What is in this article?:
- Unless Congress extends the Transaction Account Guarantee program, it will expire on December 31.
- Program provides coverage for non-interest bearing transaction accounts in community banks.
On whether Congress will act to keep the program in place…
“There will be a vote (Tuesday, December 11) on the bill that (Senate) Majority Leader Harry Reid has introduced. The bill, S.3637, would extend the TAG program for two years.
“First, the Senate will vote on a motion to proceed. Then, there will be debate and, probably, a couple of hours later will come the final vote. We could know by (Tuesday) evening what the fate of this legislation is.”
On optimism about getting a new farm bill as opposed to an extension…
“I don’t have any inside track on that. But I think everyone in the ag community should keep pushing hard to influence the small cadre of (lawmakers) who will make the final decision.
“I think the farm bill leaders in both the House and Senate have done a commendable job in keeping the ball rolling. And they’re close. There just needs to be some final pushes as the year winds down.”
You’ve been involved with a lot of farm legislation. Have you seen anything akin to what we’re seeing with the latest farm bill and fiscal cliff negotiations?
“Other farm bills haven’t passed smoothly and on time. There have been extensions and so forth.
“I don’t think the difficulty in getting (a new farm bill) passed in unprecedented. The 2008 farm bill was initially the 2007 farm bill and it had a couple of presidential vetoes involved. The process can be sticky.
“My concern is if they push a new farm bill into 2013 and have to depend on a budget where there’s less money in the baseline or Congress is looking for even more money as part of deficit reduction. (Under those scenarios), the farm bill could be hit even more. Some of the programs so important to farmers – crop insurance, conservation and so forth – have been well negotiated in the committees and they’ve seen significant cuts. Push things off another year and it’ll be even more difficult given the budget constraints, which are more difficult now than they’ve ever been.”
“The TAG program guarantees, again, are provided by the FDIC. But it isn’t a taxpayer-funded programbecause banks pay premiums to pay for the insurance. So, it’s a good deal for rural America and customers get the benefit. If money leaves our local community banks it isn’t good for the rural economy.
“We need to protect the diversity of the rural economy and allow institutions, farmers and ranchers to continue working and banking with their local banks.”
December 5 letter sent to Senate leaders.
“Dear Majority Leader Reid and Republican Leader McConnell:
“The FDIC’s successful Transaction Account Guarantee (TAG) program, which provides full insurance coverage for non-interest bearing transaction accounts, is set to expire at year’s end.
“The thousands of farms and agribusinesses we represent produce food for American families and for exports, or provide crop insurance or inputs to producers and, therefore, play a central role in rural economies. We are deeply concerned about the possibility of abruptly losing insurance coverage of transaction accounts and urge the Senate to pass S. 3637, which provides a temporary two-year extension.
“Transaction accounts are used by small and large farmers and agribusinesses, as well as small businesses, municipalities, hospitals and other entities for payroll and other operational expenses.
“These farmers and businesses appreciate the security provided by the FDIC’s TAG insurance for lump sum deposits which are inherent in the seasonal nature of their business. TAG was enacted during the financial and economic crisis to protect depositors and to prevent a sudden withdrawal of deposits that would dislocate the banking system. While economic and financial conditions have improved, they remain fragile and the impact of the year-end ‘fiscal cliff,’ a crisis in Europe, or other events could reverse the gains we’ve made. If full TAG insurance coverage expires, farmers and rural businesses will be forced to weigh shifting their deposits out of the local banks they partner with in their communities.
“TAG deposits in community banks are a significant source of funding for farm and rural business loans. Premature expiration of TAG could adversely impact the extension of credit. Farmers, small businesses and rural Americans all have a stake in our local communities and the economic recovery. Therefore, we urge you to extend TAG.”
Among those signing the letter: Agricultural Retailers Association, American Association of Crop Insurers, American Soybean Association, National Association of Wheat Growers, National Cattlemen’s Beef Association, National Corn Growers Association, and the USA Rice Federation.