The House could vote as early as tomorrow on a bill that includes a temporary stabilization fund for corporate credit unions.
The fund, to be financed by a line of credit from the Treasury Department, 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.
The bill passed the Senate earlier this month and the House Rules Committee is scheduled to meet this evening to establish the terms of debate on the bill.
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The health of corporate credit unions will also be on the agenda on Wednesday, when the House Financial Services Committee's Subcommittee on Financial Institutions holds a hearing that will include testimony from regulators and credit unions. The regulators are scheduled to be represented by NCUA Chairman Michael E. Fryzel, NASCUS Chairman George Reynolds. Jim Bedinger, the chief operations officer of the Chicago Patrolmen's Federal Credit Union is slated to testify on behalf of NAFCU. Bill Lavage, president/CEO of Service First Federal Credit Union of Danville, Pennsylvania is scheduled to appear on behalf of CUNA.
The NCUA has estimated that shoring up the corporates could cost credit unions an assessment of between eight and 20 basis points a year-with an average of 14–over seven years.
The funds are necessary because of the costs incurred to stabilize the corporate credit unions, including injecting $1.1 billion in U.S. Central Corporate Credit Union, placing U.S. Central and Western Corporate Federal Credit Union into conservatorship, and guaranteeing the deposits of natural person credit unions in the corporates.
The measure gives the NCUA $6 billion in borrowing authority (up from the current level of $100 million) and $30 billion in emergency borrowing authority. The bill gave the NCUA eight years to replenish the NCUSIF if its equity ratio falls below 1.2%. It also extends insurance coverage of accounts up to $250,000 through 2013.
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