FDIC Expected to Extend Bank Debt Guarantees

Federal regulators are likely to offer a limited emergency extension of a rescue program that guarantees hundreds of billions of dollars in U.S. banks' debt.

The board of the Federal Deposit Insurance Corp. is expected to vote to provide the six-month extension in some cases of the temporary program, which ends Oct 31. Established a year ago at the height of the financial crisis, the program was intended to help thaw the freeze in bank-to-bank lending.

The FDIC has provided insurance for loans between banks, guaranteeing the new debt in the event of payment default by the issuing bank.

To qualify for the special extension, banks will have to show they are unable to issue debt without government backing due to circumstances beyond their control.