WASHINGTON – CUNA and NAFCU today redoubled their efforts to get the Bush administration to reverse its decision not to buy troubled assets.
CUNA President Dan Mica wrote Treasury Secretary Henry Paulson and requested that Paulson either implement a program to buy bad mortgages or work with NCUA to establish such a mechanism either self funded through the credit union system or through the National Credit Union Share Insurance Fund.
Mica also asked Paulson to set aside funds that would be available to buy credit union assets or make capital infusions, should the need arise.
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"Without the federal government's purchase of problem assets, how much value they retain will remain unsettled. As a result, the problem of undervalued mortgage assets held by many institutions, which has been exacerbated by fair value accounting, will continue for an indeterminable period of time," Mica wrote Paulson.
NAFCU President Fred Becker urged members of the Senate and House Banking Committees that his association had "grave concerns" about Paulson's decision not to have the government buy illiquid assets.
He said that the Treasury Department's decision to redirect funds violates Congress' intent and will "create an uneven playing field to the advantage of the bad actors whose unscrupulous practices are at the root of this financial crisis."
- Becker made similar points in an earlier letter to Paulson.
- In a separate letter to House leaders, Mica urged Congress to lift the cap on member business loans as part of the economic stimulus package that lawmakers may consider during next week's lame-duck session. He said CUNA estimated that credit unions could make an additional $10 billion in business loans during the first year if the cap were lifted.
"With American small businesses facing a critical credit crunch that can only worsen and prolong the recession, and given the fact that credit unions in the United States were created to help stabilize the credit system, the time is now to encourage credit unions to help where they can do so responsibly," he wrote.
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