Senate takes up bank deposit insurance bill

Source: Associated Press

Senate takes up bank deposit insurance bill
By JIM ABRAMS
Associated Press
Published: Tuesday, December 11, 2012 at 3:43 p.m.
Last Modified: Tuesday, December 11, 2012 at 3:43 p.m.

The Senate on Tuesday began considering proposed legislation to extend for two years a Great Recession program that provides open-ended government insurance backing for certain non-interest-bearing bank accounts.

The 76-20 Senate vote to consider the bill to extend the Transaction Account Guarantee program was a victory for community banks who say ending the deposit insurance program could lead to a flight of money from smaller, more vulnerable, banks to the too-big-to-fail megabanks.

Conservative groups, and credit unions seeking greater equality with banks, oppose the legislation. They say the program, put in place in October 2008 to stop a possible run on banks, has outlived its usefulness. Their position may prevail in the end: even if the bill makes it through the Senate it faces opposition in the Republican-controlled House.

The program, revised and renewed in the 2010 Dodd-Frank financial overhaul act, changes the $250,000 limit for federally backed insurance that applies to other deposit accounts, making that insurance coverage unlimited for the non-interest-bearing bank accounts. If the program is allowed to expire at the end of this year, transaction account deposits will revert to that $250,000 limit.


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