The Daily Caller
A little-known bank insurance program implemented in 2008 at the height of the financial crisis may quietly slip into legislation and become permanent.
The Transaction Account Guarantee program was implemented in 2008 and provides unlimited FDIC insurance to deposits for all non-interest-bearing transaction accounts above the limit of $250,000. Today, more than $1.3 trillion in deposits are covered by the program.
As a part of the Dodd-Frank Act, TAG initially was to be phased out at the end of 2012, however, now there is a lobbying push in Congress to keep the program permanent, by way of a stealth amendment.
The insurance program protects non-interest earning accounts where many banks temporarily store money. Given that current interest rates are near zero percent, these pools serve as super safe accounts for banks.
Critics fear an extension of the TAG program would institutionalize the mantra “too big to fail.”
Treasury Secretary Tim Geithner told the Senate Banking Committee earlier this year that he sees no need to extend the TAG program, much to the ire of the ICBA.
ICBA President Camden Fine responded: “What really infuriates me is that Treasury doesn’t bat an eye to dole out billions of taxpayer dollars to too-big-to-fail firms. But when it comes to thousands of Main Street community banks who would pay for the program themselves, not one dime of taxpayer dollars, Treasury gives them the back of the hand.”…
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