WASHINGTON – NCUA Chairman Michael Fryzel called on new Treasury Secretary Tim Geithner yesterday to reconsider coverage under the Treasury’s Troubled Asset Relief Program to help the growing number of troubled credit unions.
The chief credit union regulator urged the Treasury Secretary to develop standards to allow credit unions to accept cash infusions under the TARP and to reconsider a program, since abandoned, to buy distressed assets from credit unions and banks.
"While I appreciate the actions that the Treasury Department has taken to help large banks and other major financial institutions which have faltered or failed, I am deeply concerned about the second-place status into which credit unions and other smaller financial institutions seem to have been placed," said Fryzel, in a letter to Geithner.
Credit union executives are lobbying Congress to facilitate access to TARP funds, but Congress is not expected to do so any time soon, meaning little, if any of the $700 billion approved for TARP will got to help troubled credit unions.
"While credit unions thus far largely have avoided the high-profile failures seen in other sectors, I can assure you that the system is not immune from the stresses resulting from the deepening credit crisis," said Fryzel. "Indeed, they are real and tangible, and NCUA has taken and will continue to take proactive steps in the face of growing economic adversity."
Fryzel’s letters comes as a hundreds of credit unions, including many of the nation’s biggest, are reporting large losses for the fourth quarter and for 2008. Several corporate credit unions, burdened by large mortgage portfolios, are also expected to report growing losses in the coming days.
The NCUA Chairman also urged the new Treasury Secretary to allow NCUA to establish a guarantee program for non-interest bearing accounts, business checking accounts, held by credit unions, something the FDIC is doing for banks.
