On March 17, The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) voted to extend the debt guarantee portion of the Temporary Liquidity Guarantee Program (TLGP) from June 30 through October 31 and to impose a surcharge on debt issued with a maturity of one year or more, beginning in the second quarter, to gradually phase out the program. With the extension, all insured depository institutions and those additional participants, such as holding companies, that have actively participated in the debt guarantee portion of the TLGP (by issuing guaranteed debt before April 1) may continue to issue guaranteed debt through October 31without application. The guarantee on debt issued before April 1 will expire no later than June 30, 2012. The guarantee on debt issued on or after April 1 will expire no later than December 31, 2012.
Participants that are not insured depository institutions and that have not issued FDIC-guaranteed debt before April 1 must apply by June 30 if they wish to issue guaranteed debt after that date. If the application is approved, the guarantee on debt issued on or after April 1 will expire no later than December 31, 2012.
The Board of Directors also voted to impose surcharges on guaranteed debt that has a maturity of one year or more and is issued on or after April 1. For guaranteed debt that is issued by June 30 and matures by June 30, 2012, the surcharge will be 10 basis points (on an annualized basis) for an insured depository institution and 20 basis points (on an annualized basis) for all others. For all other guaranteed debt that utilizes the extension (either through a maturity after June 30, 2012, or through issuance after June 30, 2009), the surcharge will be 25 basis points (annualized) for an insured depository institution and 50 basis points (annualized) for all others. Surcharges will be in addition to current fees for guaranteed debt and will be deposited into the Deposit Insurance Fund instead of being set aside to cover potential TLGP losses.