As you have seen, late last week and over the weekend Silicon Valley Bank and Signature Bank of New York failed, and the government announced that depositors will be made whole though the FDIC Deposit Insurance Fund- not through taxpayers. Others could follow, but to avoid this scenario, the Federal Reserve announced it was creating a lending facility for eligible financial institutions to bolster the needs of potentially impacted depositories. Credit unions are included as eligible institutions should a need arise. If you have not already done so, I would urge you to look at the list of entities that banked with Silicon Valley- many are in the fintech space- and your credit union could have a relationship with one of those businesses.
Below please find some talking points for your communications with your members should you need them:
Consumers Deposits are Safe with their Insured Credit Union in Virginia
Federally insured credit unions offer a safe place for credit union members to save money. These deposits are protected by the National Credit Union Share Insurance Fund and insured up to at least $250,000 per individual depositor – the same as any other federally insured financial institution.
Credit union members have never lost a penny of insured savings at a Virginia credit union.
Visit MyCreditUnion.gov for more information about the National Credit Union Share Insurance Fund coverage for consumers.
The NCUA is expected to issue a statement soon, similarly reinforcing the safety of insured credit unions.
Looking ahead, while it is too soon to fully speculate, these failures could certainly impact policy going forward. NCUA has long wanted third-party vendor authority and this bolsters their case. In addition, the NCUA and many industry stakeholders support the NCUA’s Central Liquidity Facility being more strongly funded and used as a regular facility source. Also due to the bank failures, the NCUA also is unlikely to lower the normal operating level for the share insurance fund. Optically, it would be challenging.
In addition, our digital assets bill is sitting on the Governor’s desk. Signature Bank failed due to investments in cryptocurrency, and while our bill would not allow credit unions to operate in that manner, the timing is challenging.
The League will continue to work with the NCUA, will message that credit unions are safe and sound in Virginia; and will continue to position credit unions as trusted partners.
We will keep you up to date with any developments as they occur.