- Cape man gets 8 years for robbery, his first offense (12/7/16)8
- Post-election taunts reported at Jackson schools (12/2/16)28
- Abuse suspect tries to take cop's gun; officer zaps him with Taser and punches his face (12/7/16)3
- Man sentenced to 103 years for murder of Cape woman (12/6/16)4
- Cape may allow residents to keep chickens; residents at meeting push for measure (12/6/16)33
- Burglary suspect apprehended inside Jackson garage (12/4/16)
- Poplar Bluff man accused of enticement, child porn in Scott County sting operation (12/4/16)
- Group seeks to create a neighborhood park on Cape Girardeau's south side (12/7/16)14
- Lt. Gov. Kinder weighs in on Trump's win, his future plans (12/4/16)13
- Cape police warn of 'Grandparent Scam' (12/4/16)
FDIC: limited extension of bank debt guarantees
WASHINGTON -- Federal regulators today offered a limited emergency extension of a rescue program that guarantees hundreds of billions of dollars in U.S. banks' debt.
The board of the Federal Deposit Insurance Corp. voted to provide the six-month extension in some cases of the temporary program, which ends Oct 31. Established a year ago at the height of the financial crisis, the program was intended to help thaw the freeze in bank-to-bank lending. The credit markets began to revive several months ago.
The FDIC has provided insurance for loans between banks, guaranteeing the new debt in the event of payment default by the issuing bank.
To qualify for the special extension through April 30, banks will have to show they are unable to issue debt without government backing due to circumstances beyond their control. Banks also will have to submit information on collateral they could provide if needed to repay principal and interest payments made by the FDIC. In some cases, the FDIC could impose conditions on the banks such as limiting executive compensation and bonuses or dividend payouts.
"It should be clear that this is not a continuation of the program but an ending of the program," FDIC Chairman Sheila Bair said before the vote.
The FDIC proposed the limited extension early last month and opened it to public comment, along with the option of simply ending the yearlong program.
The program "has been an important factor in restoring liquidity and confidence in the banking system," the FDIC said in a document explaining the new rule. It "enabled banking organizations to meet financing needs at affordable terms during a period of systemwide turmoil. Recently, credit and liquidity conditions have become less stressed."
Debt issued under the program is insured in some cases through June 30, 2012, and in others through Dec. 31, 2012.
More than $600 billion in debt has been issued by 118 financial institutions under the program. Of that, $309.4 billion was outstanding as of Oct. 14.
General Electric Co.'s financing arm, GE Capital, was approved to participate last November. GE Capital had issued about $51 billion in long-term debt with FDIC backing and around $17 billion worth of short-term debt by July, when it began to exit the program.
GE Capital issues a broad range of loans for consumers and companies. It had struggled during the financial crisis due to mounting defaults and losses on loans in areas like credit cards, commercial real estate, heavy equipment and home mortgages overseas.