In the event of default will the FDIC continue to make timely payments on interest and principal?
Under the Final Rule, the FDIC’s payment obligation will be triggered by a payment default. The FDIC will continue to make scheduled interest and principal payments under the terms of the debt instrument through its maturity, except that, for debt issuances whose final maturities extend beyond June 30, 2012, or December 31, 2012 for debt issued under the extension, at any time thereafter, the FDIC may elect to make a payment in full of all the outstanding principal and interest under the debt issuance. In connection with this expansion of the guarantee, participating entities in the Debt Guarantee Program must execute and file with the FDIC as part of its notification of participation in the Debt Guarantee Program a “Master Agreement,” governing the guarantee.
