Wednesday, September 27, 2023
Courthouse News Service
Wednesday, September 27, 2023 | Back issues
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Debt Guarantee Extension

WASHINGTON (CN) - The Federal Deposit Insurance Corporation wants to ease banks off the subsidy of the Temporary Liquidity Guarantee Program, under which institutions issue long term debt secured by the government, by extending the program's life span.

Originally set to expire with debt issued June 30, 2009, the program will back debt issued up to October 31, 2009.

As part of the four month extension of the program the FDIC will assess a surcharge on debt issued on or after April 1, equal to 10 basis points for insured banks and 20 for uninsured banks, to put money into the guarantee fund. The surcharge will increase for debt issued between June 30, 2009 and October 31, 2009 to 20 basis points for insured banks and 50 for uninsured banks. The rising surcharge may encourage debt issuers to look to the markets to back debt offerings as government backing becomes increasingly expensive, according to the FDIC.

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