The Senate voted not to extend full Federal Deposit Insurance Corporation (FDIC) insurance coverage of non-interest transaction accounts Dec. 13. The decision came after months of debating a two-year extension of the Transaction Account Guarantee (TAG) program.
Many in the banking industry, including the Independent Community Bankers of America, were disappointed with the decision, believing thousands of community banks and businesses depend on the TAG program for insurance of accounts that exceed $250,000.
Some believe the decision was made because TAG is a government program paid for with tax dollars. But John Tolomer, president and CEO of The Westchester Bank, said, “the TAG program has been funded by the banks by increased premiums to the FDIC” and the “impression that this is a government accommodation for large banks” is not the case.
Tolomer, whose community bank serves a client base comprised of 60 percent business and commercial clients, hopes lobbyists can convince lawmakers to change their minds. However, many in the banking industry are not optimistic.
“I don’t see many other avenues for legislation to extend the program,” said James Ballentine, executive vice president for congressional relations and political affairs with the American Bankers Association. Conservatives in Congress were reportedly disenchanted with the bill because it extended crisis-era guarantees that are now deemed unnecessary.