Members of the House Financial Services Committee last week introduced legislation that will provide insurance for credit unions and banks against bad checks or those drawn on insufficient funds during the recovery from hurricanes Katrina and Rita.
The Hurricane Check Cashing Relief Act will indemnify credit unions and banks in areas in Louisiana, Mississippi, Alabama, Florida and Texas affected by the two massive storms on checks up to $2,000. Those checks will effectively be insured by the Federal Reserve's surplus fund. The indemnification will be offered for checks issued between Aug. 28 and Oct. 31, 2005.
The proposal, which is expected to be passed quickly by Congress, is backed strongly by both CUNA and NAFCU and NCUA, all of which have urged credit unions to reach out and be flexible when cashing emergency checks for both members and non-members.
