FDIC Ending Program to Back Bank Debt

In one of the first concrete steps the government has taken to unwind itself from the banking industry, the Federal Deposit Insurance Corp. said it would let its debt guarantee program expire at the end of the month while leaving a six-month window to deal with near-term emergencies. The agency's final rule would let banks that have participated in the Temporary Liquidity Guarantee Program issue new guaranteed debt after Oct. 31 under certain conditions, but face significantly higher fees if they do so. "It should be clear that this is not a continuation of the program, but an ending of the program with just a short-term emergency facility that is only available for clearly unforeseen and unexpected events," FDIC chairman Sheila Bair said at a board meeting. "It would carry very high fees, so I think we are almost completely out and I think it is a good sign that the markets are normalizing and the system is repairing itself." The agency's revealed its plan late Tuesday.