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Tuesday, June 22, 2010

FDIC Extends TAG For 6 Months, Possibly Longer

Today the FDIC's Board approved a 6-month extension to the Transaction Account Guarantee Program (TAG), which provides full insurance coverage for deposits in qualifying transaction accounts. The TAG, which was set to expire on July 1, 2010, was extended through December 31, 2010.

If warranted by adverse economic conditions, the Board has the authority to further extend the program through December 31, 2011 without additional rulemaking. However, any further extension is limited to December 31, 2011. The Board must announce any extension beyond December 31, 2010 by October 29, 2010.

Assessment rates for participating institutions do not change, and rates continue to be charged on average daily account balances.

The maximum interest rates paid on qualifying negotiable order of withdrawal (NOW) accounts was reduced from 50 basis points to 25 basis points. However, the FDIC will continue to monitor interest rates for TAG-qualifying NOW accounts to see if a future adjustment in the interest rate is warranted.

Current participants had a one-time opt out opportunity through April 30, 2010, with the opt-out becoming effective on July 1, 2010. 441 banks opted out by the April 30th deadline. Current participants that did not opt out by this deadline will remain in the program through December 31, 2010 and through any additional extension through December 31, 2011.

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