|
January 22, 2009 - H.R. 384, a bill to amend and reform the Troubled Assets Relief Program (TARP), was passed yesterday by the House in a recorded vote of 260-166. The bill includes an amendment that could allow credit unions to access TARP funds by revising the definition of net worth to include a limited form of capital from the government.
Credit unions are included in the definition of an insured depository institution in the TARP, a program established by the Emergency Economic Stabilization Act of 2008. However, credit unions’ capital standards prohibit the acceptance of outside funds, like TARP. A change to the definition of net worth is necessary for credit unions to accept government funds.
The amendment to H.R. 384 would revise the definition of net worth in the Federal Credit Union Act to allow the following to be included in a credit union’s retained earnings: “any donated equity, permanent, and perpetual capital deposits, or other primary capital made available under Title I of the Emergency Economic Stabilization Act of 2008…” The bill would also make permanent the increase in deposit insurance coverage for credit unions and banks to $250,000.
The TARP’s original intent was to purchase troubled assets from financial institutions to restore liquidity and stability in the U.S. financial system. However, the Treasury Department announced a shift in TARP priorities in November and more than half of the funding was used to inject capital into financial institutions. The Senate voted last week to release the remaining $350 billion in TARP funds.
National Credit Union Administration (NCUA) Chairman Michael Fryzel wrote to House Financial Services Chairman Barney Frank (D-Mass.), the bill’s sponsor, earlier this month urging the Committee to make credit unions eligible for TARP funding. The 11-page letter was sent to the Committee on January 13, the day of its hearing on TARP and H.R. 384. NCUA Chairman Fryzel asked Congress to ensure the NCUA has the same powers and authorities under TARP as the Federal Deposit Insurance Corporation. NCUA has not commented publicly on the amendment that would revise the definition of net worth.
There is no similar bill in the Senate at this time. NASCUS will keep you posted as news develops on this issue. To view the bill, follow this link.
|
 |
|
|
NASCUS News Story Archive
Pressroom |
