The FDIC adopted a final rule extending the Transaction Account Guarantee (“TAG”) portion of the Temporary Liquidity Guarantee Program for six months, through June 30, 2010. The TAG program provides an unlimited FDIC guarantee for deposits in qualifying noninterest-bearing transaction accounts. For more on the TAG program, please see the October 14, 2008 Alert and the November 25, 2008 Alert.
Any insured depository institution that is currently participating in the TAG program may continue in the program during the extension period that ends on June 30, 2010. Any institution currently participating in the TAG program that wishes to opt out of the TAG extension must submit its opt-out election via email to the FDIC on or before November 2, 2009. Any such election to opt out will be effective on January 1, 2010 and any institution that opts out will continue in the TAG program through December 31, 2009, and must continue to report its TAG deposits accordingly. The FDIC expects that every institution currently participating in the TAG program will review its disclosures and modify them as necessary to ensure that they will be accurate after December 31, 2009.
For those institutions that choose to remain in the program, the fee for the TAG program will be raised and adjusted to reflect the risk category assigned to the institution under the FDIC’s risk-based premium system. The annual assessment rate that will apply to participating institutions during the extension period will be (a) 15 basis points for institutions in risk category 1, (b) 20 basis points for institutions in risk category 2 or (c) 25 basis points for institutions in risk category 3 or 4. The fee will apply to any deposit amounts exceeding the existing deposit insurance limit of $250,000, as reported on the quarterly call report in any noninterest-bearing transaction accounts, including any such amounts swept from a noninterest-bearing transaction account into a noninterest-bearing savings deposit account.The maximum interest rate limit for covered NOW accounts remains unchanged, which for purposes of the TAG program, will continue to include only those NOW accounts with interest rates no higher than 0.50 percent.