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News Now

Washington
CUs carved out of Stability Fund Act
WASHINGTON (11/19/09)—In a vote of 52-17, the House Financial Services Committee adopted an amendment to H.R. 3996, the Financial Stability Improvement Act of 2009, which would, in effect, exclude all credit unions from having to contribute to a stabilization resolution fund for systemically risky institutions. H.R. 3996 would create a stabilization resolution fund, located at the Federal Deposit Insurance Corporation (FDIC), to cover the cost of resolving failing financial companies that are systemically important to the financial system. The National Credit Union Share Insurance Fund (NCUSIF) currently has similar authority with respect to insured credit unions. The stability bill was set to direct the FDIC to assess financial companies, including credit unions, with over $10 billion in total assets to provide the initial funding for the new fund, and to replenish the fund in the future. Offered by Rep. Brad Sherman (D-Calif.), the amendment adopted Thursday ups that threshold to $50 billion, effectively exempting all credit unions. Credit Union National Association (CUNA) President/CEO Dan Mica praised the committee vote and said, “Credit unions and CUNA appreciate the House Financial Services Committee taking action to essentially eliminate credit unions from paying into a fund that would finance a ‘systemic risk’ regulatory agency. “In fact, by adopting the amendment that raises the threshold for institutions that must pay into the fund from $10 billion to $50 billion by a vote of 52-17 – a 3-1 margin – lawmakers, in our view, were signaling strongly that credit unions should never have been included under this requirement in the first place. Our sincere thanks to Rep. Brad Sherman for moving this amendment forward.” CUNA earlier this week wrote to House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.) and ranking member Rep. Spencer Bachus (R-Ala.), seeking their support for the Sherman amendment. CUNA detailed several reasons that credit unions should be excluded from the legislation, including their member-owned, not-for-profit cooperative business plans. Credit unions "exist to provide financial services to their member-owners" and "by definition face a set of incentives that are very different from those confronting for-profit financial companies," the letter added.


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