Hanscom Federal Credit Union President and CEO Peter Rice, right, testifies before a Senate committee on Sept. 10, 2025. Photo courtesy of Hanscom Federal Credit Union

Hanscom Federal Credit Union President and CEO Peter Rice called on U.S. senators to not expand federal deposit insurance incautiously.

Rice spoke during a Senate Banking, Housing, and Urban Affairs Committee hearing Sept. 10.

The hearing was focused on options to reform how federal deposit insurance should be overhauled in the wake of the collapses of Silicon Valley Bank and First Republic Bank. During that 2023 crisis, the FDIC took the unprecedented step of guaranteeing all deposits at both banks above the $250,000 limit, to halt bank runs driven by business customers partly worried about being able to make payroll. Regulators have already instituted several reforms in response to the crisis, including “living wills” for large regional banks.

In his testimony, Rice warned that implicit protections for the largest banks create dangerous ripple effects such as driving deposits away from local financial institutions and impact small businesses.

“When their payroll is at risk, America’s stability is at risk,” Rice said, according to excerpt from his remarks released by Hanscom FCU. “When their local banks are weakened, Main Street is weakened. And when small businesses stumble due to corporate greed, our national security stumbles, too.”

Rice argued Congress should take six steps as it examines how and whether to reform deposit insurance offered to banks through the FDIC and to credit unions through the NCUA.

First, Rice said deposit insurance should be expanded to targeted coverage for business payment accounts. Insurers should also require higher insurance premiums from banks with heavy concentrations of uninsured deposits, he said, and mandate faster reporting and stress testing for financial institutions between $50 billion and $250 billion in assets.

Rice also said Congress should standardize reciprocal deposit protections to safely spread small businesses’ balances across multiple banks, and clarify the “systemic risk exception” that drove the FDIC’s unprecedented move during the 2023 banking crisis. Lastly, Rice said Congress should direct the Department of Defense to provide emergency financing for defense-related companies when bank failures jeopardize their payroll or contracts.

“The challenge is balancing stability with avoiding moral hazard. Blanket guarantees calm panic but encourages reckless behavior,” Rice said. “Let us not ask what small businesses can do to survive our financial system—let us ask what our financial system must do to ensure small businesses, and the nation they sustain, will endure.”