WASHINGTON — As Congress was working to release the additional $350 billion in Troubled Asset Relief Program funds, credit unions and their allies were trying to get ensure they get a piece of the pie.
At press time, lobbyists for the NCUA, CUNA and NAFCU were seeking to include provisions in a House bill that spells out guidelines for the use of the remaining TARP money.
Rep. Joe Baca (D-Calif.) introduced an amendment allowing credit unions to include government assistance in the calculation of their net worth, something they currently can't do. That would enable them to apply for TARP funds that become available.
Baca said at a House Financial Services Committee hearing last Tuesday that he was pushing the amendment after hearing from credit unions in his district that might want to seek TARP funds. His district is San Bernardino County near Los Angeles, an area that has been especially badly hurt by the collapse of the real estate market.
The NCUA was working to include additional provisions that would give it similar powers to the FDIC, including increasing the amount of money the NCUA can borrow for insurance purposes from the Treasury Department from $30 billion to $100 billion.
"We believe it is extremely important to equip NCUA with the same essential powers and authorities being considered for FDIC in dealing with the varied and complex set of risks facing financial institutions in this volatile market," NCUA Chairman Michael E. Fryzel wrote the House panel.
NAFCU President/CEO Fred Becker wrote lawmakers that such parity would enable "our nation's credit unions to play a significant role in solving the current economic crisis."
The original financial rescue package passed last year allowed credit unions to participate, but the Treasury Department changed the terms and decided not to buy troubled assets. The bulk of the TARP funds used so far have gone toward buying shares in financial institutions.
The Senate has expressed little interest in passing a bill so the House language would be advisory, but officials of the Obama transition staff have said they would use some of the language to guide their use of the TARP money. The bill also says that some of the TARP funds should be used to help the automobile industry if needed and to provide relief to homeowners who are having trouble making mortgage payments. It also permanently changes the amount of deposits covered by federal deposit insurance to $250,000. When Congress changed it to $250,000 last year, it was only through the end of 2009.
In one of his last acts before leaving office, President Bush asked Congress to release the remaining $350 billion in TARP funds. The funds will be automatically released unless both houses pass measures rejecting the request.
CUNA Vice President of Legislative Affairs Ryan Donovan said that having the House provide guidance to the new administration will increase the likelihood that the Treasury Department might implement the law in a way that benefits credit unions.
"You want the lifeboat on the cruise ship even if you don't want to have to use it," he said.
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