SOURCE: Delaware State Treasury
DOVER, DE--(Marketwire - December 13, 2012) - The Delaware State Treasury (Treasury) issued an advisory notifying Delaware residents, businesses, nonprofits and government agencies on the impending expiration of the Federal Deposit Insurance Corporation's (FDIC) Transaction Account Guarantee (TAG) Program on December 31.
The TAG program was created in 2008 to strengthen confidence in the U.S. banking system and to ensure liquidity. It provides an uncapped federal guarantee on funds held at FDIC-insured depository institutions in noninterest-bearing transaction accounts. Many of these accounts are checking accounts used by individuals, businesses, nonprofit institutions and government agencies to carry out their financial operations. Failure to renew the TAG Program will result in such transaction accounts being subject to the FDIC insurance cap of $250,000.
In response to recent Senate action on the measure, Delaware State Treasurer Chip Flowers issued a Directive that requires financial institutions holding state deposits to set aside sufficient collateral to ensure the safety and security of state funds held in transaction accounts at their institutions. Under the Directive, such funds will have to be collateralized by December 31 -- the date the White House and Congress need to reach resolution on the "fiscal cliff."
"Until the issue as to whether the TAG Program will exist after December 31st is resolved at the federal level, it is critical that Delawareans using checking or other transaction accounts in FDIC-insured financial institutions for business or personal uses ensure their money is safe and properly secured. This is the rationale underlying the issuance of this advisory by the Delaware State Treasury," Flowers said.
"Furthermore, the Directive issued today protects our state funds. The safety and security of state funds will always be the top priority of the current administration of the Treasury. While the Treasury will continue working with our colleagues to find a compromise solution to extend the TAG Program that would be voluntary and not increase the size of the federal deficit, in the interest of Delawareans, I am hopeful that the White House and Congress will find common ground on this important program prior to the end of the year," Flowers said.
Citing significant benefits to state and local governments, Flowers and other members of the National Association of State Treasurers (NAST) have been urging passage of a two-year extension of the TAG Program.
For additional information, visit treasury.delaware.gov.
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