The ABA Board of Directors—at the recommendation of the ABA Government Relations Council’s Administrative Committee—voted to support a two-year extension of the Transaction Account Guarantee (TAG) program, slated to expire at the end of the year.
The ABA Board believes the extension should be provided for all depositors in insured depository institutions—whether with banks or credit unions—and coverage should include noninterest-bearing transaction accounts and Interest on Lawyers Trust Accounts (IOLTAs).
The ABA Board emphasized, however, that there will be no “quid pro quo” for extending TAG—particularly no language raising the credit union member business-lending cap—and ABA will adamantly oppose any amendment or additions to the TAG’s enabling legislation that would be detrimental to the business of banking.
The decision to support a TAG extension comes a week and a half after the FDIC provided key information on the program’s performance that both ABA and House Financial Institutions Subcommittee had aggressively sought.
In making the decision to support the extension, the ABA Board noted that while the economy has generally improved, that improvement has not been robust, and many areas of the country still suffer from the economic downturn. Recent evidence also suggests that the economy has again slowed considerably and uncertainty about the future pace of the economic growth has risen.
Such uncertainty acts to freeze business decisions, and many bank customers in a position to expand operations and hire new workers remain hesitant to do so. Extending the TAG program for an additional two years would eliminate one element of uncertainty—particularly for businesses that want assurance that their payroll accounts are safeguarded.