Ten Days in October 2008: Blanket Guarantees - Diane Ellis

In the turmoil following the failures of Lehman Brothers, Washington Mutual and Wachovia, financial markets froze and confidence in the banking system deteriorated rapidly. Former FDIC senior official Diane Ellis takes us behind the scenes as regulators worked to stabilize a rapidly unravelling financial system by designing the Temporary Liquidity Guarantee Program—effectively “building the plane while flying it.”

Diane explains how the program’s two components—the Debt Guarantee Program and the Transaction Account Guarantee Program (TAG)—helped banks regain access to funding, protected business transaction accounts and reduced the risk of destabilizing deposit runs. David Walker adds an international perspective on the crisis-driven containment measures taken in other countries to respond to the spreading market crisis.

The discussion examines why these industry-funded guarantees succeeded without

attracting the same criticism as other bailouts, why Congress later restricted the FDIC’s authority, and whether similar tools could help contain contagion in the next financial crisis.

Our Guest:

Diane Ellis

Diane Ellis is Senior Managing Director at IntraFi, a financial services firm and nationwide network of banks that provides deposit placement and liquidity management solutions, helping participating banks access expanded FDIC insurance coverage.

Previously, she served as the Director of the Division of Insurance and Research at the Federal Deposit Insurance Corporation (FDIC), where she led the agency’s efforts to maintain the adequacy of the Deposit Insurance Fund and an effective and fair risk-based premium system. She also directed the FDIC’s assessment of economic and financial sector risks to the banking industry, policy-oriented research and analysis supporting rulemakings, and the collection and publication of bank financial information and statistics, including the Quarterly Banking Profile.

Ms. Ellis has extensive executive-level experience in deposit insurance pricing and fund management, financial crisis management, and banking policy. She was elected twice to serve on the Executive Council of the International Association of Deposit Insurers. Earlier in her career, she served as a senior financial analyst and bank examiner at the FDIC.

She earned a BBA from Texas Christian University, a Master of Public Policy from George Mason University, and holds a Chartered Financial Analyst (CFA) designation.

Additional Resources:

More information on the Temporary Liquidity Guarantee Program