This afternoon, the FDIC announced that it has adopted a final rule implementing its Temporary Liquidity Guarantee Program (the "Final Rule"). As previously reported, the program is a voluntary program that includes (1) a temporary guarantee for newly issued senior unsecured debt of both insured depository institutions and their holding companies and (2) temporary and unlimited deposit insurance coverage for non-interest bearing transactions accounts. The program was established on October 14, 2008 and the Interim Rule was issued on October 23, 2008. Comments were due by November 13, 2008. We also previously issued an Advisory discussing the Interim Rule.

Based on over 700 formal comments, a number of substantive changes to the Interim Rule are incorporated in the Final Rule. Changes specific to the Debt Guarantee portion of the program include, among others:

1) The FDIC's obligation to pay under the program is triggered by an uncured payment default rather than just outright failure or bankruptcy;

2) Rather than broadly covering newly issued senior unsecured debt, the definition of "senior unsecured debt" excludes short-term unsecured debt issued after December 5, 2008, with a stated maturity of 30 days or less;

3) For insured depository institutions with no senior unsecured debt outstanding, or only Fed funds purchased, as of September 30, 2008, the alternative debt guarantee limit is two percent of the institution's total liabilities as of September 30, 2008;

4) In a holding company structure, an insured depository institution may issue debt under its guarantee limit as well as that of its holding company;

5) Uniform disclosures are provided that must be included in the documents underlying senior unsecured debt issued after December 19, 2008;

6) The assessment rates are changed from a flat 75 basis points to 50, 75 or 100 basis points depending on the term of the debt; and

7) Each participating entity must execute and file a "Master Agreement" with the FDIC.

Changes specific to the Transaction Account Guarantee portion of the program include, among others:

1) IOLTAs are now fully insured;

2) NOW accounts held by both businesses and consumers are fully insured so long as the interest rate does not exceed .50 percent at any time prior to the expiration of the program; and

3) Disclosure requirements are extended to include website notices and uniform sample disclosure notices are provided.