WASHINGTON — Efforts to extend the Transaction Account Guarantee program were dealt a significant blow Thursday, as senators blocked a vote on a two-year extension over objections it would cost the government money.
The move makes it all but certain the program will sunset at the end of the year, unless community banks can successfully add an extension to another piece of legislation, such as a potential deal to resolve the fiscal cliff.
Community bankers had fought to keep TAG, which provides full deposit insurance for certain non-interest-bearing accounts, alive by arguing its expiration will unfairly push deposits to larger institutions with implied government guarantees. Without legislative action, the program will expire at yearend.
Majority Leader Harry Reid had attempted a vote this week on his bill extending the program for two years. But Republicans filed a point of order with the bill, arguing that a finding by the Congressional Budget Office about TAG's potential costs suggests the legislation would violate constraints on spending for financial services legislation.
Although 50 senators voted to waive the budget rules, a waiver required 60 votes.
The move essentially blocked Reid's bill from consideration during the current lame-duck session.
Supporters of extending the program have also targeted yearend legislative packages to simply insert language keeping TAG alive. But those efforts appeared less likely Thursday, as Republicans argued that TAG is a subsidy that banks no longer need.
"We're not in a financial crisis anymore. … We don't have the fall of 2008 anymore," said Sen. Pat Toomey, R-Pa., who filed the budget objection.
