Transaction Account Guarantee Keeps Oakland Money Safe
Public Date: April 8, 2010
Contact: Andy Meisner
Phone Number: 248-858-0624
Pontiac, Michigan - Drawing on his experience as an aide to House Ways and Committee Chairman Sander Levin (D-MI) and House Appropriations Committee Chairman David Obey (D-WI), Oakland County Treasurer Andy Meisner today urged Federal Deposit Insurance Corporation (FDIC) Chairman Sheila Bair to extend the Transaction Account Guarantee (TAG) program set to expire in June of this year.
Quoting from a letter Meisner sent to Chairman Bair and copied to Senators Carl Levin and Debbie Stabenow and Congressmen Sander Levin and Gary Peters:
"While the TAG program's success in assisting financial institutions to continue making loans to individuals and small businesses during this financial crisis is well-documented, the story of how local governments rely on this program may not be," said Meisner. "Fully-insured transaction accounts have provided me with a critical cash management tool, allowing my taxpayers to earn a respectable yield with peace of mind."
Under the TAG program, transaction accounts, including negotiable order of withdrawal accounts, enjoy full FDIC backing with no limit provided that interest paid on the account is no greater that .5%. These accounts are used by businesses and governments for short-term cash management purposes. Oakland County currently has over $60 million in these accounts.
"Clearly, the federal response to the financial meltdown has had mixed results," conceded Meisner. "The TAG program, however, is one of the strategies that has work as planned and should be extended indefinitely."
House Financial Services Committee Chairman Barney Frank (D-MA) and Subcommittee on Financial Institutions and Consumer Credit Chairman Luis Gutierrez (D-IL) are supporters of extending TAG, which has been extended once already. Chairman Bair has the authority to extend the program upon making a formal determination that "systemic risk" persists in the financial system.