Congress Studies Corporate Meltdowns Impact On Taxpayers
WASHINGTON – President Obama signed a bill Tuesday that will create a congressional study of the affects of the corporate credit union meltdown and whether it will affect taxpayers.
The bill comes weeks after NCUA Chairman Debbie Matz assured Congress the $16 billion cost of the corporate system resolution will be funded by credit unions.
The study by the Government Accountability Office, the accounting office for Congress, will review the adequacy of NCUA’s response to the meltdown of the nation’s biggest corporates, including whether taxpayers have any liability. Most of the costs of the program have been funded by low-interest loans provided by the Treasury Department, federally guaranteed bonds sold by NCUA and assessments paid by federally insured credit unions. The GAO will review the ability of credit unions to pay the ongoing corporate assessments, which will run for as long as 11 years.
The GAO also will review NCUA’s response to the 10 large failures studied by the agency’s Inspector General, which will cost the National CU Share Insurance Fund an estimated $520 million to resolve.
The study will be provided to the Senate Banking Committee, the House Financial Services Committee, and the Financial Stability Oversight Commission, the new panel created to monitor large systemic threats to the financial system.
The bill also made several technical corrections to the Federal CU Act which will allow NCUA to count federal assistance to troubled credit unions, such as the agency’s emergency 208 loans, as net worth when merging the troubled credit unions into healthy institutions as a way to induce more mergers of ailing institutions.