WASHINGTON-NAFCU called on Senate leaders last week add to proposed funding for NCUA's corporate bailout, saying the current $5.9-billion estimate by NCUA may not be enough.
NAFCU told the chairman and ranking Republican on the Senate Banking Committee it supports NCUA's bid to create an emergency stabilization fund for the corporates and to vastly expand NCUA borrowing capacity, but by much more than NCUA has requested. NAFCU suggests authority by NCUA to borrow as much as $40 billion would be more prudent than NCUA's request to be able to borrow up to $30 billion.
NCUA has asked Congress to create the $6-billion stabilization fund and to authorize it to borrow up to $6 billion and an additional $24 billion on an emergency basis in case the financial condition of credit unions continues to slide.
But NAFCU asked the Senate leaders for an even larger amount: $10 billion on a nominal basis and an additional $30 billion for an emergency - a total of $40 billion.
"While NCUA's initial request for borrowing authority was only $6 billion, we believe more prudent action would be to enact an amount of $10 billion, since the $6 billion figure would only cover what is currently known to be needed for the present corporate credit union crisis and does not cover additional amounts that may arise," said NAFCU President Fred Becker in a letter to Sen. Chris Dodd, D-Conn., the chairman of the banking panel, and Richard Shelby, R-Ala., the ranking Republican on the committee.
"This new amount of $10 billion would not preclude the NCUA from only borrowing $6 billion, but rather allow prudent flexibility as conditions in the nation's economy may continue to deteriorate. Extending emergency borrowing authority to $30 billion would help ensure that NCUA has the tools it needs should a new crisis emerge in these difficult times," Becker added.
