The Temporary Liquidity Guarantee Program (TLGP) was a program administered by the

Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC) is a State-owned enterprises of the United States, United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. The FDIC was cr ...

(FDIC) from 2008 to 2012 in the aftermath of the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

. The program sought to promote confidence in the US banking system by guaranteeing interbank loans and no-interest transaction accounts, such as

checking account A transaction account (also called a checking account, cheque account, chequing account, current account, demand deposit account, or share account at credit unions) is a deposit account or bank account held at a bank or other financial instituti ...

s. It was announced through an Interim Rule on October 14, 2008.

Components

The Temporary Liquidity Guarantee Program had two primary components: the Debt Guarantee Program, by which the FDIC guaranteed the payment of certain newly issued senior unsecured debt, and the Transaction Account Guarantee Program, by which the FDIC guaranteed certain noninterest-bearing

transaction account A transaction account (also called a checking account, cheque account, chequing account, current account, demand deposit account, or share account at credit unions) is a deposit account or bank account held at a bank or other financial instituti ...

s. FDIC insured entities could opt out of either program

Debt Guarantee Program

The Debt Guarantee Program guaranteed all newly issued senior unsecured debt up to prescribed limits issued by participating entities. As a result of this guarantee, the unpaid principal and contract interest of an entity’s newly issued senior unsecured debt were to be paid by the FDIC if the issuing insured depository institution failed or if a bankruptcy petition were filed by the respective issuing holding company. More than 6000 banks opted out of the progra
DGP Opt-out list (.xls)
The Debt Guarantee Program passed out debt guarantees in excess of $600 billion. Yet, unlike the other major agencies bailing out the financial sector during the

—the

Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of ...

and the

U.S. Treasury The Department of the Treasury (USDT) is the Treasury, national treasury and finance department of the federal government of the United States. It is one of 15 current United States federal executive departments, U.S. government departments. ...

—the FDIC has never disclosed the identity of all the banks taking advantage of the bailout guarantees. Wilson and Wu (2011) find that the recipients of the FDIC debt guarantees paid their CEOs significantly more than their peers. Thus, bailed out CEOs made significantly more than bank CEOs not accepting the FDIC's bailout loan guarantees. The Debt Guarantee Program stopped guaranteeing outstanding loans at the end of 2012.

Transaction Account Guarantee Program

The Transaction Account Guarantee Program provided for a temporary full guarantee by the FDIC for funds held at FDIC-insured depository institutions in noninterest-bearing transaction accounts above the existing deposit insurance limit. This would continue through the end of 2010. Thereafter section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act provided similar transaction account insurance until the end of 2012.

References

FDIC resources for TLGP

text of final rule
{{Great Recession Federal Deposit Insurance Corporation