ICBA Speaks Out Against Geithner's Opposition To TAG Extension

ICBA urges the Treasury Department to renew the TAG insurance extension at the end of the year.

Jul 30, 2012

By: Michelle Patana

Amid heavier regulations and big banking abuses, smaller community banks are beginning to speak out against agencies that are failing to implement policies that will help heal the economy and bolster local financial institutions. Already, new regulations have made it more financially challenging for smaller banks to comply with the laws, and it appears that these burdensome pieces of legislation have done little to curb megabanks' harmful behaviors.

Community banks are now focusing on another issue that has failed to garner necessary support from key legislators. U.S. Treasury Secretary Timothy Geithner recently voiced his opposition to the Transaction Account Guarantee program extension, which would continue the unlimited deposit insurance guarantee for certain transaction accounts. His opposition deals a heavy hit to local institutions, namely community banks, that have lobbied in favor of the crisis-era deposit insurance.

The extension, which is set to expire at the end of 2012, extends unlimited FDIC insurance on noninterest-bearing transaction accounts. In a speech before the Senate Banking Committee, Geithner said that the Treasury has not seen fit to extend the TAG insurance program, but that it is "an issue and a concern to many people, and we're going to have to look at those concerns carefully," according to American Banker.

The issue is becoming particularly critical in the next few days, as the House and Senate will adjourn next week until after Labor Day, American Banker explains.

However, Camden Fine, who currently serves as president of the Independent Community Bankers Association, had strong remarks for Geithner's response to the extension.

"Obviously ICBA was less than pleased with the secretary's response to the question," said Fine. "What really infuriates me is that Treasury doesn't bat an eye to dole out billions of taxpayer dollars to too-big-to-fail firms," Fine said. "But when it comes to thousands of Main Street community banks who would pay for the program themselves, not one dime of taxpayer dollars, Treasury gives them the back of the hand."

Fine and ICBA have been instrumental in leading the charge to extend TAG insurance. In light of several scandals and lawsuits that are becoming increasingly prevalent among megabanks, ICBA has also become more vocal about implementing policies that will enable community banks to better serve Main Street customers who are facing abuses by Wall Street firms. Community banking programs are continuing to face obstacles from new policies designed for large banks, and more are calling on lawmakers to start focusing less on complex regulations and more on finding solutions that actually help consumers.

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