WASHINGTON—Risks borne by recently collapsed banks should not be paid for by credit unions, CUNA told the House Financial Services Committee ahead of a hearing on the issue.
As CUToday.info reported here, FDIC Chairman Martin Gruenberg said his agency is estimating that the cost to the Deposit Insurance Fund (DIF) related to resolving the failure of SVB will be $20 billion, while the cost of resolving Signature Bank at $2.5 billion. FDIC-insured banks will pay a special assessment to cover the costs.
“While much remains to be discovered regarding the causes of the collapse of SVB—and we hope this hearing today uncovers more information—we can be clear on this: our community-focused credit unions did not cause the collapse of one of the largest regional banks in the country, and should not face more federal regulation or increased fees due to these banks’ actions,” the letter reads.
CUNA again reminded Congress 91% of credit union deposits insured, and credit unions remain “stable, safe and secure.”
Request for Additional Liquidity Sources
In its letter, CUNA also called on the committee to consider legislation to help credit unions with under $250 million in assets access liquidity more easily, similar to legislation to extend COVID-related flexibility to access NCUA’s Central Liquidity Facility.
The letter further outlines problems privately insured credit unions have had accessing the Federal Reserve’s Bank Term Funding Program, which the Fed has limited to federally insured credit unions.
“Privately insured credit unions are state‐chartered, state‐regulated and subject to the same regulatory requirements as are state‐chartered, federally insured credit unions in their respective states. In all aspects, privately insured credit unions are regulated like all other state‐chartered credit unions, except they are not federally insured,” the letter reads. “CUNA strongly encourages the Federal Reserve to allow all credit unions, regardless of the source of their deposit insurance, to access the BTFP and asks that the committee bring up this important issue with Vice Chair Barr in the hearing today.”
CUNA wrote a similar letter to the Senate Banking, Housing, and Urban Affairs Committee for its hearing on the collapses.
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