WASHINGTON — The heads of two key banking trade associations on Friday repeated their calls for Congress to extend the Transaction Account Guarantee program.
American Bankers Association chief executive Frank Keating and Camden Fine, chief executive of the Independent Community Bankers of America, said in a joint letter to congressional leaders that temporarily prolonging the program "will help bolster confidence of small-business and municipal deposits and promote economic stability."
"Given the uncertain path of the economy and continued concerns of bank and credit union depositors about the safety of their deposits, we believe it prudent to extend this important coverage for bank and credit union customers," they wrote.
The program, which covers all noninterest bearing checking deposits in transaction accounts, was originally launched in 2008 by the Federal Deposit Insurance Corp. to help banks hold on to liquidity. Then, institutions could participate voluntarily by paying an extra fee on top of their deposit insurance assessments. The Dodd-Frank Act extended the coverage to the end of this year, but made it mandatory and removed the extra fee.
The ICBA has strongly supported a five-year extension, while the ABA just recently publicly endorsed a two-year extension.
"Temporarily extending the TAG program until the economy and financial system are truly recovered and interest rates are more normalized would eliminate one element of uncertainty facing depositors of insured-depository institutions," Fine and Keating wrote. (Copies of the letter were sent to leaders in both the House and the Senate.)
