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SB 1870

Financial Institutions, Dept. of - As enacted, terminates the state credit union share insurance corporation that protects or guarantees shareholdings and deposits of member credit unions against loss; terminates the capital fund held by the corporation that consists of capital contributions and special assessments paid by member credit unions; makes other revisions pertaining to credit unions. - Amends TCA Title 45, Chapter 2; Title 45, Chapter 4 and Title 45, Chapter 7.

114th Regular Session (2025-2026)

Tennessee eliminates its state credit union deposit insurance corporation, shifting all member protection to federal NCUA insurance with potential coverage gaps for deposits over $250,000.

Pub. Ch. 671
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Bill Summary · SB 1870

Legislative bill overview

SB 1870 terminates Tennessee's state credit union share insurance corporation (CUSIC), which currently protects member deposits and shareholdings against loss, and eliminates the capital fund built from member contributions and assessments. The bill makes accompanying revisions to Tennessee's credit union regulatory framework across three chapters of state law.

Why is this important

Credit unions serve approximately 500,000+ Tennessee members, and deposit insurance protection is a primary safeguard for consumer savings. Eliminating state-level insurance shifts members' protection reliance entirely to the federal National Credit Union Administration (NCUA), which insures deposits up to $250,000. This represents a fundamental change in the state's role in protecting financial institution members and could affect credit union operations, member confidence, and the competitive landscape between state and federal credit union regulation.

Potential points of contention

  • Consumer protection gap: Members with deposits exceeding $250,000 would lose state insurance coverage; the timing and transition process for existing members is unclear
  • Credit union funding mechanism: Elimination of the capital fund removes a self-funded emergency backstop built by member assessments over time; unclear if NCUA insurance adequately replaces this layer
  • Regulatory philosophy: Represents deregulation and reduced state oversight of financial institutions chartered in Tennessee, potentially affecting lending practices and member services

Compiled from official sources — confirm details with the bill’s official record.

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