Comment Letter Responding to FDIC’s Proposed Rule to Implement Certain Provisions of the Orderly Liquidation Authority Contained in Title II of the Dodd-Frank Act.

On November 18, MFA submitted a comment letter to the FDIC in response to the FDICs proposed rule to implement certain provisions of the orderly liquidation authority contained in Title II of the Dodd-Frank Act. MFA provided comments in response to two key issues in the proposed rule, the ability of the FDIC to treat similarly situated creditors differently and the FDICs valuation of assets in its role as receiver. With respect to similarly situated creditors, MFA encouraged the FDIC to amend its proposal to better harmonize with the Bankruptcy Code by eliminating the distinction between short-term and long-term debt holders and instead to limit its authority to make extra payments to include only two categories of creditors: those that provide critical services to the failing institution (or bridge financial institution; and those parties to financial contracts that the FDIC requires to continue to perform under the contract (but only to the extent of their compelled performance). With respect to valuation, we encouraged the FDIC not to assign fixed values to assets, but instead to develop, with public input, a valuation process that the FDIC would use to determine fair market value of assets as a receiver.