Nearly along party lines, Republicans in the Senate this afternoon killed a bill to extend a little-known but potentially costly bank bailout.

The provision is the Transaction Account Guarantee, or TAG. Created amidst the financial panic of late 2008 and extended as part of Dodd-Frank, TAG puts a taxpayer guarantee on all deposits above and beyond FDIC’s insurance. In other words, if banks lose a rich person’s checking-account money, the taxpayer pays difference.

TAG is set to expire at the end of the year. The American Bankers Association and the community bank lobby are eager to keep it alive. Credit Unions want to kill it, as does the mutual-fund lobby — mutual funds, which are not insured, lose business when wealthy potential clients can get taxpayer backstops by going elsewhere.

Majority Leader Harry Reid brought a two-year extension to the Senate floor this week, but Pat Toomey brought a budget point of order against the bill. Democrats needed 60 votes to override the budget act. They got 50 votes: 49 Democrats and Kay Bailey Hutchison.

It’s promising that Republicans are willing to go against the American Bankers’ Association. I wonder, though, if this isn’t a replay of last year’s fight over the Export-Import Bank.

Back then, Senate Republicans lined up against reauthorizing that export-subsidy agency at first, in protest of Reid’s heavy-handed management of the Senate. Eventually, most Republicans voted to reauthorize Ex-Im.

And today’s GOP vote against TAG should be considered mostly a protest against Reid’s undemocratic ways. McConnell took to the floor last night to lament Reid’s tendency to keep Republicans from offering amendments:

Senate Republicans voted overwhelmingly to get on this bill–voted overwhelmingly to get on the bill. We soon found out, however, that no good deed goes unpunished. Less than a minute after agreeing to adopt a motion to proceed to the bill, theDemocratic majority filled the amendment tree to prevent any Senator, Republican or Democrat, from offering any amendments.

Republicans have significant, on-point amendments we would like to offer. For example, Senator Corker has an amendment that requires the FDIC to charge the full premium necessary to cover the cost of this insurance. Senator Vitter has a similar amendment. Senator Corker also has an amendment that would make participation in the TAG Program voluntary so banks don’t have to pay premiums for insurance they don’t use. Senator Wicker has an amendment that would limit the term and exposure of the extension of the TAG Program.

So, maybe Republicans are starting to oppose bank subsidies. Or maybe Reid is just angering them.

John Berlau at CEI sees it this way:

Though TAG went down due to legitimate concerns about the shutting down of constructive amendments and violations of budget rules, this subsidy providing an unlimited safety net to millionaires and billionaires deserved to be defeated because it own fiscal recklessness….”