Insurance Space

The program, which is set to expire on June 30, is expected to be extended by at least six months or possibly through mid-2011, according to the paper.

The move signals that the U.S. government is not yet ready to drop the temporary measures adopted during the financial crisis to prop up the banking system, the Journal said.

Industry officials have warned that ending the program could lead to more bank failures because businesses would pull money from banks that they believe are in trouble, the paper said.

The Transaction Account Guarantee program was put in place in October 2008 when businesses were pulling their money out of smaller banks and parking the funds in larger institutions perceived to be safer.

The program provides unlimited federal backing for no-interest transaction accounts that businesses typically use to meet payroll and pay vendors.

Since January 2008, more than 200 banks have failed and just eight of those banks have had more than $10 billion of assets, according to the paper.

The FDIC could not be immediately reached for comment by Reuters outside regular U.S. business hours. (Reporting by Shrutika Verma in Bangalore, editing by Will Waterman)

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