Bankin’ Bits

Tagging Out of the TAG Component of the FDIC’s Temporary Liquidity Guarantee Program

June 23, 2009 at 7:53 pm Scott Smalley Leave a comment

Today the FDIC announced that it is seeking public input on whether to extend the Transaction Account Guarantee (TAG) component of the Temporary Liquidity Guarantee Program (TLGP).  As you may recall, the FDIC established the TAG program in October 2008 as part of a broader effort to stabilize the nation’s financial system.  Under the TAG program, the FDIC guarantees all deposits held in qualifying noninterest-bearing transaction accounts at participating depository institutions.  The TAG program is currently set to expire on December 31, 2009. 

According to its announcement (available here), the FDIC is seeking input on whether to allow the TAG program to expire as scheduled, on December 31st, or whether to extend the TAG program for six months until June 30, 2010.  If extended, depository institutions currently participating in the TAG program would be given the opportunity to opt out.  However, any institution opting out of the program would be required to notify its customers that, beginning on January 1, 2010, deposits in qualifying noninterest-bearing transaction accounts would not be covered by the FDIC beyond standard deposit insurance limits.

For institutions that do not opt out of the extended TAG program, the FDIC would increase the fees currently assessed for the program by 10 to 25 basis points during the proposed extension period.

Entry filed under: Client Alerts, FDIC, Small Business/SBA/Community Banks. Tags: .