Understanding the Transaction Account Guarantee Program [TAGP] and Its Importance
Definition & Meaning
The Transaction Account Guarantee Program (TAGP) is a federal initiative designed to provide a full guarantee for non-interest-bearing deposit transaction accounts that exceed $250,000. This program is part of the Temporary Liquidity Guarantee Program (TLGP) established by the Federal Deposit Insurance Corporation (FDIC). It aims to enhance the stability of the banking system by reassuring depositors that their funds are protected in participating depository institutions.
Legal Use & context
The TAGP is primarily relevant in the context of banking and finance law. It is utilized during times of economic uncertainty to bolster consumer confidence in the banking system. Legal professionals may encounter this term when advising clients on deposit insurance and risk management strategies. Users can manage their accounts and understand their protections through available legal templates and resources.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A business owner deposits $500,000 in a non-interest-bearing account at a bank that participates in the TAGP. In the event of a bank failure, the owner is guaranteed to recover the full amount above the standard FDIC limit of $250,000.
Example 2: A nonprofit organization opens a transaction account with $300,000 in a participating bank. If the bank fails, the organization can rely on the TAGP to recover the amount above the $250,000 threshold. (hypothetical example)