FDIC modifies program to allow issues of mandatory convertibles

By Jennifer Chiou

New York, Feb. 27 - The board of directors of the Federal Deposit Insurance Corp. voted to modify the debt guarantee component of the temporary liquidity guarantee program to allow participating entities, with the FDIC's permission, to issue mandatory convertible debt, according to a news release.

This change would provide institutions additional options for raising capital and reducing the concentration of FDIC-guaranteed debt maturing in mid-2012, the release noted.

The FDIC also voted to amend the restoration plan for the deposit insurance fund, ensuring the continued strength of the insurance fund by imposing a special assessment on insured institutions of 20 basis points.

"Deposit insurance remains a good value," FDIC chairman Sheila Bair said in the release. "Public confidence in the FDIC guarantee has helped assure a stable source of funding for banks in these troubled times."

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