FDIC Federal Register Citations

From: Doug Morley [mailto:dmorley@valleystatebank.com]
Sent: Friday, October 24, 2008 12:02 PM
To: Comments
Subject: RIN #3064-AD37

Temporary Liquidity Guarantee Program Comment on Interim Rule.

• The increase in FDIC insurance coverage was very helpful in calming deposit customers. Thank you for being proactive.

• A potential problem raised by the debt guarantee program comes to mind. Assume we have unsecured fed fund lines with upstream correspondents totaling seven million dollars. As of September 30, 2008 we had 0 borrowed. It is possible that correspondent banks will now loan money only to banks who have guaranteed unsecured debt. Since we have none, our liquidity position could be severly negatively impacted by the proposed reg. I assume that we could apply for a guaranteed line from the FDIC.

Hopefully, the amount of the guarantee would be at least the amount of our lines currently available.

Thanks for your consideration.

Douglas M. Morley
President
Valley State Bank
PO Box 428
Belle Plaine, KS 67013