WASHINGTON — Federal Deposit Insurance Corp. Chairman Sheila Bair said the agency is considering a further extension of its unlimited coverage for noninterest bearing checking accounts, which is currently due to expire June 30.

"We are absolutely looking at that," Bair said Thursday at an American Bankers Association meeting in Washington. "The key question is: Are we … out of the woods now? Or if we" end the program "are we going to see that trigger liquidity failures? That would end up costing us more money."

The FDIC has offered the special coverage since October 2008 as the Transaction Account Guarantee Program, which was part of a broader effort to protect liquidity at the height of the crisis. The agency had moved to extend the program once before, giving institutions an additional six months of coverage beyond an original December 2009 end date, but the FDIC charged higher fees of banks that stayed with the program.

In her remarks, Bair sided with community bankers who fear that they could lose uninsured depositors when the program ends; the fear is customers would move their accounts to the largest banks that have an implicit government guarantee. Bair said the FDIC plans to make a decision in the next month.

Will "all these programs, there's a desire to end them as soon as you can. Congress generally is the one that determines insured deposit limits," Bair said. "I don't want to raise expectations, but I do think we need to make a decision over the next 30 days."

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