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Senate bill would extend deposit insurance program

Published on NewsOK Modified: December 10, 2012 at 2:11 pm •  Published: December 10, 2012

Community bankers dispute claims made by the program's opponents that it has cost the FDIC almost $2.5 billion. While they acknowledge that the program increases bank-failure-related expenses by about 3 percent, they argue that those losses are covered by insurance premiums that banks pay the FDIC.

But 14 conservative and free-market groups, in a letter to Senate leaders Friday, said the TAG program "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." The letter, signed by such groups as the Competitive Enterprise Institute, Tea Party WDC, R Street and the Republican National Policy Committee, said many wealthy people "will choose the security of a 100 percent guaranteed bank account rather than taking a risk with an entrepreneur."

Megan Whittemore, spokeswoman for House Majority Leader Eric Cantor, R-Va., said the program was intended to be a temporary measure during the height of the financial crisis and that "the majority leader believes we should not continue to extend these guarantees and therefore opposes the proposal."

The measure is also opposed by the Credit Union National Association, which ran ads saying "the banks have their hands out again." The credit union has said an extension of the program should be accompanied by legislation that would allow credit unions to expand lending to their business members.