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.
Yet, unlike the other major agencies bailing out the financial sector during the 2007–2008 financial crisis—the Federal Reserve and the U.S. Treasury—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.
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.
[3] Thereafter section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act provided similar transaction account insurance until the end of 2012.