WASHINGTON – NCUA Chairman Michael Fryzel visited top lawmakers in the House and Senate Friday to kick off a push for a new corporate credit union bailout fund.
"The NCUA proposal has been very well-received in our initial round of discussions on the Hill, and I am taking every opportunity to encourage lawmakers to provide the Agency with a mechanism to spread the assessment costs while at the same time maintaining a strong National Credit Union Share Insurance Fund," said Fryzel in a statement.
The proposed Corporate Stabilization Fund would finance the efforts to rescue the corporate credit unions separately from the National CU Share Insurance Fund, and would allow regular credit unions, known as natural person credit unions, to stretch out the $5.9 billion cost for as long as seven years, Fryzel told the lawmakers.
The fund would be authorized to borrow from the U.S. Treasury up to $6 billion to effectuate the corporate bailout, which would be repaid by premiums assessed natural person credit unions.
Under current law, if the corporate bailout is affected through the NCUSIF then natural person credit unions would have to repay the costs this year.
NAFCU President Fred Becker said his lobbyists were also on Capitol Hill Friday crossing paths with Fryzel and his staff to also urge passage of the corporate bailout provision. NAFCU supports the NCUA proposal, but would like more funds than the $6 billion proposed by NCUA and more time for credit unions to repay the money, Becker told The Credit Union Journal.
Several other measures aimed at alleviating the strain of the corporate bailout are moving through Congress, including a proposal to allow NCUA to stretch out the recapitalization of the NCUSIF for as many as five years; plans to vastly expand NCUA borrowing capacity to as much as $24 billion; and to allow corporate credit unions direct access to the emergency loan fund, the Central Liquidity Facility.
