A two-year extension of the Transaction Account Guarantee (TAG),
which provides unlimited deposit insurance coverage for
non-interest bearing accounts and a short-term investment option
for many treasurers, cleared a procedural motion in the Senate on
The 76-20 Senate approval to begin debate is the preliminary
advancement of the bill with a final vote shortly thereafter.
Created by the Federal Deposit Insurance Corporation (FDIC) in
2008 to supplement liquidity and prevent bank runs in the wake of
the financial crisis, and then extended in 2010 under the
Dodd-Frank Act, TAG is set to expire at the end of this month.
The bill, introduced by Senate Majority Leader Harry Reid (D-NV),
amends the current program by requiring that TAG offset its own
estimated losses through collected fees, effectively removing it
from FDIC cost assessment.
Many lawmakers are reluctant to extend TAG a third time, arguing
the program was intended only for emergency liquidity relief in the
immediate aftermath of the 2008 financial crisis and that further
extension would stifle competition.
Following Tuesday's passage, Reid abruptly blocked additional
amendments from being added to the bill, a move that could obstruct
the Republican support needed for final Senate passage. House
Republican Leadership has expressed opposition to considering the
bill on the House floor, while the White House has released a
statement in support of the legislation.
AFP will continue to monitor the bill's status as it moves