What are the risk weightings on U.S. bank debt that is guaranteed by FDIC?
Senior unsecured debt that is guaranteed under the Temporary Liquidity Guarantee Program will have a risk weight of 20 percent. How will FDIC’s obligation to pay holders of FDIC-guaranteed debt issued by a participating entity apply to a situation where an issuer of FDIC-guaranteed debt (the “Issuer”) has made payments to holders of the debt (“Holders”) and the Holders are subsequently required to return such payments to the bankruptcy estate of the Issuer because the payments were made during the “preference period” (typically defined to include a payment made on or within 90 days before the filing of a bankruptcy petition by the Issuer)? In this situation, the FDIC will, in accordance with its guarantee, pay the Holders the amount that the Holders returned to the bankruptcy estate of the Issuer pursuant to an order of the Bankruptcy Court. Payment will be made in accordance with the provisions of 370.12(b), which, among other things, requires demand for payment and proofs of claim.
Related Questions
- If a bank or holding company wishes to apply for a higher guaranteed debt limit under the debt guarantee component of the Temporary Liquidity Guarantee Program, must it do so by December 5, 2008?
- What is the risk weight for risk-based capital purposes for a banks holding of bank or bank holding company debt guaranteed by the FDIC under the Temporary Liquidity Guarantee Program (TLGP)?
- What are the risk weightings on U.S. bank debt that is guaranteed by FDIC?
