ALEXANDRIA, Va. – NCUA Chairman Michael Fryzel yesterday rejected a CUNA proposal that would have had the National CU Share Insurance Fund direct a credit union assistance program that would include buying distressed real estate loans from troubled credit unions.
Fryzel, in an interview with The Credit Union Journal, said he believes the NCUSIF is not the proper vehicle for such a bailout and the resources of the fund should be preserved for what the fund was intended, the payout of member deposits in credit union failures.
"We will not use the Share Insurance Fund for a TARP program," said Fryzel. "That does not mean that I’m not open to other proposals, but those funds are reserved for the 90 million credit union members."
The NCUA Chairman said he was told by key lawmakers that there will probably not be any money available for NCUA and credit unions through the Treasury’s Troubled Asset Relief Program until the new administration takes office at the end of January, if at all. But Fryzel said he will continue to urge both Congress and the Treasury to make funds available for troubled credit unions. "I want money available for credit unions, in case we need it," he said.
CUNA had proposed using the NCUSIF to buy and manage distressed real estate from troubled credit unions, particularly in the hard-hit states of California, Nevada, Arizona and Florida. The proposal would either be financed from the existing resources of the NCUSIF or by funds available through the Treasury’s TARP.
Fryzel said the condition of the market for credit unions to deteriorate further, before it gets better. "I’m convinced 2009 is going to be more difficult than 2008, based on everything we’ve seen the last couple of months," he said.
He cited the soaring lay-offs around the country in key credit union fields of membership and the continuing deterioration of real estate. "It’s not going to change quickly," said Fryzel of the downturn.
