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News Now

Washington
Fryzel urges Paulson to reconsider TARP change
ALEXANDRIA, Va. (11/14/08)—The chief federal credit union regulator called upon Treasury Secretary Henry Paulson Thursday to reconsider his announced reversal of the asset purchase function of the Troubled Assets Relief Program (TARP). National Credit Union Administration (NCUA) Chairman Michael Fryzel asked Paulson to immediately make a portion of the TARP funds available for the purchase of troubled assets from credit unions and others. The NCUA chairman’s urging was in response to yesterday’s Treasury announcement that the TARP Program would abandon its orginial strategy and would no longer seek to buy distressed mortgage-backed assets. Fryzel wrote to Paulson: “As a regulator and insurer of 8,000 financial institutions, I must be proactive rather than reactive. The financial climate demands that I have all the tools I need to protect the savings of the 90 million people who use credit unions.” “Although I can understand the initial actions that Treasury has taken to help the large banks, insurance companies, and other major financial institutions that have faltered or failed, I am concerned about the second-place status into which credit unions and other smaller financial institutions have been placed,” the NCUA chairman said. Fryzel also noted that “the federal government is expected to be undertaking firm and coherent steps to improve the situation,” and said that “if mitigating steps are not made available through TARP, some credit unions experiencing difficulties could face a considerably worsened financial environment.” The NCUA chairman reiterated his assessment that the majority of credit unions are performing well, despite the overall market conditions. However, he acknowledged there are some that may require the TARP assistance “that was originally set forth in the Emergency Economic Stabilization Act enacted last month.” Prior to Paulson’s announcement, the Credit Union National Association sought credit union access to the TARP Program, as well as urged the NCUA to set up a similar credit union-funded program under the National Credit Union Share Insurance Fund.


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