WASHINGTON – House leaders agreed yesterday to add a provision to the Troubled Asset Relief Program that would allow credit unions to obtain cash infusions under the TARP, but put off a final vote on the bill until next week.
Still, prospects for the credit union provision appear dim as the Senate is not expected to pass the bill, which would provide tens of billions of dollars to restructure at-risk mortgages and make last fall’s increase in federal deposit insurance to $250,000 per account permanent.
In fact, the Senate voted late yesterday to release the final $350 billion of the $700 billion approved in October for the TARP, making it less likely the Senate will approve the House's TARP bill.
The credit union provision would allow credit unions to accept TARP cash–like banks–and count it as net worth, or capital, something they are barred form doing under current law. With credit unions expected to report some dismal numbers in the coming days and weeks, industry leaders see a growing need for capital infusion into needy credit unions.
The credit union provision would allow credit unions to accept government assistance, including cash under TARP or TARP purchases of distressed assets and NCUA assistance, and count it under net worth rules.
But the provision stops short of authorizing credit unions to accept outside assistance, such as non-member deposits, and counting it as net worth.
