Senate Majority Leader Harry Reid (D-Nev.), who promised credit union leaders a vote on member business lending legislation this year, introduced a bill Monday night that would be an early Christmas gift to community banks.
S. 3637 would temporarily extend the Transaction Account Guarantee, which provides unlimited federal insurance for transactional account deposits, such as checking accounts used by businesses.
Community bank lobbyists have argued that without TAG, large business depositors would move their accounts to big banks under so-called “too big to fail” protections, and take their lending business with them.
According to the Library of Congress website and other sources, Reid also began the process for Rule 14 in regard to the bill, which would allow him to object to it being sent to committee and instead bring it to the floor for a vote.
Reid took the same route with S. 2231, which would increase the member business lending cap to 27.5% of assets, but that bill has not yet made it to the Senate floor.
Because S. 3637 was just introduced Monday night, text of the bill is not yet available. It is unknown if the TAG extension will also apply to credit unions.
A Senate Democrat website called the legislation the “FDIC TAG Extension bill.” The bill also serves unspecified “other purposes” which could mean a potential MBL package deal for credit unions as suggested by credit union trade associations.