Transaction Account Coverage an Urgent Issue

At ICBA’s recent Washington Policy Summit, I told community bankers gathered in the nation’s capital that our industry is full of passionate advocates. And I mean it—we’ve had a good year so far. ICBA and community bankers have advanced an important regulatory-relief provision of the Communities First Act that raises the Securities and Exchange Commission registration threshold for financial institutions from 500 shareholders to 2,000. We’ve also temporarily held off the credit union push for expanded business lending.

But we’re getting into crunch time on one of this year’s top priorities—extending the FDIC’s full coverage of noninterest-bearing transaction accounts. The coverage, known as “TAG” after the original program launched during the financial crisis in 2008, has helped stabilize the banking system and level the playing field with the megabanks. The TAG program helps prevent even greater deposit concentration in a handful of these large institutions and helps keep deposits in local communities to fund small-business lending.

Problem is, the coverage is scheduled to expire on Dec. 31. And let me tell you, on Capitol Hill, that’s right around the corner. This is an election year, so it’s particularly hard to get Congress’s attention.

That’s why we need community bankers to dig deep, to get that fire in the belly going, because this issue’s going to take some work. Congress needs to hear from you on why this issue is so important. There are more than $1.4 trillion in transaction-account deposits that would become uninsured overnight if this program is not extended—and the systemically risky banks are going to be the ones to benefit. So keep the passion going and make sure that Congress is listening. We’ve had a pretty good year, but it’s far from over. So let’s continue to fight the good fight—as ICBA Immediate Past Chairman Sal Marranca would say—and make it a great one.

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