WASHINGTON – A new bill introduced in the House this morning would allow credit unions to stretch out the costs of the corporate bailout for as long as eight years and it would provide as much as $30 billion in new funding to NCUA to help stem a systemic crisis.
The bill, sponsored by congressional credit union champion Paul Kanjorski, is similar to the bill that passed the Senate last week as part of broader housing legislation.
"Unless Congress takes quick action to change the law, two-thirds of credit unions will have negative earnings in 2009 as a result of the need to rebuild deposit insurance reserves after the $5.9 billion rescue of corporate credit unions," said Kanjorski, the Pennsylvania Democrat who championed HR 1151, the 1998 CU Membership Access Act. "As members of a cooperative movement, credit unions are willing to help one another and to pay their fair share to recapitalize the system, but we shouldn’t ask them to do the impossible."
Kanjorski’s bill would also create a $6 billion Corporate CU Stabilization Fund, a fund that would separate the corporate bailout from the National CU Share Insurance Fund, and would be merged with the NCUSIF after seven years.
Introduction of the bill comes as the House Financial Services Committee is planning to hold hearings on the corporate bailout and its causes, and the failures of U.S. Central FCU and WesCorp FCU.
