Republican lawmakers have spent the past two years praising the virtues of community banks and expressing concern that new regulations under the 2010 Dodd-Frank financial oversight law will crush small lenders. But when it comes to small banks’ top agenda item this year, the GOP hasn’t exactly been bending over backward to show the love.


Community banks have been furiously lobbying Congress in recent weeks to extend a program that provides a bigger backstop for certain customer deposits, particularly those of businesses. The Transaction Account Guarantee program, which covers an estimated $1.4 trillion worth of deposits, was created in 2008 during the financial crisis and extended for two years in 2010. It is set to expire at the end of the year.


The small bank lobby argues that without the security of this enhanced guarantee, provided by the Federal Deposit Insurance Corp., businesses will pull their funds and put them in what may be considered safer investments, such as money market funds and accounts at large banks, delivering a blow to a community banking industry that is still reeling from the financial crisis.

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