Capital Corner: Not the Main Event, But the Undercard Deserves Attention, Too

​Shutdown politics have taken center stage in Washington. Closely following that will be the annual consideration of the National Defense Authorization Act, which may include hot-button issues such as the Credit Card Competition Act. Against that backdrop, DCUC is closely monitoring other issues that may not be as headline-grabbing but are nonetheless important to defense credit unions.

One is the Senate’s emerging effort to change the deposit insurance regime. Sens. Bill Hagerty (R-TN) and Angela Alsobrooks (D-MD) have introduced a bill that would raise deposit insurance caps from $250,000 to $20 million for business checking accounts at NCUSIF and FDIC-insured banks with less than $250 billion in assets. This proposal has drawn a mixed reaction from Senate Banking Committee Chairman Tim Scott—he stated that he is “open to consideration” of the move but cautioned that “reform is not simple; it comes with trade-offs.”

In a letter to Acting FDIC Chairman Travis Hill, Scott asked for detailed information on possible changes to deposit insurance, specifically for data on insured and uninsured deposits, as well as an analysis of the potential costs to banks of increasing coverage for certain types of accounts. He also requested the FDIC’s opinion on how higher limits might alter market behavior among banks and depositors.

Thus far, the Senate Banking Committee has not requested similar information from NCUA. On one hand, this is at least partially explainable by the reality that the banking industry is much more involved in, and exposed to, a possible business checking account coverage expansion than are credit unions. However, the legislation to alter the current system does include NCUSIF, and credit unions would be affected by any changes to the consumer deposit market. NCUA should be included in these discussions, period.

The Senate Banking Committee is expected to examine this issue in greater detail at its October 23 regulatory oversight hearing that will feature NCUA Chairman Kyle Hauptman, along with his banking regulatory counterparts.

DCUC has also been in direct contact with the House Financial Services Committee about including credit unions in reg relief deliberations regarding banks. Chairman French Hill, in close concert with bank trade groups, has declared his intent to “Make Community Banking Great Again,” and has put forth an ambitious agenda to help smaller banks.

Specifically, Chairman Hill has teed up bills to expand the ability of small banks to deal in reciprocal deposits, to lower capital ratios for banks under $10 billion in assets, and to streamline the capital-raising framework for small and mid-sized banks. The House Financial Services Committee has also approved a bill to grant tax-exempt Subchapter S banks relaxed capital standards when participating in economic stimulus programs designed to increase capital investments in local communities, an ironic position for the banking industry to support, given their vehemence in demanding that the credit union tax exemption bar credit unions from almost any new authorities or activity.

Where are credit unions in all this modernization talk? DCUC is interacting with financial staff in both chambers, asking that question and reminding Capitol Hill that the need for greater flexibility and powers applies to credit unions as well.

Being visible, engaged, and generally present are essential in the advocacy business. It shows Congress that you are paying attention, and in turn need to be paid attention to, especially when critical issues emerge.

​Look for amplified efforts on DCUC’s part as 2025 draws to a close