From now on, the Federal Deposit Insurance Corp. will consider short- term foreign-exchange agreements and repurchase agreements on qualified foreign government securities to be "qualified financial contracts."
Such contracts are harder for the agency to repudiate when it is appointed receiver or conservator of a failed bank or thrift. Other qualified contracts already protected by law include certain securities contracts, commodity contracts, forward contracts, repurchase agreements, and swaps.
FDIC Chairman Ricki Helfer said the agency is trying to "strike a balance between protecting the insurance funds and keeping stability in the marketplace for these contracts."
The FDIC board approved the rule change at its Dec. 19 meeting. The change became effective with publication in the Federal Register Wednesday.
The short-term foreign exchange transactions affected by the rule include so-called spot, tomorrow/next-day, and same-day/tomorrow transactions.
Qualified foreign government securities are those issued or guaranteed by the central governments of Organization for Economic Cooperation and Development countries or by countries that have concluded special lending arrangements with the International Monetary Fund.