WASHINGTON — The Obama administration released a statement of policy Tuesday in support of extending a crisis-era guarantee program for certain business bank accounts, ahead of a successful procedural Senate vote on the bill to limit debate on the issue.
The bill, S. 3637, introduced by Majority Leader Harry Reid, would extend the Transaction Account Guarantee program for two years. The issue has divided a number of industry groups, pitting big banks and credit unions against smaller banks which argue they still need the guarantee.
"The Transaction Account Guarantee (TAG) Program played an important role in maintaining financial stability and banking system liquidity for consumers and businesses during the financial crisis," said the statement of policy. "While the Administration supports a temporary extension of the program, it remains committed to actively evaluating the use of this emergency measure created during extraordinary times and a responsible approach to winding down the program."
The Senate voted 76 to 20 in favor of a motion to limit debate on the issue on Tuesday afternoon, which likely clears the path for an additional procedural vote and a final Senate vote in favor of the bill as early as Thursday.
The bill "provides certainty to businesses in uncertain times," said Sen. Tim Johnson, chairman of the Senate Banking Committee, on the Senate floor earlier in the day. "This is not and never will be a bailout."
But some Republicans have warned that a TAG extension would continue unnecessary government support for the industry more than four years after the financial crisis, and the bill’s prospects in the House appear dubious.
House GOP leadership is said to oppose any extension and even more moderate voices like Rep. Shelley Moore Capito, R-W.Va., sound skeptical of its chances. Speaking at a Politico conference on Tuesday, Capito said she "could" support TAG if it came to a House vote, but "I feel like it’s not going to make it."