WASHINGTON-At press time, CUNA was still surveying its member CUs about whether CUs should push for access to TARP. Among the pros for seeking these funds were:
* The CU system is suffering its worst earnings results since the early 1980s, and there is no end is sight. Despite prudent lending, the deteriorating economy is driving up loan losses, causing further cuts in net income. Adding the cost of the Corporate Stabilization Program will mean the vast majority of CUs will lose money this year.
* CU competitors are receiving low-cost capital from TARP.
* The threats to CUs' political future from accepting TARP funds can be overstated. In the context of the worst financial debacle in 80 years, if CUs end up receiving a small slice that will not sully the record of credit unions being strong, viable institutions.
* At this point credit unions may be seeking only a TARP backup to the share insurance fund, rather than a certain expenditure of TARP funds.
* We don't know how much worse financial conditions will get, so ensuring today that TARP funds will be available to credit unions in the future could be important.
