CUNA: CU TARP language sends strong signal

WASHINGTON (1/15/09)—As House members tussle over the release of the remaining $350 billion in Troubled Asset Relief Program (TARP) funds to the incoming Obama administration, some lawmakers are taking the opportunity to make an important statement about credit unions, noted Ryan Donovan of the Credit Union National Association (CUNA) Wednesday.

"For instance, Rep. Joe Baca's recent question about credit unions' inability to access TARP funds, and his introduction of an amendment to address the inequality, send important signals to the new administration," Donovan said. He is CUNA's vice president of legislative affairs.

Donovan was referring to remarks made by Baca, a Democrat from California, during a Tuesday House Financial Services Committee hearing on "Priorities for the Next Administration: Use of TARP Funds under EESA (Emergency Economic Stabilization Act)."

The hearing also focused on H.R. 384, a new bill introduced by the committee's chairman, Rep. Barney Frank (D-Mass.), intended to modify rules governing TARP.

Baca offered an amendment that would provide a limited form of alternative capital to help credit unions participate in government assistance programs. Currently, credit unions have been unable to access TARP funding—which has focused on capital injections-- because of statutory prohibitions that generally bar credit unions from obtaining capital from outside sources.

Frank included the Baca amendment in his "manager's amendment," which will become the base text of the bill when it is considered by the House.

The California CU League met with Baca on this and other credit union issues just last week. And CUNA also kept the heat on for credit union inclusion in any new program developed by Treasury under TARP with a letter to key committee members.

Frank himself has said he does not expect his TARP modification bill to complete the legislative process and becomes law. (American Banker Jan. 14). While a vote is expected in the House, there is no comparable on the Senate side.

"What is important here to credit unions, however, is whether the House passes a TARP bill with language specifically addressing the needs of credit unions—something CUNA has been pushing hard for on all levels of the government," Donovan said.

"Through passage of this bill the House would be making a statement that they want credit unions to have access and they are willing to change the law if the Treasury Department doesn't facilitate such changes in its TARP plan," he added.