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WASHINGTON — Credit unions are hoping that the Treasury Department will open the coffers of the Troubled Asset Relief Program when the department unveils new rules soon.The department is reacting to criticism that the Bush administration did not follow the intent of the law by refusing to buy up bad assets from financial institutions.Treasury Secretary Timothy Geithner has said the administration plan, which could be unveiled as early as this week, would likely reverse the policy but hasn’t elaborated how. One possibility would be to use some of the remaining $350 billion in TARP funds to create a “bad bank” that would buy toxic assets from financial institutions. This is similar to the Resolution Trust Corp., which was used in the late 1980s to buy bad assets of savings and loans.NCUA Chairman Michael E. Fryzel, CUNA President/CEO Dan Mica and NAFCU President/CEO Fred Becker have all written Geithner urging him to make corporate and natural person credit unions eligible for TARP funds.The House recently passed a measure sponsored by House Financial Services Committee Chairman Barney Frank (D-Mass.) that includes a provision allowing credit unions to accept TARP money. It allows credit unions to include government assistance in the calculation of their net worth, something they currently can’t do.Although the prospects for passage in the Senate are slim, Frank told reporters that the Treasury Department doesn’t need legislative approval to make the change and urged Geithner to do so.Some credit union executives and lobbyists have said that if credit unions had access to TARP funds, this could offset some of the costs of the NCUA’s rescue plan for corporate credit unions.Fryzel said while he would welcome the TARP money, it’s not clear what kinds of restrictions would be placed on its use and how much could go to help the NCUSIF insure all deposits at corporate credit unions.Lobbyists for CUNA and NAFCU said while they hoped the new rules would be beneficial to credit unions, at press time they hadn’t received any final indication about how the administration was leaning.Although taking TARP funds would mean a break with the movement’s past position of not taking taxpayers’ money, some industry leaders such as Golden 1 Credit Union President/CEO Teresa Halleck said these are extraordinary times.“By sticking to that position, we’d be taking a principled stance that would hurt us. We need to worry about the health of credit unions. No one is going to not join a credit union if we take TARP funds, but they will not join one if it is in trouble,” she said.–[email protected]

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