March 14, 2023

Berger outlines what CUs need to know on bank failures

Treasury buildingAs President Joe Biden, lawmakers, and regulators Monday continued to address the failings of Silicon Valley Bank (SVB) and Signature Bank, NAFCU President and CEO Dan Berger sent a message to member credit unions providing additional insights into the situation and the safety of credit union deposits.

Berger highlighted that:

  • the banks’ failings are a result of “their poor management of assets and liabilities – not a systemic failure” like the 2008 financial crisis;
  • SVB and Signature Bank’s banking models are not representative of the U.S. financial ecosystem, as their businesses were heavily concentrated in startup companies, venture capital firms, and crypto companies;
  • over 90 percent of credit union deposits are insured by the federal government, compared to only 50 percent of banks’ deposits; and
  • federal regulators took swift action to meet the needs of the depositors and protect taxpayers from shouldering the cost of the failures.

NCUA Board Chairman Todd Harper also released a statement, saying “the credit union system remains well-capitalized and on a solid footing.” Harper said the NCUA will continue to closely monitor credit union performance during examinations and offsite monitoring, and reiterated that “no one has ever lost a single penny of insured share deposits within the credit union system.”

Of note, the Federal Reserve announced that Vice Chair for Supervision Michael Barr will lead a review of Silicon Valley Bank’s supervision and regulation; the review will be publicly released by May 1. Federal banking regulators provided updates to lawmakers on the situation Monday evening, and lawmakers are planning congressional hearings on the failures.

NAFCU remains engaged with lawmakers and regulators who are prioritizing investigations into both bank failures and will continue to tout the credit union difference.