Treasury & Risk: "New Game of No TAG"
Treasury & Risk writes "New Game of No TAG", which is subtitled, "As banks opt out of unlimited FDIC protection on corporate accounts, treasurers scramble to find safe havens for cash." The piece says, "Beginning in October 2008, the FDIC's transaction account guarantee, or TAG, program, insured the full amount in accounts, rather than just the $250,000 normally covered. Last year, TAG was extended through this June, but more than 3,100 banks have opted out, including Bank of America, Bank of New York Mellon, Citigroup, HSBC, JPMorgan Chase, PNC, SunTrust, USBank and Wells Fargo. Comerica and KeyBank had not opted out at press time." T&R quotes Dave Robertson, a partner at Treasury Strategies, "This is a huge issue for corporations. As most banks opt out, depositors go from full protection by the U.S. government to direct counterparty risk with their banks, very few of which are rated above A. That's quite a drop-off." The article also quotes Ben Campbell, CEO of Capital Advisors Group, "Unlimited FDIC insurance on corporate accounts had provided cash managers with a worry-free vehicle. Now that it's going away, we've had inquiries about the alternatives. I've talked with treasurers who had billions of dollars in FDIC-insured accounts." In other news, see the press release "Confluence Experts Available to Comment on Money Market Fund Reform's Impact on Fund Administration and Holdings Reporting".
