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Committee endorses option for state‑chartered credit unions to seek state‑approved private deposit insurance
Summary
The committee recommended SF 4444 to give state‑chartered credit unions the option to replace federal NCUSIF coverage with state‑approved private deposit insurance; supporters said it adds resilience and choice, while at least one senator flagged the loss of the federal 'full faith and credit' backstop as a systemic‑risk concern.
The Commerce Committee on March 24 recommended moving SF 4444 forward to the Senate with bipartisan support, after testimony from credit unions and private insurers that the optional framework would provide flexibility and resilience for Minnesota‑chartered credit unions.
Sponsor Sen. France said the bill allows well‑capitalized state‑chartered credit unions to satisfy deposit‑insurance requirements through an approved private insurer, while preserving the Department of Commerce’s authority to approve or prohibit any insurer found unable to protect members.
Ryan Smith of the Minnesota Credit Network told the committee the change is “about choice and resilience,” arguing the private model has operated successfully in other states and would diversify protections beyond a single federal system. Jake Service, a Rochester credit‑union executive, said the option would allow boards to align deposit protection with a credit union’s specific strategy.
Opponents pressed the loss of a federal backstop. One senator recounted experience as a bank customer in a federal receivership and warned that private insurers lack the explicit full‑faith guarantee of the U.S. government; sponsor and proponents responded by pointing to private‑insurer reserve levels and regulatory oversight in other states.
The committee recommended passage to general orders. The bill retains the $250,000 coverage level and includes Department of Commerce oversight and petition processes for a credit union wishing to opt in.
The committee vote to send SF 4444 to the floor passed after discussion; the Department of Commerce testified that it helped draft supervisory language and supports the oversight approach.
