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Inside Washington (09/13/2011)
* WASHINGTON (9/14/11)--The Federal Deposit Insurance Corp.’s (FDIC) blanket coverage of no-interest deposits, a program started during the financial crisis, has created a quandary for large financial institutions. The coverage was initially created to provide stability, but after the Dodd-Frank Act extended the program until the end of 2012, many large banks have been left with the added costs of ultra-short term deposits from institutional investors. Banks can only invest or lend the money out on an overnight basis, said Ron Glancz, a partner at Venable LLP. They are paying the premiums without the advantage of increased deposits, he said. The coverage was intended primarily for small banks and to protect businesses from losses, but banks no longer have liquidity issues, said John Douglas, a partner at Davis Polk & Wardwell and a former FDIC general counsel … * WASHINGTON (9/14/11)--The Internal Revenue Service (IRS) seeks public comment on a proposed “affordability safe harbor” for employers under the shared responsibility provisions included in the Affordable Care Act. Under the act, which goes into effect in 2014, employers with 50 or more full-time employees that do not offer affordable health coverage to those employees may be required to make a shared-responsibility payment. IRS expects to propose a safe harbor permitting employers that offer coverage to their employees to measure the affordability of that coverage by using wages that the employer paid to an employee, instead of the employee’s household income. This contemplated safe harbor would only apply for purposes of the employer shared responsibility provision, and would not affect employees’ eligibility for health insurance premium tax credits. Notice 2011-73, posted Tuesday on IRS.gov, asks for comment on the proposed safe harbor …


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