WASHINGTON – In a victory for credit unions, the Senate is expected to vote passage tomorrow of a bill helping NCUA and credit unions to finance the costs of the corporate credit union bailout–which is expected to be separated from the so-called cramdown provision that would allow troubled homeowners to ask a bankruptcy court to restructure their mortgage.
The cramdown measure, which was once a key part of the bill, has now been relegated to the background because it is not expected to pass, according to several lobbying sources. So the chief sponsor of the cramdown provision, Illinois Sen. Richard Durbin, will be allowed to offer the provision as an amendment to the package.
The bill to be voted Thursday, which is still being drafted, is expected to include provisions to create a $6 billion Corporate Stabilization Fund that would be capitalized by credit unions over as long as eight years–effectively stretching out the costs of the corporate bailout from one year. It is also expected to authorize NCUA to borrow as much as $30 billion to cope with a systemic emergency. And it will make permanent last year’s increase in federal deposit insurance coverage to $250,000 per account.
Not expected to be included in the bill are proposals that would have expanded the authority of the Central Liquidity Facility to allow it to lend directly to corporate credit unions or to make capital infusions into corporates. The advent of the Corporate Stabilization Fund is believed to have eliminated the necessity for the CLF provisions.
The deposit insurance provisions were attached to the cramdown provision in a bill that passed the House last month.
But credit union lobbyists were reluctant to declare victory, noting the cramdown provision, which they oppose, could still be revived if House and Senate leaders meet in conference to reconcile the separate bills, or as part of another bill.
