WASHINGTON—Legislation has been introduced that would increase deposit insurance coverage, expand FHLB membership and provide more flexibility under the member business loan cap.
Sen. J.D. Vance (R-OH) has introduced legislation aimed at increasing deposit insurance coverage for smaller and regional financial institutions, including all credit unions.
The legislation would fully guarantee all noninterest-bearing transaction accounts at banks with less than $225 billion in assets, and at all credit unions regardless of assets held.
Under the Payroll Account Guarantee Act, all operating, business, and payroll accounts would be fully guaranteed for all credit unions and banks under the asset threshold. It would not levy fees against participating institutions.
Position Outlined in Letter
In May of this year NAFCU had outlined its position on deposit insurance coverage changes in a letter to the committee, of which Vance is a member.
“While we are not advocating for changes for coverage limits for the NCUSIF at this time, any changes considered by Congress to FDIC coverage levels must include parity in coverage levels for the NCUSIF while not changing the tried and tested structure, funding, and operations of the NCUSIF,” NAFCU stated in the letter.
Additional Legislation
In addition, two bills that would provide flexibility under the member business lending cap and expand Federal Home Loan Bank (FHLB) membership have been introduced by Reps. Vicente Gonzalez (D-TX) and Brian Fitzpatrick (R-PA).
The Member Business Loan Expansion Act would seeks to allow NCUA the flexibility to provide credit unions with relief from the 15-year general loan maturity limit under the Federal Credit Union (FCU) Act and raise the de minimis value of what counts toward the MBL cap from $50,000 to $100,000.
In addition, the bill would amend the definition of "community financial institution" under the FHLB Act to include credit unions.
Trade Group CEOs Express Thanks
“NAFCU applauds Representatives Gonzalez and Fitzpatrick for continuing to recognize the important role credit unions play for their members and in helping small businesses thrive – many of which are minority-owned or in communities that have been left behind by banks,” said NAFCU President and CEO Dan Berger. “Main Street small businesses rely on their local credit unions for safe, secure, and reliable loans and this bill will help communities flourish. We support and urge its passage."
Added CUNA President and CEO Jim Nussle, “We thank Reps. Gonzalez and Fitzpatrick for their legislation to help credit unions provide more opportunities for members, including in the student loan arena. The current limit keeps additional affordable credit from credit unions from the market, and we appreciate the Congressman working together on this bipartisan bill.”
Veterans Member Business Loan Act
The Veterans Member Business Loan Act would exclude from credit unions’ MBL cap any business loan made to veterans.
“The Veterans Member Business Loan Act will bring economic opportunity to more veterans by removing barriers that hinder credit unions’ ability to meet their needs,” Berger said. “We thank Representatives Gonzalez and Fitzpatrick for their leadership on this issue and look forward to working with them to get this bill passed.”
Added Nussle, “Credit unions stand willing and able to get needed capital to veteran-owned business, and we thank Reps. Gonzalez and Fitzpatrick for working together and introducing this bill in the House. With bipartisan bills addressing this issue now introduced in both chambers, we will continue to engage members of Congress to move this common-sense legislation forward.”