FDIC OKs backing for bank debt, deposits
Published: November 21, 2008
WASHINGTON (AP) _ 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.
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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 issuing 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.
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