WASHINGTON — Saying that in light of the financial crisis he must be "proactive rather than reactive," NCUA Chairman Michael E. Fryzel today urged Treasury Secretary Henry Paulson to reconsider yesterday's decision to abandon plans to buy illiquid assets from financial institutions.
Fryzel wrote in a letter to Paulson that the decision is problematic because "Congress was specific in the legislation that this was the primary purpose of the package." He further noted that making troubled assets relief program funds available to credit unions in need would enable them to "remain solvent and secure."
He wrote that while "the majority" of credit unions won't need to make use of the funds, without having that money available some credit unions could "face a considerably worsened financial environment and would require more costly remedial action."
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On Wednesday, Paulson announced that he wouldn't use any of the $700 billion allocated by Congress to buy bad assets because the money could be more effectively spent to inject capital into financial institutions and other firms through stock purchases.
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