Comment Letter in Response to the FDICs Interim Final Rule Implementing Certain Provisions of the Orderly Liquidation Authority (OLA),

March 28, 2011

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Topics: allocation of capital Bankruptcy Code, Board of Directors of FDIC, bond holders, bridge financial company, chapter 7 liquidation, claim disallowance, contingent claims, covered financial institution, creditor involvement, creditor losses, creditor participation, critical vendors, debt instrument, default, Disclosure, distress, doctrine of necessity, equality of distribution, estate, fair market value, favored creditors, FDIC, Federal Deposit Insurance Corporation, Federal Rules of Bankruptcy Procedure, financial market meltdown, insolvency laws, insolvency proceeding, investor, judicial review, Liquidation Authority provisions, liquidation framework, liquidation process, liquidation value, longer-term financing, market data, market discipline, market expertise, market fluctuations, moral hazard, non-statutory considerations, OLA, orderly liquid authority, preferred creditors, providers of lines of credit, publicly traded securities, quotes, ratable payments, receivership, receivership estate, repurchase agreements, secured creditor, securities contracts, shareholder losses, short-term creditors, short-term financing, short-term lenders, swaps, systemic risk, systemically significant firm, third-party market participants, transparency, true market valuation, underlying collateral, unduly delay, Union Bank v. Wolas, unsecured claim, unsecured creditors, unsecured deficiency claim, US government securities, valuation date, valuation of collateral, valuation rules, volatility,
From: MFA, Richard Baker

To:

Robert Feldman, FDIC

MFA filed a comment letter in response to the FDICs interim final rule implementing certain provisions of the orderly liquidation authority (OLA), including additional payments to similarly situated creditors, valuation of collateral, and estimation of contingent claims. In our letter, which supplemented two previous letters to the FDIC on these provisions of the OLA, we: (i) continued to express our concern with the distinction between short and long-term debt holders with respect to the possibility of additional payments being made to creditors; (ii) expressed support for the FDICs decision to amend its valuation rule to require fair valuation of all securities; (iii) encouraged the FDIC to publish for comment the policies and procedures it will use to determine fair value; and (iv) expressed our view that the FDIC should not designate a specific time at which it will estimate contingent claims. We further urged the FDIC to harmonize, to the greatest extent possible, rules under the OLA with the Bankruptcy Code and related rules.

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