WASHINGTON– The Defense Credit Union Council (DCUC) has sent a letter to Sens. Bill Hagerty (R-TN) and Hagerty and Angela Alsobrooks (D-MD) expressing support for a recent amendment to the FY2026 National Defense Authorization Act (NDAA) that proposes to raise deposit insurance coverage on business transaction accounts to $20 million for community financial institutions, while also expressing some concerns.
The NCUSIF currently covers deposit accounts up to $250,000 per account.
One Big Question
Jason Stverak, chief advocacy officer with the DCUC, acknowledged one big question raised by such a huge increase in account coverage is whether additional assessments would need to be charged to credit unions to boost the NCUSIF’s equity ratio. He said the trade group is hopeful of working with Congress as the amendment moves forward to address that issue.
A proposal has been made to extend up to $20 million in coverage for a very limited class of accounts under the FDIC. The issue of expanded deposit coverage has been on the table since the March 2023 failure of Silicon Valley Bank and others that left many business accounts largely uninsured, although the government ultimately made all of them whole.
“This proposal closes a dangerous gap for small businesses,” Stverak said in a statement. “Payroll and operating funds must be safe and available, even during financial instability.”
Three Priorities
In the letter, Stverak highlighted three priorities for DCUC as Congress considers reforms:
- Protect Small Business Deposits: DCUC said the higher coverage for operating accounts ensures businesses can meet payroll and essential expenses.
- Maintain Parity: DCUC stressed that credit unions must have equal authority as banks through NCUA.
- Pair Reform with Lending Relief: DCUC expressed its continued support for the bipartisan Veterans Member Business Loan Act and urged Congress lift or ease the outdated cap that limits credit unions’ ability to serve local businesses.
‘Uniquely Positioned’
“Veteran entrepreneurs deserve full access to capital, and credit unions are uniquely positioned to provide it,” Stverak said. “By coupling stronger deposit protections with expanded credit opportunities, DCUC believes Congress can safeguard small businesses while fueling local economic growth.
Deposit insurance reform and MBL relief go hand-in-hand,” Stverak continued. “Together, they strengthen small businesses, protect jobs, and level the playing field between Wall Street and Main Street.”
Stverak added that if “Congress doesn’t want to take a bite of the whole apple” it should instead start by passing the Veterans Member Business Loan bill that would lift the MBL cap currently in place to allow for business loans to veterans.
The DCUC letter can be found here.
Opposition to Bill in Puerto Rico
Separately, DCUC expressed its strong opposition to Puerto Rico Senate Bill 675, which seeks to exclude sales taxes and gratuities from interchange fee calculations.
“SB 675 would harm Puerto Rico’s financial ecosystem, especially servicemembers, veterans, and their families who rely on safe, convenient, and affordable payments through their local financial institutions including credit unions,” said Stverak in a statement.
Specific Concerns
DCUC said its concerns with SB 675 include:
- Undermined payment security
- A costly and complex Puerto Rico-specific technology mandate
- Disproportionate impact on smaller financial institutions (through limited resources and higher costs)
- Shifted compliance expenses to consumers (higher fees, reduced rewards programs, fewer resources for security)
- The lacking of potential for true public benefit (past interchange regulations have shown savings are rarely passed on to customers)
- The fact no U.S. state or global jurisdiction has enacted this type of carve-out.
Would ‘Isolate’ Island
DCUC’s noted it expressed that enacting this bill would isolate Puerto Rico’s financial system and likely discourage investment.
Instead of rewriting payment rules, DCUC is suggesting Puerto Rico “adopt proven measures—such as ensuring full tip protection for employees or providing sales tax collection allowances for merchants—without harming consumers or financial institutions.”
DCUC letter on the Puerto Rico bill can be found here.
