WASHINGTON – The House Financial Institutions Committee has agreed to vote this afternoon on a proposal that would allow federally insured credit unions to pay the crushing $5 billion premium charge to rescue the corporate credit union network over as many as five years, instead of in one gulp.
The bid to ease the toll of the huge premium will be proposed by congressional credit union champion Paul Kanjorski as part of a bill being voted by the committee this afternoon to make the increase in federal deposit insurance to $250,000 permanent.
The Kanjorski provision would allow NCUA to stretch out the proposed recapitalization of the National CU Share Insurance Fund, made necessary by the $1 billion cash infusion for troubled U.S. Central FCU and a guarantee of all corporate deposits. The Federal CU Act currently requires that NCUA charge a one-time premium if the reserve level for the NCUSIF drops below 1.2 (dollar reserved per $100 of insured deposits).
If the committee approves the measure, the bill would then be voted by the full House.
The $5 billion cost of the corporate rescue would force as many as 80% to 90% of all credit unions to report a loss for 2009, according to industry experts.
