Last week, the FDIC issued a notice of proposed rulemaking (NPR) regarding the potential extension of the Transaction Account Guarantee (TAG) Program, a component of the FDIC’s Temporary Liquidity Guarantee Program. Under the TAG Program, the FDIC provides an unlimited “guarantee for deposits in qualifying noninterest-bearing transaction accounts” maintained at participating insured depository institutions. The FDIC is requesting comments on two alternative methods of concluding the TAG Program.
Under the first proposed alternative, the FDIC would not change its existing regulations for the TAG Program. The FDIC’s guarantee for the qualifying deposits would expire on December 31, 2009, and there would be no increase in fees for TAG coverage.
Under the second proposal, the TAG Program would be extended until June 30, 2010, “with an increase in annual fees from 10 basis points to 25 basis points during the proposed extension period.” Insured depository institutions participating in the TAG Program would be given a one-time opportunity to opt out of the extension on or before October 31, 2009. Those opting out of the TAG Program would be required to notify their customers of the fact that, “beginning on January 1, 2010, deposits in qualifying noninterest-bearing transaction accounts would not be covered by the FDIC beyond the standard deposit insurance limits.” Those insured depository institutions remaining in the TAG Program would need to review and amend their current disclosures to alert depositors of the extended expiration date.
Publication of the NPR in the Federal Register is expected to occur in the next week and all comments must be submitted to the FDIC within 30 days following publication.