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NAFCU updates CUs on Washington’s response to bank failures
NAFCU Senior Vice President of Government Affairs Greg Mesack sent member credit unions an update on discussions and efforts underway in Washington, D.C., in response to recent bank failures.
Of note, Federal Reserve Chairman Jerome Powell addressed the failures during his statement after the Federal Open Market Committee’s (FOMC) meeting, acknowledging the bank’s poor risk management and the Fed’s commitment to learning from the events to prevent future failures. Treasury Secretary Janet Yellen also received questions during a budget hearing Wednesday and told lawmakers that raising deposit insurance limits is not currently under consideration.
Mesack noted that regulators’ initial response seems to have contained the impact of the failures to those banks, and officials have indicated deposits at regional and mid-size banks have stabilized.
The Senate Banking Committee and House Financial Services Committee are set to hold hearings next week with Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg, Federal Reserve Vice Chair of Supervision Michael Barr, and Treasury Department Under Secretary for Domestic Finance Nellie Liang.
Mesack said the discussions will likely focus on extending deposit insurance coverage, repealing regulatory relief for mid-size institutions, and changing compensation for bank executives; however, no immediate legislation is expected as committee leadership take a wait-and-see approach for investigations to reveal how these collapses happened prior to considering any legislation.
NAFCU will remain engaged with lawmakers and regulators on this issue, touting the credit union difference and strength of the industry.