Senate Majority Leader Reid introduces bill to extend TAG program

Harry Reid

Senate Majority Leader Harry Reid (D-Nev.) introduced legislation on Monday that would extend a guarantee program for non-interest-bearing bank accounts used by companies and local governments until 2014.

The Transaction Account Guarantee Program allows municipalities and small firms to hold large sums of money temporarily. The extension of the program has been cited by some industry experts as critical to maintaining the stability of the U.S. financial system, The Hill reports.

Reid’s bill, S. 3637, would require the Federal Deposit Insurance Corp., which currently factors in the program’s costs into its regulator assessments, to separately estimate the costs and collect added fees to offset them.

The Independent Community Bankers of America and American Bankers Association said in a letter to Congress earlier this year that economic uncertainty justified the extension of the government guarantee.

“While policymakers had expected the economy to be on solid footing by year-end 2012 when Congress extended the TAG program in 2010, the fact is that the economy is still fragile,” the ICBA and ABA said, according to The Hill. “Businesses…are increasingly nervous about the path of the economy. Extending the TAG program for an additional two years will take at least one important piece of uncertainty off the table at year-end.”

Reid gave no indication as to how he hopes to advance the measure, but his introduction of the bill indicates that Reid may try to move the legislation through Congress before it leaves for Christmas break.

The measure stands a higher chance of passage if it is attached to another measure, such as a year-end tax bill, than as a stand-alone bill.

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