U.S. Senator Bob Corker, R-Tenn., a member of the Senate Banking Committee, today announced his opposition to further extension of the Transaction Account Guarantee Program, which expires at the end of the year. The temporary measure established during the 2008 financial crisis provides unlimited federal insurance for noninterest-bearing business accounts. With banks now holding sufficient deposits to support their outstanding loans and data showing that large institutions are by far the largest holders of TAG deposits, the program's benefit to the community banking system is, at best, unclear.
"It's time to move beyond this period of unprecedented government support of the banking industry, and so I am opposed to any more extensions of this limitless guarantee program," said Corker.
In August, Corker wrote to FDIC Chairman Martin Gruenberg, asking a number of questions about the necessity of extending the program with the banking system having emerged from a crisis. The FDIC's response did not provide sufficient evidence that maintaining TAG is justified by current measures of bank lending or liquidity.