The FDIC published in the Federal Register a Dodd-Frank Act-mandated final rule that prohibits an insured savings association from acquiring or retaining a corporate debt security unless it determines the issuer can meet all financial commitments under the security for the investment’s projected life.
The final rule is similar to the final rules published by the OCC in June defining alternative creditworthiness standards.
The FDIC’s standards of creditworthiness will be satisfied if the issuer presents a low risk of default and is deemed likely to make a full and timely repayment of principal and interest. The agency also issued final guidance that establishes due diligence standards for determining the credit quality of a corporate debt security.
Savings associations have until Jan. 1, 2013, to comply with the final rule and guidance.
Read the final rule.
Read the final guidance.