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Washington
Mica tests waters Higher borrowing longer write-off
WASHINGTON (4/1/09)—An amendment to improve the National Credit Union Administration (NCUA) borrowing position with the U.S. Treasury, as well as allow credit unions to spread out their impending premium payment, is a “significant step” toward relief for credit unions, according to the Credit Union National Association (CUNA). After the Senate Banking Committee voted unanimously to adopt the amendment Tuesday, CUNA President/CEO Dan Mica sent a letter to its sponsors, Sens. Mike Crapo (R-Idaho) and Bob Corker (R-Tenn.), commending their actions. The language was added to a bill on best credit card practices. The amendment would: increased NCUA borrowing authority to $6 billion; triple that to $18 billion in times of emergency; and allow credit unions to spread out realizing the premium cost associated with NCUA’s corporate credit union stabilization efforts over five years. (See related story: Senate card bill includes NCUA emergency borrowing.) Mica wrote that CUNA, however, would welcome an opportunity to discuss whether a seven- or eight-year repayment period, similar to what the Federal Deposit Insurance Corp. has requested for banks, might be considered by Congress. He also tested the waters for a congressional appetite to consider a higher borrowing authority for the NCUA. The agency has requested $30 billion in borrowing authority, and has proposed legislation that would allow credit unions to spread realization of the premium over as many as seven years. The Mica letter noted that credit unions are being buffeted by circumstances in the economy that are beyond their control. They also are facing significant costs related to the NCUA’s actions concerning corporate credit unions, and are funding losses as a result of declines in the values of mortgage-backed securities in which corporates had invested when prudent. “We appreciate your efforts to address theses matters in this legislation and look forward to working with you on these issues,” Mica wrote.


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