Targeted steps to increase deposit insurance would protect Main Street
Hanscom Federal Credit Union President/CEO Peter Rice made specific deposit insurance reform recommendations to the Senate Banking Committee Wednesday, while America’s Credit Unions urged credit union parity with any updates to bank deposit insurance.
In a letter to the Committee ahead of the hearing, America’s Credit Unions President and CEO Jim Nussle did not directly advocate for any changes to coverage limits to the National Credit Union Share Insurance Fund (NCUSIF) currently, but noted, “any changes to coverage levels for banks must include parity in coverage levels for credit unions while not changing the tried and tested structure, funding, and operations of the NCUSIF.”
Rice, the sole credit union witness at the hearing, spoke in support of increasing both NCUSIF and Federal Deposit Insurance Corporation levels for small business payroll and operating accounts.
He urged Congress to:
- Protect deposits used for payroll, payables, and taxes, without extending unlimited coverage to all accounts;
- Make banks with higher concentrations of risky, uninsured deposits pay more for insurance;
- Require faster reporting and stress tests for banks with between $50 billion and $250 billion in assets so depositors have clarity;
- Ensure small businesses can safely spread balances across banks without hidden risks;
- Make clear criteria for when extraordinary coverage will apply; and
- Direct the Department of Defense to provide emergency bridge financing for cleared small vendors when bank failures threaten payroll or contract delivery.
He also added, “while credit unions remained safe during the March 2023 crisis, we are deeply concerned about the risks posed by implicit guarantees for ‘too-big-to-fail’ banks and the threat this creates for Main Street and our national security.”
America’s Credit Unions, Cooperative Credit Union Association, Defense Credit Union Council, (Hanscom is a member of all three), and MD|DC Credit Union Association attended the hearing.
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