PRESS RELEASE
Federal Deposit Insurance Corporation Each Depositor insured to at least $250,000
FOR IMMEDIATE RELEASE
April 13, 2010
Media Contact:
Andrew Gray
(202) 898-7192
Email: angray@fdic.gov
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing
risks to which they are exposed. The FDIC receives no federal tax dollars — insured financial institutions fund its
operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html ) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-75-2010
FDIC Board of Directors Approves Extension of Transaction
Account Guarantee Program
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) today
approved an interim rule to extend the Transaction Account Guarantee (TAG) program
to December 31, 2010. Last year the program was extended to June 30, 2010. Under
the TAG program, customers of participating insured depository institutions are provided
full coverage on transaction accounts. The interim rule gives the Board discretion to
extend the program to the end of 2011, without additional rulemaking, if it determines
that economic conditions warrant such an extension.
FDIC Chairman Sheila Bair said, "It's necessary to extend the TAG program because
the lingering effects of the financial crisis that emerged in 2008 in large systemically
important banks have now spread to institutions of all sizes, particularly in regions
suffering from ongoing economic weakness. Allowing the TAG program to expire in this
environment could cause a number of community banks—already under stress—to
experience deposit withdrawals from their large transaction accounts and would risk
needless liquidity failures. This reflects the continuing legacy of too big to fail and the
different liquidity pressures our community banks experience as a result."
The TAG extension will provide a continued stable funding source for participating
banks and will help them maintain their ability to secure low-cost, large deposits,
thereby preserving their deposit franchise value and supporting the rebuilding of their
earnings and capital, which in turn protects the Deposit Insurance Fund.
Bair said, "I believe it's a wise decision to keep the rates for the TAG program at current
levels so as to enable most participating institutions to remain in the program and retain
liquidity to support lending needed for our nation's economic recovery. Ultimately, it
Federal Deposit Insurance Corporation Each Depositor insured to at least $250,000
FOR IMMEDIATE RELEASE
April 13, 2010
Media Contact:
Andrew Gray
(202) 898-7192
Email: angray@fdic.gov
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing
risks to which they are exposed. The FDIC receives no federal tax dollars — insured financial institutions fund its
operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html ) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-75-2010
FDIC Board of Directors Approves Extension of Transaction
Account Guarantee Program
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) today
approved an interim rule to extend the Transaction Account Guarantee (TAG) program
to December 31, 2010. Last year the program was extended to June 30, 2010. Under
the TAG program, customers of participating insured depository institutions are provided
full coverage on transaction accounts. The interim rule gives the Board discretion to
extend the program to the end of 2011, without additional rulemaking, if it determines
that economic conditions warrant such an extension.
FDIC Chairman Sheila Bair said, "It's necessary to extend the TAG program because
the lingering effects of the financial crisis that emerged in 2008 in large systemically
important banks have now spread to institutions of all sizes, particularly in regions
suffering from ongoing economic weakness. Allowing the TAG program to expire in this
environment could cause a number of community banks—already under stress—to
experience deposit withdrawals from their large transaction accounts and would risk
needless liquidity failures. This reflects the continuing legacy of too big to fail and the
different liquidity pressures our community banks experience as a result."
The TAG extension will provide a continued stable funding source for participating
banks and will help them maintain their ability to secure low-cost, large deposits,
thereby preserving their deposit franchise value and supporting the rebuilding of their
earnings and capital, which in turn protects the Deposit Insurance Fund.
Bair said, "I believe it's a wise decision to keep the rates for the TAG program at current
levels so as to enable most participating institutions to remain in the program and retain
liquidity to support lending needed for our nation's economic recovery. Ultimately, it
should be up to Congress to determine our insurance limits, and I hope this will receive
prompt attention."
Nearly 6,400 insured depository institutions, about 80 percent of the industry, continue
to participate in the TAG program and benefit from the guarantee provided by the FDIC.
These institutions held an estimated $266 billion of deposits above the insured deposit
limit and guaranteed by the FDIC through the TAG program as of the end of 2009.
Under the interim rule, participating institutions can opt out effective July 1, 2010. Last
year the Board adjusted the assessment rate to make it risk based and approved an
increase in the rates; the current rates will remain unchanged under the interim rule.
The Board also voted to require TAG assessment reporting be based on average daily
account balances and to reduce the maximum rate that can be paid for qualifying NOW
accounts to 0.25 percent from 0.50 percent.
There will be a 30-day public comment period upon publication in the Federal Register.
Attachments:
Memorandum - PDF and resolution re: Interim Rule with Request for Comment:
Temporary Liquidity Guarantee Program - PDF. (PDF Help)
prompt attention."
Nearly 6,400 insured depository institutions, about 80 percent of the industry, continue
to participate in the TAG program and benefit from the guarantee provided by the FDIC.
These institutions held an estimated $266 billion of deposits above the insured deposit
limit and guaranteed by the FDIC through the TAG program as of the end of 2009.
Under the interim rule, participating institutions can opt out effective July 1, 2010. Last
year the Board adjusted the assessment rate to make it risk based and approved an
increase in the rates; the current rates will remain unchanged under the interim rule.
The Board also voted to require TAG assessment reporting be based on average daily
account balances and to reduce the maximum rate that can be paid for qualifying NOW
accounts to 0.25 percent from 0.50 percent.
There will be a 30-day public comment period upon publication in the Federal Register.
Attachments:
Memorandum - PDF and resolution re: Interim Rule with Request for Comment:
Temporary Liquidity Guarantee Program - PDF. (PDF Help)