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News Now

Washington
CU stabilization insurance fund mods clear Senate
WASHINGTON (5/7/09)—The Senate on Wednesday voted 91-5 to approve S. 896, the Helping Families Save Their Homes Act, which now includes provisions to create a temporary Corporate Credit Union Stabilization Fund and permit credit unions to spread the cost of National Credit Union Share Insurance Fund (NCUSIF) replenishment over a longer period of time. The bill next will be sent back to the House to work out differences between the Senate bill and the House version, H.R. 1106. The National Credit Union Administration’s (NCUA) plan for a stabilization fund wasn’t included in the House package; however key members said last week that they would favor acting expeditiously and including the language in a final bill. Credit Union National Association (CUNA) President/CEO Dan Mica said Wednesday that time is of the essence for final passage: “Credit unions are covering the costs related to stabilizing corporate credit unions, and the legislation will allow them to spread this cost out over time rather than in just one lump sum this year.” “Spreading these costs over multiple years means that credit unions can use the funds, that otherwise would have been used to pay the assessment immediately, to make credit available to their members right away – a needed component to help our economy get back on its feet,” Mica said, adding, “We now urge the House to just as quickly take up and adopt the Senate legislation.” Other credit union provisions in S. 896, adopted as an amendment offered by Sens. Christopher Dodd (D-Conn.) and Richard Shelby (R-Ala.), would raise the NCUA’s borrowing authority to $6 billion, from the current ceiling of $100 million. They also would authorize $30 billion in NCUA emergency borrowing authority. Another provision important to credit unions, the bill would extend—for four years—the higher, $250,000 federal share and deposit insurance ceiling due to expire at the end of the year. The Senate vote followed a grassroots call to action by CUNA and the leagues that resulted in an estimated 20,000 contacts from credit unions to Capitol Hill in support of the Senate language mitigating the corporate costs. Though S. 896 contains many legislative changes that are of great importance to credit unions, the bill is mainly aimed at helping homeowners avoid foreclosure by encouraging loan modifications for at risk mortgages. In earlier comments delivered on the Senate floor, Sen. Richard Durbin (D-Ill.) said he was “not giving up” on judicial mortgage modification provisions that were defeated by a six-vote margin late last month. The mortgage provisions, also known as the cramdown amendment, would have allowed bankruptcy judges to modify the terms of existing mortgages.


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