Washington, DC, December 10, 2012 – As the Senate prepares today to vote on extending unlimited deposit insurance for non-interest bank accounts, 14 leaders and scholars of conservative and free-market groups signed a letter stating strong opposition to the Transaction Account Guarantee (TAG).
Enacted at the height of the financial crisis, TAG provides unlimited government-guaranteed deposit insurance for non-interest bank and credit union accounts, over and above the $250,000 limit for all accounts. Yet the Senate today is voting on whether to extend this “temporary program,” which benefits only the wealthiest depositors, for another two years.
“We are outraged on many levels that the Senate would even consider extending TAG,” states the letter, whose signatories includes leaders from the Competitive Enterprise Institute, National Taxpayers Union, the 60 Plus Association, National Center for Public Policy Research, American Commitment, Less Government, R Street, and in his own capacity, prominent banking scholar Peter Wallison of the American Enterprise Institute. “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.”
John Berlau, CEI’s Senior Fellow for Finance and Access to Capital, writes in National Review, “A TAG extension, coupled with the tax rate hikes that may go into effect next year, would pour fuel on the proverbial fire by telling investors the government will take more from them if their investment in a job-generating startup business is successful but will provide an additional margin of safety if the money just sits in a bank vault!”
Berlau is available for comment before and after the Senate open debate on the bill, which is slated to take place today around 5:30 pm. The bill is S. 3637.