WASHINGTON—When the Senate Banking, Housing, and Urban Affairs Committee convenes Wednesday to weigh deposit insurance reform, Peter Rice, president and CEO of Hanscom Federal Credit Union, will be the lone voice representing credit unions.
Senator Elizabeth Warren (D-MA) extended the invitation to Rice, who told CUToday.info his testimony will dispel the public belief that deposits are safer in large Wall Street banks.
Hanscom FCU, a member of the Defense Credit Union Council, serves military personnel, veterans, and their families. Rice said he views the invitation as “exceptional,” noting that credit unions bring a strong record of safety and stability to the discussion. He also warned that overlooking the credit union perspective could prove costly as lawmakers weigh reforms that could reshape confidence in the financial system.
Hanscom FCU is also a member of America’s Credit Unions and the Cooperative Credit Union Association.
Rice’s central message to lawmakers is clear: deposit insurance must better protect small businesses. He pointed to the fallout from the March 2023 banking crisis—sparked by the collapse of Silicon Valley Bank, when billions fled community institutions for “too-big-to-fail” banks. Payroll accounts were frozen, employees went unpaid, and smaller firms were left exposed.
“Small businesses provide 46% of all private jobs and nearly half of GDP,” Rice said. “If they can’t meet payroll, the consequences ripple through our communities—and even our national defense.”
The defense connection, Rice stressed, is critical. Each year, the Department of Defense spends more than $130 billion with small business contractors, many of them sole-source suppliers for vital military technology and readiness.
“If those businesses miss payroll or lose their banking relationships, military capabilities are at risk,” he said.
Battling Public Perception
Rice also emphasized another danger: the public belief that deposits are safer in large Wall Street banks.
“The contagion danger from public perception that bigger institutions are safer could be disastrous for the credit union movement,” he warned. Even with an exceptional safety record, smaller institutions remain vulnerable to fear-driven deposit runs. “We cannot sit back and say, ‘that was the bankers’ problem.’ Fear and panic don’t make that distinction.”
A Seat At The Table
As the only credit union voice at the hearing, Rice plans to press Congress for a balanced approach—pricing deposit insurance based on risk, protecting payroll accounts, and ensuring that smaller institutions are treated on par with their larger counterparts.
“This isn’t just about moral hazard,” said the leader of the $1.85-billion CU based in Hanscom AFB, Mass. “It’s about protecting Main Street, ensuring small businesses can keep America working, and safeguarding our national security. Credit unions have to be part of that solution.”
DCUC Proud To Support Hanscom
Anthony Hernandez, president and CEO of the Defense Credit Union Council, said his organization is proud to support Hanscom FCU as it represents the credit union industry before the Senate Banking, Housing, and Urban Affairs Committee.
“We are also grateful to Senator Elizabeth Warren for inviting Hanscom Federal Credit Union to provide the credit union perspective on this critical issue,” Hernandez said.
Credit unions are pillars of Main Street and vital partners for small businesses, said Jason Stverak, DCUC chief advocacy officer.
“By enhancing deposit protections and expanding credit unions’ ability to lend, Congress can fortify the economic foundation of communities nationwide, leveling the playing field between Wall Street and Main Street,” Stverak said.
DCUC recently urged Congress to take action on several key priorities to strengthen deposit protections and expand access to credit:
- Modernizing Deposit Insurance – Raising coverage limits on business operating accounts to better protect payroll and vendor funds in today’s economy.
- Ensuring Parity – Empowering the National Credit Union Administration (NCUA) with the same tools as the FDIC to safeguard deposits, eliminating any perception that credit union deposits are “second class.”
- Managing Costs Responsibly – Supporting a phased-in approach to higher coverage limits to maintain the strength of the National Credit Union Share Insurance Fund.
- Unlocking Small Business Lending – Removing or easing the outdated Member Business Lending (MBL) cap, which unfairly limits credit unions’ ability to meet small business credit needs compared to banks.
- Supporting Veteran Entrepreneurs – Advocating for bipartisan efforts such as the Veterans Member Business Loan Act, which would exempt loans to veteran-owned small businesses from the MBL cap, unleashing new sources of financing for veteran entrepreneurs
ACU Perspective
America’s Credit Unions President/CEO Jim Nussle addressed the support and the opportunities this hearing brings.
“Credit unions must have a seat at the table when Congress debates deposit insurance reform. This hearing presents a clear opportunity to combine the real stories of credit union members with the hard data showing how vital our system is to Main Street,” said Nussle. “This isn’t just one credit union’s perspective, it’s the lived experience of millions of families who depend on safe, affordable financial services. Without our voice, Main Street risks being overshadowed by Wall Street. America’s Credit Unions will continue to bring both the stories and the statistics that prove why reforms must strengthen, not weaken, the Share Insurance Fund and the protection it provides to communities nationwide.”
ACU pointed out that at the heart of this hearing is the National Credit Union Share Insurance Fund. America’s Credit Unions recently emphasized the following key priorities in its research and commentary on the SIF:
- Ensuring that the NCUA employs a fair, transparent budgeting methodology that treats federal and state credit unions equitably, and restricts funding of the SIF to genuine insurance-related expenses
- Advocating for prudent management of the SIF to maintain its equity ratio above the statutory minimum of 1.20%, without resorting to unnecessary premium increases for credit unions
- Supporting policy changes, such as simplification of share insurance rules—including creating a clearer “trust accounts” category—to better serve members and reduce complexity
- Monitoring and communicating quarterly updates on the SIF’s health—speaking to its performance and equity ratios—to promote transparency and confidence in the system
Other witnesses testifying Wednesday: Kenneth Kelly, chairman and CEO, First Independence Bank; Bob Harrison, chairman, president, and CEO, First Hawaiian Bank; and Nicholas J. Podsiadly, partner, Financial Markets Practice, Jones Day.