House Panel Mulls Permanent FDIC Debt Guarantee Program

WASHINGTON — The Federal Deposit Insurance Corp. could revive its popular program to guarantee bank debt in times of economic stress under an amendment considered Wednesday by the House Financial Services Committee.

Rep. Barney Frank (D, Mass.), who chairs the committee, offered an amendment that would allow the FDIC to offer healthy financial firms guarantees on debt if liquidity in the financial system is strained. It would effectively allow for the revival of a popular program offered by the FDIC this year in which the agency collected significant fees in return for offering the guarantee.

Republicans on the panel said the program amounted to another government rescue program for financial firms.

"I think we are just creating another avenue for bailing out entities," Rep. Randy Neugebauer (R, Texas) said.

That position was challenged by Frank, who noted that the FDIC made a profit on the fees it collected from firms who received the guarantee over the last year.

"This is a purely voluntarily program ... if you want that guarantee you pay for it," Frank said.

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