Bulletin: SLS2009001

Dear Associates:

The Transaction Account Guarantee Program (which is one part of the Temporary Liquidity Guarantee Program) is an FDIC program which provides a full guarantee of a depositor's funds in certain noninterest-bearing accounts maintained at an FDIC-insured institutionirrespective of the $250,000 standard limit. The program is temporary (it expires on December 31, 2009) and applies only to "noninterest-bearing transaction accounts" as defined in the Final Rule (73 Fed. Reg. 72244)with two exceptions - Lawyers' Trust Accounts (IOLTA accounts) and NOW accounts with interest rates no higher than 0.50%. The program is voluntary and eligible institutions (which include all FDIC-insured institutions) had until December 5, 2008 to opt-out by notifying the FDIC. Many institutions have opted-out and the preliminary list (which is still being refined) of those not participating in the program can be found at www.fdic.gov/regulations/resources/TLGP/optout.html. By December 19, 2008 each eligible institution that offers these types of accounts must disclose in its lobbies and on its website whether it is participating in the Transaction Account Guarantee Program.

When depositing escrow funds you may want to check financial institutions as to their participation in the Transaction Account Guarantee Program and also verify that the accounts set up for such deposits qualify as "noninterest-bearing transaction accounts." This will determine if the deposited funds are insured by the FDIC for an unlimited amount or subject to the current $250,000 cap.

This is also a consideration as to sweep accounts. If an institution fails, the FDIC will apply its normal rules and procedures in determining whether funds are in a noninterest-bearing transaction account and thus be covered by the unlimited guarantee.

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