WASHINGTON (2/19/09)—Credit union feelings run deep about whether to pursue access to the U.S. Treasury’s TARP funds, yet early results of a Credit Union National Association (CUNA) survey this week show there is an almost equal divide between those voting ‘yea’ and ‘nay.’ CUNA President/CEO Dan Mica revealed the early survey results during a 75-minute CUNA conference call Wednesday on the latest developments on the National Credit Union Administration’s (NCUA’s) corporate credit union stabilization plan. The CUNA poll ended Wednesday. TARP is a highly controversial issue among credit unions, Mica noted on the call. The legislation that set up TARP last year included credit unions as eligible institutions, but as implemented by the U.S. Treasury Department to date, credit unions have not been included. Mica noted he and other CUNA representatives would be meeting with Treasury officials for further discussions Wednesday afternoon. Under the NCUA corporate liquidity plan, approved at a special closed meeting late last month, the NCUA guarantees uninsured shares at all corporate credit unions through February 2009, and established a voluntary guarantee program for uninsured shares of all corporate credit unions through Dec. 31, 2010. Additionally, the agency has agreed to provide a $1 billion capital note to U.S. Central Corporate FCU. The NCUA declared a premium assessment to restore the National Credit Union Share Insurance Fund (NCUSIF) equity ratio to 1.3%. The premium will be collected later in 2009. Mica said on the CUNA conference call, “If there is one area of agreement in the credit union system, it is that we would like to mitigate the cost of this program to credit unions.” Among alternatives to do just that, CUNA is investigating:
*Allowing credit unions to tap Treasury’s funds as soon as possible to deal with the corporate credit union liquidity emergency. This may require a statutory change and CUNA will sound out federal lawmakers to assess support: and * Use the NCUA’s Central Liquidity Facility (CLF) to provide the funding. CUNA is currently analyzing CLF's legal obligations and whether there may be opportunities for additional approaches or flexibility.
Mica underscored for participants that the complexities around the NCUA plan are extensive—especially in investigating accounting and statutory issues, as CUNA continues to do. He pledged that despite disagreement regarding approach, CUNA will continue to pursue funding alternatives for the NCUA program. CUNA’s efforts will include exploring access to TARP funds to back up the National Credit Union Share Insurance Fund (NCUSIF), as needed. “This is a train leaving the station,” Mica warned. “If we don’t get agreement (among credit unions) to get use of TARP funds for credit unions now, whether we need those funds or not, the opportunity will close for us.” See News Now
Friday for final survey results.