Money fund portals, fund companies and FDIC "amalgamators" are all gearing up to take advantage of what is expected to be a flood of TAG money coming out of bank noninterest bearing transaction accounts if unlimited FDIC insurance expires as expected at the end of this month. Money fund "portal" provider Institutional Cash Distributors put out a press release entitled, "ICD's 2013 Corporate Treasury Investment Guide Identifies Key Post-TAG Alternatives," which says, "ICD responds to industry-wide investor concerns about safe haven replacements for cash as the Dodd-Frank Act provision extending unlimited FDIC insurance for bank deposits expires on December 31, 2012." The release explains, "Institutional Cash Distributors (ICD) announced today the publication of its 2013 Corporate Treasury Investment Guide, a timely alternative institutional investments listing with accompanying capital preservation, liquidity and yield attributes. It is estimated that as much as $1.6 trillion in corporate cash moved to banks after a temporary emergency government provision -- known as the Transaction Account Guarantee (TAG) program -- was implemented providing unlimited FDIC insurance for non-interest bearing bank accounts. That program will end on December 31, 2012."
ICD writes, "At October's 2012 AFP Annual Conference in Miami, standing-room-only corporate treasury crowds overwhelmed the TAG Expiration sessions as corporate treasurers sought information and direction on institutional investment options. Further evidence of the importance of this issue was the November 30th Treasury & Risk feature story, Unlimited FDIC Coverage Could Be Extended, was one of its Top 10 most read articles in 2012. In response ICD developed the 2013 Corporate Treasury Investment Guide, which summarizes various available investment options in the market and analyzes them based on preservation of capital, liquidity and yield in today's global economic environment."
Sebastian Ramos, ICD's Senior Vice President, Head of Global Trading said, "Many of our corporate treasury clients have asked for guidance regarding alternative investments to bank deposits. In response, we created our guide listing relevant investment options featuring capital preservation, liquidity and yield attributes to help corporate practitioners in designing a post-TAG asset allocation plan that matches their investment objectives and risk tolerance." Ramos added, "Once an allocation strategy has been developed, investments can be further evaluated on an individual and comprehensive basis, through an exposure analytics process, to understand the portfolio's aggregated counterparty, country and sector risks."
ICD's release adds, "Given the expected investment inflows due to the termination of FDIC unlimited insurance, expected year-end seasonal factors, and a declining supply of money-market instruments, those planning to invest in money market funds -- especially US Treasury and Government funds - should do so well in advance of December 31, 2012."
FDIC "amalgamator" StoneCastle Partners also put out a release last week. They wrote, "StoneCastle Partners, LLC, a leading asset management company that manages, with its affiliates, over $5 billion in assets, is available to assist reporters seeking background, insights and comments on to the Senate block to temporarily extend the Dodd-Frank Transaction Account Guarantee ("TAG") program. Originally introduced by the FDIC in 2008 as a temporary backstop for banks to avoid the flight of large depositors, it is estimated that TAG currently has $1.5 trillion of non-interest bearing bank balances under its umbrella. StoneCastle executives, who have deep banking knowledge and experience, are available to provide background on the history of the TAG program, potential impact of the outcome of the vote and next steps for both banks and depositors."
