The Transaction Account Guarantee Program (TAG) is set to expire at the end of the year. In the midst of the financial crisis, TAG extended bank deposit guarantees for checking accounts above the normal FDIC $250,000 limit, making them unlimited. The program was extended after its first two-year expiration came up in 2010. It should not be extended again.
The Senate will vote on the issue later today (UPDATE: The Senate voted 76-20 to open debate with the vote to close debate expected on Thursday) barring another postponement – it was originally scheduled to open for a vote yesterday. CF&P President Andrew Quinlan joined 13 other free market leaders in a letter making the case against extending TAG, shown below in its entirety :
RE: STOP TAG – TARP’S BLOATED BIG BROTHER BANK BAILOUT
Dear Majority Leader Reid and Republican Leader McConnell:
As conservative, libertarian, and free-market organizations concerned — as the vast majority of Americans are – about economic growth and the government’s fiscal solvency, we are outraged on many levels that the Senate would even consider extending the Transaction Account Guarantee program, or TAG.
TAG both places unlimited liability on taxpayers for bank and credit union deposits and subsidizes the ability of the wealthy to “park their money” in ways that are unproductive for the economy. It makes the government responsible for guaranteeing any bank account – no matter how large – so long as the financial institution doesn’t pay interest.
If TAG expires, accounts will still be guaranteed up to $250,000. It is especially ironic that Congress is contemplating raising tax rates for those making above $250,000, and TAG further encourages the wealthy to sit on their money, rather than invest in job-creating new businesses. Many wealthy people will choose the security of a 100-percent guaranteed bank account rather than taking a risk with an entrepreneur.
We sympathize with banks and credit unions in their fight against the regulatory burdens they face from Dodd-Frank and other big-government mandates. We would point out that some banks and credit unions oppose extending TAG, and instead urge Congress to pass legislation with regulatory relief. We urge you to listen to these voices in the financial community, as well as the voices of the beleaguered American taxpayer, before extending this unprecedented, unproductive, and regressive bailout.
Senior Fellow for Finance and Access to Capital
Competitive Enterprise Institute
Richard and Susan Falknor
Blue Ridge Forum
Republican National Policy Committee
60 Plus Association
Tea Party WDC
Andrew F. Quinlan
Center for Freedom & Prosperity
National Center for Public Policy
Executive Vice President
National Taxpayers Union
Lewis K. Uhler
National Tax Limitation Committee
Arthur F. Burns Fellow in Financial Policy Studies
American Enterprise Institute
* Title for identification purposes only.