FDIC Letter: Investments in Corporate Debt Securities by Savings Associations

The FDIC has issued a final rule that would prohibit state and federal savings associations from acquiring or holding a corporate debt security when the security's issuer does not have an adequate capacity to meet all financial commitments under the security for the projected life of the security. The final rule is being issued under section 939(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Savings associations must be in compliance with this rule by January 1, 2013. Additionally, the FDIC has issued a final guidance that sets forth due diligence standards for determining the credit quality of a corporate debt security.

View release and highlights in full here (links externally to FDIC website).Additional Materials: Final Rule: Permissible Investments for Federal and State Savings Associations: Corporate Debt Securities; Guidance on Due Diligence Requirements for Savings Associations in Determining Whether a Corporate Debt Security Is Eligible for Investment Under Part 362.