The NCUA's proposal to create a stabilization fund for corporate credit unions will be included in a housing bill that the Senate is scheduled to consider on Thursday, but the measure won't contain a provision to allow bankruptcy judges to rewrite the terms of mortgages.
The so-called "cramdown" provision,' which was strongly opposed by CUNA, NAFCU and other representatives of financial services industry, could be offered as an amendment but Sen. Richard Durbin (D-Illinois), the measure's key sponsor has indicated that he doubts there are enough votes to pass it. The House-passed version contains "cramdown" so the two versions will be reconciled during a conference committee.
Both CUNA and NAFCU opposed the House version cramdown, but the groups took different approaches when the focus shifted to the Senate. Both trade associations were originally at the negotiating table in the Senate, but NAFCU withdrew its support last week. CUNA said it stayed in the negotiations because they wanted to ensure that any bill did the least possible damage to credit unions.
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The bill that the Senate is expected to considerallows the NCUA to create a stabilization fund for corporate credit unions financed by a larger line of credit from the Treasury Department so credit unions can spread out over seven years premiums for the cost of placing U.S. Central and Wescorp into conversatorship and for guaranteeing the deposits of natural person credit unions in corporate credit unions.
The agency currently has $100 million in borrowing authority and the full House and Senate Banking Committee have approved an amendment increasing that to $6 billion. The Senate panel gave the NCUA $18 billion in emergency borrowing authority but the final measure could raise that to $30 billion. The fund would supplement the NCUSIF. The NCUA would pay back the Treasury Department over seven years and natural person credit unions would pay the additional premium to the NCUSIF over that time period.
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