The FDIC will guarantee up to $1.4 trillion in U.S. banks’ debt for more than three years as part of the government’s financial rescue plan.
By Daniel at 22 November, 2008, 12:35 am
“The directors of the Federal Deposit Insurance Corp. voted Friday to approve the plan, which is meant to break the crippling logjam in bank-to-bank lending.
The FDIC will provide temporary insurance for loans between banks — except for those for 30 days or less — guaranteeing the new debt in the event of payment default by the borrowing bank.
The FDIC also will guarantee deposits in non-interest-bearing “transaction” accounts by removing the current $250,000 insurance limit on them through the end of next year. That could add as much as $500 billion to FDIC-backed deposits.
The guarantee program has been in effect since Oct. 23. All federally-insured banks and thrifts have been automatically covered since then but will have to decide by Dec. 5 whether to participate or “opt out.”
Well over half of the roughly 8,500 U.S. banks and savings and loans are expected to tap the FDIC’s temporary guarantees, which are in addition to the government’s $250 billion program of directly buying shares in banks and financial companies. ”
http://news.yahoo.com/s/ap/20081121/ap_on_bi_ge/fdic_bank_guarantees;_ylt=AjkkdHD.VEfDqTqa
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