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FDIC Encourages "Adequate Notice" On Possible Tag Expiration

Posted on 11/6/2012

The FDIC encouraged banks in a financial institution letter yesterday to give customers adequate advance notice that the Transaction Account Guarantee (TAG) program is scheduled to expire on December 31. TAG currently provides temporary unlimited deposit insurance coverage for non-interest-bearing transaction accounts, including Interest on Lawyer Trust Accounts (IOLTAs).

The FDIC noted that the Dodd-Frank Act imposes no specific notice requirement for the coverage expiration, but added that "we encourage [insured depository institutions], as a matter of prudent commercial practice, to remind their…depositors about the pending expiration and the impact that expiration will have on their deposit insurance coverage."

The FDIC included model language that banks can use to communicate that the TAG program is slated to expire, and said it will provide additional guidance if Congress modifies coverage for non-interest-bearing transaction accounts.

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