Reuters reports that the FDIC's Transaction Account Guarantee (TAG) program, which insures all bank deposits in checking accounts above the $250,000 coverage already provided by the is scheduled to expire on December 31, 2012 and that $1.3 trillion of TAG-insured deposits that do not pay interest are on deposit at U.S. banks.
The TAG program is likely one big reason why the FDIC is not taking down more
banks; they can't afford to cover losses on the extra deposits. Apparently only about three weeks of legislative days are left for Congress to create an
extension of the TAG insurance program before the election, if they wanted to. This should be allowed to expire, as taxpayers are potentially on the hook for much larger losses with the program. Expiration would give the FDIC room to take over more insolvent banks, since the covered deposits would be less.