WASHINGTON-CUNA has suggested NCUA seek a portion of the funds that may - or may not - still be available under the Troubled Asset Relief Program (TARP) to help replenish the NCUSIF.
"This would immediately cut the amount of money credit unions would have to set aside," noted CUNA's Pat Keefe.
Under the CUNA proposal, the total amount to be provided to cover whatever is needed to replenish the 1% would be $5.5 billion, with $500 million paid by credit unions "as a sort of deductible," Keefe said, and the remainder by TARP.
"Again, what's at stake here, is time. Credit union auditors are already telling CUs that they will have to start writing down their 1% deposit, based on NCUA's estimation of total costs to the NCUSIF to guarantee corporate deposits - $3.7 billion," he said. "Auditors are not going to agree to just sit back and wait."
"The key here is that TARP would be used as a back-up to the NCUSIF, not credit unions themselves," Keefe added. "Credit unions still wouldn't be receiving any TARP funds."
And that's an important distinction, as receiving TARP funds has the potential to tarnish the fabled White Hat that credit unions wear on Capitol Hill and on Main Street.
The problem, several credit union advocates suggested, is that it's fine-line distinction to make when lawmakers, CU members and the general public tend to paint with a broad brush - and see accepting TARP funds as an admission that CUs also need to be bailed out by the taxpayers.
Still, the idea, Keefe said, is that TARP helps buy time for other proposed alternatives to come into play, such as the CLF plan. "This is just one piece of the puzzle," Keefe said. "These things have to work in concert."
