The effort to extend the Transaction Account Guarantee, which is due to expire at yearend, received a major "boost this week after Senate Majority Leader Harry Reid unveiled a bill to keep it alive for another two years," writes American Banker's Joe Adler.
The Federal Deposit Insurance Corporation originally created TAG in 2008 to guarantee non-interest-bearing deposits in response to liquidity fears brought on by the financial crisis. The program was later extended to the end of 2012 as part of the Dodd-Frank Act.
Reid's support is a sign that Congress could pass a bill for extension, but it is not a guarantee. Observers said it is more likely to pass as part of a broader piece of legislation.
"It would be a Herculean task to pass this as a stand-alone bill no matter who introduces it," said Jaret Seiberg, a managing director at Guggenheim Partners.
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