Search
 

Flows Linked to TAG Expiration Are Limited

No wholesale shift out of bank accounts has been seen despite the end of unlimited FDIC coverage.

By Susan Kelly | Updated on January 22, 2013

The flood of money moving out of U.S. banks when unlimited Federal Deposit Insurance Corp. coverage expired at the start of this year doesn’t seem to have materialized. At the end of 2012, an estimated $1.5 trillion held in non-interest bearing bank accounts lost FDIC coverage when a financial crisis program, the Transaction Account Guarantee program (TAG), expired and FDIC insurance reverted to a maximum of $250,000. Much of the newly uninsured money was expected to shift from banks to other short-term investment products, like money-market funds, but in fact, banks saw more money coming in than going out late last year.

“What was expected was that when deposit insurance was scaled back to $250,000, there would be hundreds of billions flowing out of banks,” Anthony Carfang, a partner at consultancy Treasury Strategies, said during a webcast earlier this month. Instead, “during the fourth quarter of 2012 leading up to the Dec. 31 expiration, deposits at U.S. banks actually increased,” he said.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Why Companies Are Racing to the U.S. Debt Market

Why Companies Are Racing to the U.S. Debt Market

Caleb Mutua & Jeannine Amodeo |

Borrowing costs have become compelling, as markets are already pricing in expectations for reduced interest rates. And several external factors could reverse that trend.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.