CUNA’s Magill Tells Reuters that TAG, MBL Bills May Move in Combination
July 31, 2012
July 31, 2012
An article in Reuters, a London-based international news agency, quoted Credit Union National Association (CUNA) Executive Vice President John Magill yesterday in an article entitled, “Banks urge U.S. Congress to extend crisis-era deposit insurance.”
The article primarily references the banking industry’s efforts lobbying Congress to extend the Transaction Account Guarantee (TAG) program for deposit insurance. But as Magill noted in the story, some members of the U.S. Senate have indicated that combining the TAG extension with S. 2231, the bill to raise the credit union member business lending (MBL) cap, might allow both bills to move forward.
Magill told Reuters that senators have indicated to CUNA that “marrying TAG, which the banks really want, with the MBL bill, which we are lobbying for, would work.”
Magill went on to say that CUNA will work to ensure that TAG will not end up passing unless the MBL bill is passed.
“CUNA has been promised votes in the House and the Senate on its bill. The banks don’t have a bill or a vehicle to attach one,” he said, referring to a pledge made in March by Sen. Majority Leader Harry Reid (D-Nev.) to give the MBL bill a floor vote in the House.
TAG insurance was established in response to the 2008 financial crisis as a way to prevent sudden mass withdrawals, one of two main components of the Temporary Liquidity Guarantee Program (TLGP). According to a press release issued in October 2008 by the Federal Deposit Insurance Corporation (FDIC), the TLGP was intended “to decrease the cost of bank funding so that bank lending to consumers and businesses will normalize,” and to encourage liquidity and confidence in the banking system by establishing a program that “guarantees newly issued senior unsecured debt of banks, thrifts, and certain holding companies, and provides full coverage of non-interest bearing deposit transaction accounts.”
The TAG program temporarily provided a full guarantee by the FDIC for funds above the existing deposit insurance limit held in noninterest-bearing transaction accounts at FDIC-insured depository institutions. This coverage was originally set to extend through Dec. 31, 2009, and is now set to expire on Dec. 31, 2012 after multiple extensions.
The banks are now pushing for an additional two-year extension of the TAG coverage. Credit unions have comparable coverage, which is also set to expire at year’s end along with the banks’, through the National Credit Union Administration (NCUA).
The American Bankers Association and the Independent Community Bankers Association have said they would oppose giving credit unions more lending capability in exchange for the temporary TAG extension.
Questions? Contact a member of the Association’s Legislative Affairs team: