FOR IMMEDIATE RELEASE
Ending Deposit Coverage Will Disproportionately Affect Minority Communities
Minority Community Banks Urge Extension of “TAG” Coverage
Washington, D.C. (June 18, 2012)—Abruptly ending full Federal Deposit Insurance Corp. coverage of $1.3 trillion in deposits will disproportionately affect minority community banks and their customers, the Independent Community Bankers of America’s (ICBA) Minority Bank Council told Congress. In a letter to congressional leaders, the chairman and vice chairman of the council wrote that a temporary, five-year extension of the FDIC’s transaction account guarantee (“TAG”) insurance would preserve the economic recovery in minority communities.
“With so many other risks to the nation’s economic recovery, a premature expiration of TAG is an additional, unnecessary risk we should not take,” Chairman Guillermo Diaz-Rousselot of Continental Bank of Miami and Vice Chairman George Andrews of Capitol City Bank & Trust Co. in Atlanta wrote. “The stakes are especially high for minority banks and the communities we serve.”
Transaction accounts are essentially checking accounts used by businesses, local governments, hospitals and other non-profit organizations for payroll and other recurring expenses. TAG insurance, which was established in 2008 during the financial crisis to prevent a sudden withdrawal of deposits, provides full insurance of transaction accounts that do not bear interest. The coverage, which is scheduled to expire on Dec. 31, is fully paid for by banks through their FDIC insurance premiums and requires no taxpayer funding.
Minority banks are either owned by minority individuals (African Americans, Asian Americans, Hispanic Americans or Native Americans) or have minority boards of directors and serve minority communities. Diaz-Rousselot and Andrews wrote that the TAG program has helped the nation’s 184 FDIC- recognized minority banks attract deposits, which support loans to small businesses and consumers. The institutions are tailored to the languages, customs and special financial needs of their communities. The loss of TAG coverage will have a direct and adverse impact on the neighborhoods served by minority banks.
For more information and to read the letter, visit www.icba.org.