Extension of Bill to Extend Deposit Coverage for Non-Interest Bearing Accounts Defeated
Commentary by Scott Cammarn
On December 13, 2012, efforts to pass S. 3637 – which would have extended the Transaction Account Guarantee ("TAG") program through the end of 2014 – failed in the Senate. The TAG program, established during the height of the financial crisis, will afford unlimited Federal deposit insurance coverage to non-interest transaction accounts, through December 31, 2012. As a result of the expiration of the TAG program, the insurance coverage amount for such deposits will revert to the standard maximum deposit insurance amount of $250,000, effective January 1, 2013, as originally scheduled.
Commentary
The expiration of the TAG program will have a significant impact on depository collateral accounts held at FDIC-insured institutions, which will be subject to the $250,000 SMDIA effective January 1, 2013. Clients should review their collateral arrangements and consider making appropriate changes, such as the creation of special deposits or other structures that provide greater protection in the event of the failure of the custodial bank).