Senate Banking Committee Chairman Tim Johnson (D-SD) spoke on the Senate floor today to urge his colleagues to support passage of S. 3637, a temporary extension of the Transaction Account Guarantee (TAG) Program.
Below are Chairman Johnson's remarks as prepared for delivery:
"Mr. President, I want to express my support for S. 3637, a temporary extension of the Transaction Account Guarantee or TAG program.
"The TAG program, which is administered by the FDIC for insured depository institutions, and the NCUA for credit unions, provides unlimited insurance for noninterest-bearing accounts at banks and credit unions. These transaction accounts are used by businesses, local governments, hospitals and other non-profit organizations for payroll and other recurring expenses, and this program provides certainty to businesses in uncertain times.
"These accounts are also important to our nation's smallest financial institutions. In fact, 90% of community banks with assets under $10 billion have TAG deposits. This program allows these institutions to serve the banking needs of the small businesses in their communities, keeping deposits local. In my state of South Dakota, I know that the TAG program is important to banks, credit unions and small businesses.
"Our nation's economy is certainly in a different place than it was in 2008 at the height of the financial crisis when this program was created, but with concerns about the fiscal cliff in the U.S. and continued instability in European markets, I believe a temporary extension is needed.
"Therefore I believe a clean two year extension makes the most sense. It provides the most certainty for businesses and financial institutions. It also provides time to prepare for the end of the program in two years.
"I want to note that this legislation has a cost recovery provision that ensures that no taxpayer is on the hook for this insurance; financial institutions pay for the coverage. This is not, and never will be, a bailout. This is simply additional insurance paid for by the banks to ensure that these accounts remain stable.
"Last, I want to thank Leader Reid for making this issue a priority in the lame duck session. I also want to thank Senator Sherrod Brown for being a great partner for many months on this important topic.
"I ask that my colleagues support the extension of TAG."