A static comparison of CDIC to DGCM (the new name for Manitoba's CUDGC) is somewhat misleading. On a practical level, failure of any of Canada's biggest banks is highly improbable, so the current ex-ante fund is big enough to plug most likely holes. However, given recent events, CDIC is raising their target to a 100 bps fund, so their premiums are likely to increase over the next few years. But in any case, they have a $17 billion line of credit with Treasury, equivalent to something like 280 bps (!). Whether or not there is some sort of implicit legal obligation for Canada to back CDIC beyond this as an agent of the Crown is unclear, but fairly moot given that credit line.
If one sticks with CDIC on Canadian Capitalist's "explicit backing" measurement, that's perfectly reasonable - one isn't so much evaluating actual risk as much as defined recovery resources. But beyond that, there's a lot of nonsense tossed around about Manitoba CUs and their rates. The first thing to remember is that credit unions are cooperatives, where the shareholders and customers are the same group. So better rates to customers is to some extent simply money that might have been paid out as patronage or dividends. A bank, on the other hand, pays out a separate group of shareholders, who would not appreciate their dividend reduced to support higher rates. This isn't the whole story, but if you want to look at this seriously you need to compare how Manitoba CUs look at the end of the day - percentages of revenue as retained earnings, capital buffers, etc. Manitoba CUs don't seem terribly exotic when looked at like this.
Similarly with rates, it isn't like bonds where higher rates generally reflect higher risk. To a great extent it is much more like retail pricing. Big banks, like established stores with lots of customers, may be able to charge higher prices (or give lower interest rates), either because their customers are unlikely to go elsewhere for relatively small savings, or because they provide many other useful services as well. Other stores may sacrifice some profit to offer better prices, or work at reducing their costs to the same end. But it is not "riskier" to buy a Tassimo coffee maker for $100 at Walmart than for $150 at Pricey Goodies, Inc. Banks that want to divert business away from the Big5 need to establish some reason for consumers to choose them; one way is to offer better rates. It is always possible that any particular high rate reflects an unhealthy desire for high-cost deposits, but certainly for Canada there doesn't seem to be be any indication of that.
If one is actually evaluating a provincial credit union system as large as Manitoba's, it is fine to hypothesize some sort of unknown disaster, but you then have to ask just what that might entail. Manitoba CUs by some measures approach 40-50% penetration there, so any collapse affects the entire province, and it becomes pretty hard to argue a scenario where it isn't much better (and cheaper) for Manitoba to support them, rather than let the CU sector collapse entirely. Working down, it is also very hard to come up with a scenario where the DGCM fails without having customers at "healthy" CUs fleeing away to CDIC banks, and in any case hard to see indications of what would bring down the Manitoba CU system.
