WASHINGTON — Congressional leaders are considering increasing the amount of credit union and bank deposits covered by federal insurance from $100,000 to $250,000 for one year, as part of a revised asset purchase plan scheduled to be voted on by the Senate tonight.
Credit unions are included in the drafts that have been circulated on Capitol Hill, a result that pleases NCUA Chairman Michael E. Fryzel and lobbyists for the industry's major trade associations, all of whom have been working hard to ensure that credit unions receive parity with banks on this issue.
Increasing the amount of money that is insured could be a way to pick up more support for the $700 billion plan to authorize the government to buy the troubled assets from credit unions, banks and thrifts. The measure was defeated in the House on Monday.
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"Federal insurance coverage for credit union members would send an important signal of reassurance at a time when confidence in depository institutions generally has been compromised by market events," Fryzel said.
NAFCU President Fred Becker wrote lawmakers that "in this time of uncertainty, it is imperative that any increase in deposit insurance be done across the board for both the FDIC and the NCUSIF.
In a letter to President Bush, CUNA President Dan Mica urged that the insurance increase be complimented with a "risk-based capital system (which) will provide credit unions and our regulator with additional tools to continue to serve their members safely and soundly."
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