Quote:

http://www.reuters.com/article/2012/07/3....
Jul 30, 2012

NEW YORK, July 30 (Reuters) - The expiration of special U.S. deposit insurance at the end of the year has spurred b anks to lobby Congress to extend the program out of fear that companies will withdraw billions of dollars.

At issue is the Transaction Account Guarantee (TAG) program, which insures all bank deposits in checking accounts above the $250,000 coverage already provided by the Federal Deposit Insurance Corp.

TAG primarily benefits businesses and local governments that need quick access to large amounts of cash for payroll and other needs.

About $1.3 trillion of TAG-insured deposits that do not pay interest sit at large and small U.S. banks...

Quote:

Without another extension, businesses are likely to shift their deposits to prime money-market accounts and other short-term alternatives.

"This program is the best deal around," said Robert Haas, senior treasury associate in charge of cash management and investments at the National Railroad Passenger Corp., the parent of Amtrak.

Quote:

While the 10 largest U.S. banks hold 70 percent of TAG deposits, small banks have benefited by attracting deposits from local borrowers to fund loans that previously went to bigger banks, which are seen as safer. Community banks with under $10 billion of assets hold about $200 billion of TAG deposits - or about $23 million per bank.

"Extending TAG is our No. 1 priority this year," said Camden Fine, president of the Independent Community Bankers of America, who insists that business lending in distressed communities depends on the program. "Ending it will have a crippling impact on any kind of full economic recovery."

The ICBA seeks a five-year extension of the program...