RIVERSIDE, Calif. – Support for the mortgage bailout plan appears to be growing among credit union executives, especially in ground zero of the mortgage crisis, just as the House is expected to vote an amended version today.
The amended version was approved Wednesday by the Senate and would allow the Treasury to buy up to $700 billion in distressed mortgage securities from banks and credit unions.
"From all appearances, it has to happen," Mark Hawkins, president of Altura CU, told The Credit Union Journal. "Word is the vote could happen (yesterday) in the House, meaning they recognize the urgency of this. It has to happen quickly. As for the effect, doing nothing obviously is damaging. Whether it helps or not is not clear."
"All of our problems are real estate based, and we see that in many areas of the country, so we've got to set a floor," said Hawkins, whose $900 million credit union reported a $308,000 gain for the first six months of the year. "We need to halt this inevitable slide we are on and begin to look up. Out here, the wealth effect is just a memory. Until we get a floor under real estate prices, nothing is going to happen. I hope Congress steps up and gets it passed and the president signs
it."
"SchoolsFirst believes the relief package is necessary to get the banking system back on track," said Jose Lara, senior vice president of member development for SchoolsFirst FCU, in Santa Ana, Calif. "It is needed to make available credit for members and the banking system in general and the overall economy."
SchoolsFirst, the $8 billion credit union formerly known as Orange County Teachers FCU, reported first half net income of $22.8 million, down from $35 million for the first half last year.
"For us, we don't have issues with money to loan, but we believe the fear instilled by the banking
crisis is hurting borrowing. If there is a bill that relieves the consumer, it would be good for everybody," said Lara.
Brad Beal, president of Nevada FCU, in another hard-hit market, also called for passage of the bailout bill.
"It is a necessary evil," said the Las Vegas credit union executive. "I find it very distasteful that we have to buy out some of these folks who took inordinate risks, but at the same time there isa threat to our financial system that we cannot ignore. The consequences of not doing anything are compelling."
"There won't be any direct effect on Nevada Federal," said Beal. "We didn't engage in any
of those subprime loans, so we don't need to be bailed out. Indirectly, restoring confidence in the financial system will help stabilize the market and will help all of us."
Beal’s $825 million credit union reported $1.8 million in net income for the first six months of the year, about half of the $3.4 million it reported for the same period last year.
