Alert February 03, 2009

OCC Concludes Banks’ Senior Unsecured Debt Covered by FDIC Guarantee is Exempt from OCC Registration Requirement

The OCC issued an interpretive letter (“Letter  #1108) in which the OCC confirmed that a national bank’s senior unsecured debt that is guaranteed (for the full period it is outstanding) by the FDIC under the FDIC’s Temporary Liquidity Guarantee Program (“TLGP”) is exempt from the OCC’s registration requirements under 12 C.F.R. §16.5 (“Section 16.5”). 

As one of two current programs under the TGLP, the FDIC established a debt guarantee program (the “Debt Guarantee Program”), which temporarily guarantees newly issued senior unsecured debt of participating FDIC-insured depository institutions and U.S. holding companies (“Banks”) up to prescribed volume limits.  The Debt Guarantee Program applies to eligible debt issued by Banks that matures on or before June 30, 2012. 

Letter #1108 states that the SEC has confirmed to the FDIC that eligible debt under the Debt Guarantee Program that matures on or before June 30, 2012 (i.e., that is guaranteed for the full period it is outstanding) is exempt from registration under the Securities Act of 1933 because the debt is “guaranteed by an instrumentality of the United States.”  Since such debt is exempt from SEC registration for reasons other than for the fact that it is issued by a bank, the OCC concludes in Letter #1108 that eligible debt under the TLGP is exempt from registration with the OCC under Section 16.5.

The OCC stated that the exemption will apply as long as a bank continues to participate in the TLGP, but, as noted above, the exemption remains subject to the June 30, 2012 maturity requirement.