Paulson says CUs included in federal rescue proposal

WASHINGTON (9/25/08)--U.S. Treasury Secretary Henry Paulson, Jr. in testimony before the House Financial Services Committee yesterday said credit unions would be included in any federal plan to rescue the financial services sector.

Paulson appeared in the hearing entitled, "Turmoil in U.S. Credit Markets: Recent Actions regarding Government Sponsored Entities, Investment Banks and other Financial Institutions." He outlined the urgency of Treasury's plan to issue up to $700 billion of Treasury securities to buy troubled mortgage assets from U.S. financial firms.

"Under our proposal, we would use market mechanisms available to small banks, credit unions, and thrifts, across the country--not just big banks," said Paulson. "These mechanisms will help set values of complex, illiquid mortgage and mortgage-related securities to unclog our credit and capital markets, and make it easier for private investors to purchase these securities and for financial institutions to raise more capital."

Paulson said the Treasury for months internally analyzed the proposed program--which he said the administration had hoped would never be necessary. The secretary urged lawmakers to quickly adopt the plan, and provided a peek at his follow-up agenda to reform the U.S. financial regulatory structure.

"When we get through this difficult period, which we will, our next task must be to address the problems in our financial system through a reform program that fixes our outdated financial regulatory structure, and provides strong measures to address other flaws and excesses," said Paulson. "I have already put forward my recommendations on this subject. Many of you also have strong views, and we must have that critical debate, but we must get through this period first."

Use the resource link below to access the complete text of Paulson's testimony.

Resource Links

Text of Secretary Paulson’s remarks