With lawmakers considering legislation to provide more security and stability for business payroll accounts held by depository institutions, community bankers are raising opposition.
“Their opposition to the legislation isn’t that it increases the coverage level, nor that it’s targeted at business accounts; their opposition stems solely from the fact that credit unions will be given the same deposit insurance coverage level as banks,” wrote America’s Credit Unions President/CEO Scott Simpson in a new letter-to-the-editor in American Banker. “…They don’t seem to care that the purpose of the bill is to protect worker payroll, enhance financial stability, and strengthen small and midsize businesses that drive economic growth in communities across the nation, many of whom are credit union members.”
Simpson wrote in response to a recent op-ed from community bankers that argued the Main Street Depositor Protection Act “gives credit unions a new government-backed opening into business.”
“If bankers claim their concern is about unfair advantages within deposit insurance structures, perhaps they would be open to reforms that require community banks to pay their fair share for FDIC coverage, similar to how credit unions pay evenly for their deposit insurance,” posed Simpson.
While the banker op-ed offered measured support for an alternative, temporary solution, Simpson noted both proposals are in response to “problems created by bank failures and mismanagement, not credit union abuses.”
“That is the difference between cooperative finance and for-profit banks: Credit unions fight to create economic opportunity for the good of all; bankers fight to stifle it so only they benefit.”
