The National Credit Union Administration said Thursday that it wants to create a fund to bail out corporate credit unions.
The agency said the Corporate Credit Union Stabilization Fund would allow it to segregate the $5.9 billion of bailout-related expenses from the National Credit Union Share Insurance Fund, which insures customer deposits. The new fund would allow the NCUA to stretch out payments on those expenses for up to seven years.
Congressional approval is required to create the fund. The NCUA would have to shut it down after seven years, but while it is operating, it would be authorized to borrow up to $6 billion from the Treasury Department on a revolving basis.
Under the proposal from the NCUA, the fund would be required to repay its borrowings to the Treasury with interest. However, there would be some discretion as to the timing of the payments and the amount of principal included in each payment.
