Community Bankers Association of Illinois

FDIC Extends TAG Program for Six Months

The FDIC board met yesterday and voted unanimously to extend the Transaction Account Guarantee Program, which is part of the Temporary Liquidity Guarantee Program or TLGP, for six months through June 30, 2010, but did not rule out further extensions, if necessary. The FDIC accepted a risk-based assessment program, based on an ICBA proposal, in lieu of charging 25 basis points for all participating institutions. Banks that choose to participate in the extended program will be subject to a 15-, 20- or 25-basis-point fee, depending on the Risk Category assigned to the bank under the FDICís risk-based premium system.

For instance, all institutions participating in the extended TAG program that are assigned to Risk Category I of the risk-based premium system will be charged an annualized fee of 15 basis points on their deposits in noninterest-bearing transaction accounts for the portion of the quarter in which they are assigned to Risk Category I. Institutions in Risk Category II will be charged 20 basis points, and institutions in Risk Category III or Risk Category IV will be charged an annualized fee of 25 basis points.

Participating banks that do not want to take part in the extension will have the opportunity to opt out. In order to exercise the option to opt out, a participating entity must submit an e-mail to the FDIC no later than November 2, 2009, that meets all the requirements of the regulation.

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