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Washington
CUNA urges Treasury on shadow TARP for CUs
WASHINGTON (11/17/08)--Noting that credit unions want to handle their own issues themselves arising from the financial crisis, the Credit Union National Association (CUNA) has also urged the Treasury Department to work with the National Credit Union Administration (NCUA) to stand behind credit unions if needed. Wednesday, Treasury Secretary Henry Paulson announced his agency would not pursue a plan to purchase troubled assets from financial institutions under the auspices of the Economic Emergency Stabilization Act (EESA) and its “Troubled Asset Relief Program” (TARP). CUNA President/CEO Dan Mica, in a letter to Paulson, called the decision “troubling,” noting it essentially cuts out credit unions from any help under the EESA. “We continue to believe, however, that because no one knows the extent of the financial crisis, credit unions should, as Congress intended, be able to call upon the resources available under EESA, if the reserves of the National Credit Union Share Insurance Fund (NCUSIF) prove to be insufficient,” Mica wrote to the Treasury secretary. CUNA has urged NCUA to develop a “shadow TARP” program for credit unions that would purchase mortgage loans and mortgage-related assets from credit unions. Under CUNA’s proposal, the program would be self-funded from within the credit union system and operated out of the NCUSIF. Mica said that, by coordinating with NCUA for a broad asset purchase program for credit unions, the program would not only remove these assets from credit unions' balance sheets, but also provide a net worth contribution to affected credit unions achieving the same purpose that the capital purchase program--for which credit unions are not eligible--does for other institutions. “In that connection, we also urge Treasury to work with NCUA to specifically designate and set aside the appropriate level of funds that would be available to purchase credit union assets or provide direct capital infusions, should the need for such assistance from Treasury materialize,” CUNA wrote. Access the full text of CUNA’s letter to the Treasury secretary using the link below.


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