FDIC chairman says decision soon on ending guarantee for ‘transaction’ accounts

FDIC to decide on ending guarantee

WASHINGTON — The head of the Federal Deposit Insurance Corp. says the agency will decide soon whether to end a government guarantee for special deposit accounts in banks used by businesses.

The guarantee for non-interest-bearing “transaction” accounts was part of a program backing hundreds of billions of dollars in U.S. banks’ debt that was put in at the height of the financial crisis in October 2008.

FDIC Chairman Sheila Bair said Thursday a decision will be made in the next 30 days on terminating the guarantee for the accounts, which removed the $250,000 insurance limit.

Businesses often use the accounts for processing their payrolls and other transactions.

It is the latest sign of the unwinding of federal financial rescue programs. Bair says such programs must be ended “as soon as possible.”