WASHINGTON — In a dramatic reversal of its vote four days ago, the House today approved 263-171 a bill to create a $700 billion fund to purchase illiquid assets from credit unions and other financial institutions and temporarily raise the amount of deposit insured by the federal government.
The measure, which had been approved by the Senate on Wednesday night, increases the amount of credit union and bank deposits covered by federal insurance from $100,000 to $250,000 through the end of 2009. Credit unions won't be assessed a higher fee for the additional coverage. The NCUA's Share Insurance Fund will see its line of credit from the Treasury Department increase.
The NCUA chairman will be among the government officials, whom the treasury secretary will have to consult during the asset purchase process, a provision pushed for by CUNA, NAFCU and the NCUA.
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The deposit insurance increase, the inclusion of the NCUA chairman in the consultation process and an array of tax incentives were added in the Senate to increase the bill's appeal. Members of both parties expressed concern about a measure that would be perceived as a bailout of Wall Street firms and big banks.
During today's the debate, House Financial Services Committee Chairman Barney Frank said that next year there would be an examination of the regulatory policies that caused the current financial crisis and there will be "serious surgery" to fix the problems.
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