WASHINGTON – Congressional credit union allies were working last night to get language into a bill to be voted later this week that would amend the Troubled Asset Relief Program in a way that would enable credit unions to obtain cash infusions under the TARP.
The language would allow credit unions to accept outside forms of assistance, such as that provided under TARP, and count it as capital, something currently prohibited for most credit unions. "This would allow credit unions to get capital through the TARP program," said Fred Becker, president of NAFCU, which crafted the language with the California CU League and CUNA.
The House is expected to vote as soon as tomorrow on the bill, which would also provide tens of billions of cash to restructure troubled mortgages and permanently extend federal deposit insurance for credit unions and banks to $250,000 per account.
The vote is necessary as a condition for Congress making the second half of the $700 banking bailout funds available.
Credit union allies, led by Democrat Joe Baca of California, were working last night to convince House leaders to attach the credit union language to the bill. "The credit unions are telling me they can’t access TARP funds," said Baca during a hearing on the bill yesterday. "Congress intended credit unions to be able to accept TARP funding.
While credit unions were included in the original TARP bill, the Federal CU Act bars them from counting cash infusions under programs like TARP as net worth, or capital. Language provided by Baca would redefine net worth to include TARP funds. "Basically, it would allow credit unions to count any form of government assistance as net worth," said Ryan Donovan, senior lobbyist for CUNA. That would also include government guaranteed loans, Section 208 assistance from the National CU Share Insurance Fund, of the proceeds from the sale of distressed securities to the Treasury, as was originally contemplated for TARP.
