Winding Down Transaction Account Guarantees

     WASHINGTON (CN) – The Federal Deposit Insurance Corporation has proposed two scenarios to wind down the Transaction Account Guarantee Program component of the Temporary Liquidity Guarantee Program, which insures non-interest bearing transaction accounts at Insured Depository Institutions.

     Under the first proposed alternative, the FDIC’s guarantee of deposits held in qualifying non-interest-bearing transaction accounts subject to the TAG program would continue until Dec. 31. The existing fee structure and the FDIC’s guarantee of non-interest-bearing transaction accounts would remain as they are under the current regulation.
     The second proposed alternative would extend the TAG program six months more, until June 30, 2010. Insured depository institutions that are currently participating in the TAG program would be provided a single opportunity to opt out of the extended TAG program. Insured institutions that opt out of the extended TAG program would be required to update their disclosure postings and notices to indicate that they are no longer participating in the program. In addition, under this alternative, institutions that remain in the TAG program would be charged a higher fee than they currently are, to participate in the program.
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