A Federal Deposit Insurance Corp. program that expanded safeguards for business bank accounts will probably expire at the end of this year after the U.S. Senate failed to advance a proposal for an extension.
A 50-42 vote on a procedural motion fell 10 short of the 60 needed to move forward on a two-year extension of the Transaction Account Guarantee Program, effectively killing it. The TAG program, introduced in the wake of the 2008 credit crisis, guarantees $1.5 trillion in non-interest bearing accounts above the FDIC’s general limit of $250,000. An initial extension is set to end Dec. 31.
“Absent unforeseen developments, the TAG program will expire at the end of the year,” James Ballentine, executive vice president of congressional relations and political affairs at the American Bankers Association, said in an e-mail.
The TAG program, which provided unlimited backing for accounts used for payrolls and other business expenses, was opposed by Republicans as a bailout-era program that shouldn’t be extended. Community bankers sought the extension as a way to keep accounts from being moved to bigger banks or money-market mutual funds.
“We’re disappointed that the Senate failed to vote on a temporary extension,” American Bankers Association President and Chief Executive Officer Frank Keating said in a statement. “The TAG program has been fully funded by the banking industry at no taxpayer expense and millions of small businesses and municipal depositors would have valued its continuation during this period of economic recovery.”