Navy FCU Seeking Meetings on Capitol Hill Over NCUSIF Coverage of Bank’s Deposits (CUToday, October 18, 2023)
WASHINGTON–Navy Federal Credit Union has reached out to Capitol Hill seeking assistance in resolving an issue related to deposit insurance and a contract Navy FCU has won to operate bank branches on military bases.
CUToday.info has obtained a copy of a letter Navy Federal has sent to Sen. Jack Reed (D-RI), chairman of the Senate Committee on Armed Services, in which the credit union states an “issue” with NCUA “threatens to undermine our ability to provide deposit insurance to servicemembers’ accounts in the Overseas Military Banking Program (OMBP).”
That issue is that in order for the contract to work, changes will need to be made to the Federal Credit Union Act to allow deposit insurance from the National Credit Union Share Insurance Fund (NCUSIF) to cover non-member deposits.
Several experts have told CUToday.info they believe such a change is unlikely.
Other legal issues will also need to be addressed before the $165-billion Navy Federal, which won the contract to operate 60 branches and 275 ATMs of “The Community Bank” on military bases effective in April 2024, can execute on the contract that runs for 10 years.
Navy FCU won the bid after Bank of America, which had been operating those branches for several decades, opted not to bid this time.
“Navy Federal responded to a DoD Request for Proposal, was awarded the OMBP contract in September 2023, and will be replacing Bank of America (BofA) who has operated the Program for more than 20 years,” wrote Navy FCU President and CEO Mary A. McDuffie. “At issue is the fact the DoD contract requires Community Bank deposits to be insured. The current OMBP contractor, BofA, is insured by the Federal Deposit Insurance Corporation (FDIC), and Community Bank’s deposits are also insured by the FDIC. However, to date, NCUA has been unwilling to provide the same deposit insurance under their statute, despite a similar authority granted by Congress.”
In the letter, which was accompanied by a memo providing Navy FCU’s analysis of NCUA’s legal authority to insure OMBP deposits, McDuffie requested a meeting with Sen. Reed at his earliest possible convenience.
CUToday.info has reached out for comment from Navy Federal.
DCUC Raises Issues
In addition, CUToday.info has separate reporting here on concerns being voiced by the Defense Credit Union Council over changes by the Defense Department to its “one bank/one credit union” policy on military bases.
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