In a letter to the Senate Banking Committee, the American Bankers Association and the Independent Community Bankers of America urged the committee to extend the Transaction Account Guarantee program for two years.
“The TAG program for banks and credit unions has proven its value to millions of small business and municipal depositors,” the ABA and ICBA said in the Tuesday letter. “It has been an asset to the economy and the financial system during this period of recovery. While the economy has generally improved, it has not been robust or uniform across the United States. Several areas of our country are still recovering from the economic recession and there remains a need for the TAG program. Ending it too soon does nothing but add more nervousness and uncertainty among our business and municipal customers.”
The groups said in the letter that the TAG program does not rely on taxpayers for funding but is funded by the banking industry “at a very low cost relative to the benefits for our communities.”
Additionally, the ABA and ICBA said that extending the TAG program would not interfere with the current recapitalization of the Federal Deposit Insurance Corp.’s Deposit Insurance Fund, adding that an increase in bank premiums would be unnecessary in order to fund the two-year TAG extension.
“We know that some in Congress have proposed linking the extension of the TAG with expanded credit union business lending,” the groups said. “The ABA and ICBA strongly oppose any such attempt to combine these two provisions. The fact is that credit union customers enjoy the protection that TAG has provided and will benefit from any extension. We know the extension of TAG has merits that benefit both banks and credit unions, and any combination of TAG with a permanent expansion of credit union powers would be unacceptable to the community banking industry.”