal to the amount of the 
debt times the term of the debt (or in the case of mandatory 
convertible debt, the time period to conversion) times an annualized 
assessment rate of 300 basis points, or such greater rate as the FDIC 
may determine in its decision approving such issuance.

    By order of the Board of Directors.

    Dated at Washington, DC, this 20th day of October 2009.
Robert E. Feldman,
Executive Secretary, Federal Deposit Insurance Corporation.
[FR Doc. E9-25555 Filed 10-22-09; 8:45 am]
BILLING CODE 6714-01-P