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ICBA Urges FDIC to Extend Transaction Account Guarantee Program, Assess Institutions Based on Risk

Washington, D.C. (July 30, 2009)—The Independent Community Bankers of America (ICBA) today urged the FDIC to extend its Transaction Account Guarantee Program (TAG) for one additional year or until Dec. 31, 2010. ICBA also called on the FDIC to set the assessment fees of participating institutions based on risk instead of raising the assessment from 10 basis points to a flat 25 basis points for all participating institutions.

“The TAG program has been an important source of stability for many of our nation’s Main Street community banks, particularly those in communities that have been hardest hit by the current economic downturn,” said Camden R. Fine, ICBA president and CEO. “We urge the FDIC to extend the TAG program for an additional year so community banks can continue to use it to navigate through the ebb and flow of the economic crisis and help their customers in their communities during this critical time.”

The TAG program has been an important source of stability for community banks with large transaction account balances. Since its inception, the program has garnered significant participation and approximately $700 billion in transaction accounts subject to the FDIC guarantee, which otherwise wouldn’t be insured.

Instead of charging an onerous flat fee of 25 basis points for all participating TAG institutions, ICBA recommends that the FDIC establish premium rates for the program that are commensurate with the risk profile of the bank as determined under the FDIC’s risk-based assessment system. For instance, Risk Category I banks could pay a TAG fee of between 10-14 basis points, Risk Category II banks pay a flat fee of 16 basis points, Risk Category III banks 20 basis points and Risk Category IV banks 25 basis points.

ICBA looks forward to working with the FDIC on this important issue. To read ICBA’s comment letter to FDIC, visit www.icba.org.

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