NCUA seeks Treasury funds for distressed CU assets

ALEXANDRIA, Va. (11/19/08)---National Credit Union Administration (NCUA) Chairman Michael Fryzel asked Congress Wednesday to encourage the U.S. Treasury Department to equip the NCUA to deal with troubled credit union assets.

In a letter to congressional leaders, Fryzel asked federal lawmakers to intervene with the Treasury to secure funds necessary for the NCUA to construct a relief program for troubled assets.

The NCUA chairman said the Treasury's recent decision not to purchase distressed assets under the Troubled Asset Relief Program (TARP), authorized under the Emergency Economic Stabilization Act, was a concern.

He said NCUA stands ready to create a TARP-like program for credit unions, with Treasury back up, to serve as "an important potential avenue of relief." The NCUA would be responsible for establishing standards and procedures for the use of the funds under the plan.

The NCUA letter was sent to the chairmen and ranking members of the House Financial Services Committee and Senate Banking Committee and House and Senate leadership.

Credit Union National Association (CUNA) President/CEO Dan Mica said that access to Treasury funds through NCUA, as suggested by the NCUA chairman, could be "an important backstop for credit unions affected by the economic downturn."

"However," he said, "CUNA continues to hear from credit unions who want a system-based solution that does not rely on Treasury funding to address credit union problems."

Mica noted that there are many ways such a solution could be structured to avoid reliance on taxpayer funds.

"We will continue to work with Chairman Fryzel and the NCUA board to seek such an approach, which is reflective of the cooperative nature of the credit union movement and would not further burden the U.S. taxpayer," the CUNA leader pledged.