WASHINGTON– The House Financial Services Committee will hold a hearing on the future of deposit insurance that is part of a broader effort on both sides of Congress to expand federal deposit insurance for business accounts from $250,000 to $10 million per account. Credit unions will not be represented during the hearing.
Various plans, including the Main Street Depositor Protection Act, have been put forth that seek to phase in the higher cap over 10 years. As the CU Daily reported earlier, one initial version of the proposal sought to set the deposit insurance cap at $20 million per account.
The hearing, which is set for 10 a.m. ET today, also has on its agenda proposals to establish emergency transaction account guarantee programs.
“We were extremely disappointed that close to half of the nation’s opinions are not going to be heard in this committee, as they’ve only invited bank witnesses,” said Jason Stverak, chief advocacy officer with the Defense Credit Union Council. “We expressed our concern that if you were going to have a full and robust discussion on the issue of deposit insurance then you should have a voice at the table that represents 144 million credit union members.”
Supportive of Overall Legislation
While a CU rep won’t be testifying, Ann Petros, VP-policy, engagement and credit union operations with America’s Credit Unions, noted the trade group has endorsed the Main Street Depositor Protection Act.
“We think it could be incredibly beneficial for credit unions to have that additional flexibility and support for deposit Insurance for business accounts,” she said.
CU CEO Testified at Earlier Hearing
Stverak noted that a credit union representative did appear earlier at a separate hearing on the issue. As the CU Daily reported here, Hanscom Federal Credit Union President/CEO Peter Rice testified in September before a Senate Banking, Housing, and Urban Affairs Committee during a hearing titled, “Evaluating Perspectives on Deposit Insurance Reform,” and warned that implicit protections for the largest banks create “dangerous ripple effects” — driving deposits away from local financial institutions, starving small businesses of credit, and hurting the defense industry’s supply chain, according to the testimony.
Ahead of today’s hearing, DCUC, sent a letter to the House Financial Services Committee leaders ahead of tomorrow’s hearing on deposit insurance, expressing its concern over the lack of a witness representing credit unions.
The trade group submitted for the record the the written testimony of Rice from September.
CU Priorities
In its letter, DCUC urged the Committee to consider key credit union priorities as it evaluates deposit insurance reform, including:
- Raising coverage for small-business operating accounts, which frequently exceed the current $250,000 insured limit and were a major source of instability during recent bank failures
- Ensuring full parity between credit unions and banks in both standard insurance coverage and emergency guarantee programs so that credit union members are not treated as “second-class” depositors during crises
- Phasing in any coverage increases responsibly to protect the National Credit Union Share Insurance Fund (NCUSIF) and avoid sudden premium spikes for community institutions
- Removing outdated limits on credit union small-business lending, including supporting the Veterans Member Business Loan Act (VMBLA) to expand access to credit for veteran-owned businesses.
DCUC further requested that the Committee include credit union input as it develops deposit insurance solutions and reaffirmed its readiness to serve as a resource throughout the process.
The Witnesses
Scheduled to appear as witnesses before the committee today are:
- James Ryan, chairman and CEO, Old National Bancorp
- Jill Castilla, president and CEO, Citizens Bank of Edmond
- Chris Furlow, president and CE, Texas Bankers Association
- Grover Norquist, founder and president, Americans for Tax Reform
- Jarryd E. Anderson, partner and co-chair, Financial Services Group, Paul, Weiss, Rifkind, Wharton & Garrison LLP
