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Exhibit 10.2
January 15, 2009
Summary of
Terms
Eligible Asset
Guarantee
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Eligible Assets:
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A pool of financial instruments consisting of
securities backed by residential and commercial real estate loans
and corporate debt, derivative transactions that reference such
securities, loans, and associated hedges, as agreed, and such other
financial instruments as the U.S. government (USG) has agreed to
guarantee or lend against (the Pool). Each specific financial
instrument in the Pool must be identified on signing of the
guarantee agreement. Financial instruments in the Pool will remain
on the books of institution but will be appropriately
“ring-fenced.”
The following financial instruments
will be excluded from the Pool: (i) foreign assets
(definition to be provided by USG); (ii) assets originated or
issued on or after March 14, 2008; (iii) equity securities;
and (iv) any other assets that USG deems necessary to
exclude.
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Size:
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The Pool
contains up to $118 billion of financial instruments. More
specifically, the Pool includes cash assets with a current book
(i.e., carrying) value of up to $37 billion and a derivatives
portfolio with maximum potential future losses of up to
$81 billion (based on valuations agreed between institution
and USG).
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Term and Coverage
of Guarantee:
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Guarantee is in
place for 10 years for residential assets and 5 years for
non-residential assets. Residential assets will include loans
secured solely by 1-4 family residential real estate, securities
predominately collateralized by such loans, and derivatives that
predominately reference such securities. Institution has the right
to terminate the guarantee at any time (with the consent of USG),
and the parties will negotiate in good faith as to an appropriate
fee or rebate in connection with any permitted termination. If
institution terminates the guarantee, it must prepay any
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January 15, 2009
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outstanding Federal Reserve loan (described
below) in full.
Guarantee covers Eligible Losses on
the Pool. Eligible Losses are the aggregate incurred credit losses
(net of any gains and recoveries) on the Pool during the term of
the guarantee, beyond the January 15, 2009, marks and credit
valuation adjustments for the Pool (as agreed between institution
and USG). Eligible Lo
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