Transaction Account Guarantee Program

The Federal Deposit Insurance Act is amended by adding at the end the following new section:

51.

Transaction Account Guarantee Program

(a)

Establishment

There is hereby established the Transaction Account Guarantee Program to provide a full guarantee for funds held in noninterest-bearing transaction accounts of insured depository institutions participating in the TAG Program. (b)

Guarantee in addition to deposit insurance

The guarantee provided for under the TAG Program is separate, and in addition to, any deposit insurance provided with respect to such funds under this Act. (c)

Opting-In to the TAG Program

(1)

In general

An insured depository institution that wishes to participate in the TAG Program shall submit an application to the Corporation in such form and manner and containing such information as the Corporation may require. The Corporation shall accept all such applications that do not otherwise conflict with the provisions of this section. (2)

Minimum 6-month participation period

An insured depository institution that opts-in to the TAG Program may not opt-out of the program during the 6-month period beginning on the date on which the such institution opts-in to the TAG Program. (3)

Waiting period after opting-out

An insured depository institution may not apply to participate in the TAG Program if such institution has opted-out of the TAG Program during the previous 6-month period. (d)

Opt-Out requirements

(1)

In general

An insured depository institution may opt-out of the TAG Program by providing notice to the Corporation in such form and manner and containing such information as the Corporation may require. (2)

Customer notice requirement

An insured depository institution that chooses to opt-out of the TAG Program shall notify each person with a noninterest-bearing transaction account with the institution that the institution is opting-out of the TAG Program. (e)

Assessments

(1)

In general

The Corporation shall levy assessments on those insured depository institutions participating in the TAG Program. (2)

Risk-based assessment system

In levying assessments under paragraph (1), the Corporation shall levy higher assessments on those insured depository institutions that the Corporation determines present a higher risk that the Corporation will incur a loss under the TAG Program with respect to such institutions. (3)

Amount of assessment

The Corporation shall set the amount of assessments made under paragraph (1) at a level such that the aggregate amount of all assessments is sufficient to cover the estimated amount of payments made by the Corporation by reason of guarantees made under the TAG Program. (f)

Rulemaking

The Corporation shall issue such regulations as are necessary to carry out the provisions of this section. (g)

Definitions

For purposes of this section: (1)

Noninterest-bearing transaction account

The term noninterest-bearing transaction account means— (A)a transaction account with respect to which interest is neither accrued nor paid and on which the insured depository institution does not reserve the right to require advance notice of an intended withdrawal; (B)accounts commonly known as Interest on Lawyers Trust Accounts, or functionally equivalent accounts; and (C)negotiable order of withdrawal accounts with interest rates no higher than 0.50 percent, if the insured depository institution at which the account is held has committed to maintain the interest rate at or below 0.50 percent. (2)

TAG Program

The term TAG Program means the Transaction Account Guarantee Program established under subsection (a).