WASHINGTON (AP) — A federal program giving unlimited insurance guarantees to some no-interest bank accounts, enacted at the height of the financial meltdown, will die out at the end of the year following defeat of a Senate plan to extend it.

Senate Majority Leader Harry Reid, D-Nev., led efforts to add two more years to the life of the Transaction Account Guarantee program, but Republican opponents used a procedural vote on the bill's budgetary impact to effectively kill it.

Non-interest-bearing transaction accounts are used by businesses, local governments, hospitals and farmers who need a safe place to keep money on a short-term basis for such recurring expenses as payrolls. Critics of open-ended government backing of the program say the accounts have also become a haven for the wealthy and a deterrent to people investing in more risky job-creating enterprises.

With the measure's demise, federally backed insurance for so-called TAG accounts will revert back to the $250,000 level that applies to most other bank accounts. The increased insurance protection was put in place in October 2008 as the financial crisis raised fears of a run on banks. It was revised and renewed in the 2010 Dodd-Frank financial overhaul act.

At the end of September, about $1.5 trillion was guaranteed in transaction accounts at U.S. banks and thrifts, according to the Federal Deposit Insurance Corp.

The two-year extension was pushed by smaller community banks that argued that the financial recovery is still fragile and that the shrinking of federal protections would result in depositors moving their money to big banks that are less vulnerable to future financial downturns.

The extension was opposed by credit unions seeking the same advantages as banks and conservative groups who associate the TAG program with the federal bailouts of 2008 and 2009 and say the program is no longer needed.

"We are not in a financial crisis anymore," said Sen. Pat Toomey, R-Pa. "I don't understand how you can justify it now." Republicans were also upset that Reid used tactics to keep them from amending the bill. Continued...