NEW YORK – The National Federation of CDCUs joined the Community Development Financial Institutions Coalition yesterday in urging the Treasury Department to set aside $1 billion for cash infusions into CDFIs.
Community development, or low-income, credit unions, unlike mainstream credit unions, may accept secondary capital, so are eligible for cash infusions under the Treasury’s Troubled Asset Relief Program.
The plea comes as the prospects of getting TARP cash for mainstream credit unions continue to dwindle, as Treasury has abandoned its original plans to buy distressed mortgage assets from banks and credit unions and increasing numbers of banks and other financial institutions are seeking capital under the $700 billion financial bailout.
"Congress has expressed its concern that little of the first wave of TARP investments in banks seems to be finding its way to the communities and families most in need," said Clifford Rosenthal, president of the CDCU group. "We in the CDFI movement believe that our institutions are uniquely positioned to aid some of the hardest-hit communities around America, and that moreover, we can leverage any federal funding many times over."
Under NCUA regulations, only credit unions qualified as low-income (community development) are eligible to accept secondary capital, such as the cash being infused by Treasury under the TARP. About 1,000 credit unions are qualified as low-income by NCUA.
